Company Analysis Project – Deliverable 3: The Complete Analysis

In a written submission, use a set of specific criteria to arrive at a recommendation as to the company VISA Inc. suitability as an investment.

Recommended Structure: APA

1. Profitability Analysis

2. Debt Analysis

3. Market Share Analysis

4. Innovation – an analysis of the company’s research and development efforts and its product pipeline

5. Other relevant factors

6. Current Valuation: is the company’s stock currently overvalued by the market?

6. Recommendation: create a recommendation as to whether the company’s stock is a suitable investment, based on your analysis above.

Annual Report 2023
Our purpose
is to uplift
everyone,
everywhere
by being
the best way
to pay and
be paid.
View the interactive report
A NN
UAL
RE P O RT 2023
1 at
and
additional
content
annualreport.visa.com
YEAR-END FINANCIAL HIGHLIGHTS
Operational Highlights
12 months ended September 30 (except where noted)
2021
2022
2023
Total volume1
$13.0T
$14.1T
$14.8T
Payments volume1
$10.4T
$11.6T
$12.3T
Transactions processed on Visa’s networks
164.7B
192.5B
212.6B
Cards2
3.7B
4.0B
4.3B
Financial Highlights (GAAP)
In millions (except per share data)
FY 2021
FY 2022
FY 2023
Net revenues
$24,105
$29,310
$32,653
Operating expenses
$8,301
$10,497
$11,653
Net income
$12,311
$14,957
$17,273
Diluted class A common stock earnings per share
$5.63
$7.00
$8.28
Financial Highlights (Non-GAAP)3
In millions (except per share data)
FY 2021
FY 2022
FY 2023
Net revenues
$24,105
$29,310
$32,653
Operating expenses
$8,077
$9,387
$10,481
Net income
$12,933
$16,034
$18,280
Diluted class A common stock earnings per share
$5.91
$7.50
$8.77
1 Total volume is the sum of payments volume and cash volume. Payments volume represents the aggregate dollar amount of purchases made with cards and other form
factors carrying the Visa, Visa Electron, V PAY and Interlink brands and excludes Europe co-badged volume. Cash volume generally consists of cash access transactions,
balance access transactions, balance transfers and convenience checks. For further discussion, see Item 7 – Management’s Discussion and Analysis of Financial Condition and
Results of Operations – Overview – Payments volume and processed transactions in this Annual Report.
2 These figures represent data at June 30, 2021, June 30, 2022 and June 30, 2023.
3 For further discussion and a reconciliation of our GAAP to non-GAAP financial measures presented, see Item 7 – Management’s Discussion and Analysis of Financial Condition
and Results of Operations – Overview – Non-GAAP financial results in this Annual Report.
2
VISA
Stock Performance
The accompanying graph and chart compare the cumulative total return on Visa’s class A common stock with the cumulative
total return on Standard & Poor’s 500 Index and Standard & Poor’s 500 Data Processing Index from September 30, 2018 through
September 30, 2023. The comparison assumes $100 was invested on September 30, 2018, and that dividends were reinvested.
There is currently no established public trading market for Visa Inc.’s class B and class C common stock.
Base period
Indexed Returns (Fiscal Year Ended)
Company / Index
9/30/18
9/30/19
9/30/20
9/30/21
9/30/22
9/30/23
Visa Inc.
$100
$115
$135
$151
$121
$159
S&P 500 Index
$100
$104
$120
$156
$132
$160
S&P 500 Data
Processing Index
$100
$117
$143
$161
$116
$170
Visa Inc.
S&P 500 Index
S&P 500 Data Processing Index
$180
$170
$160
$150
$140
$130
$120
$110
$100
9/30/18
9/30/19
9/30/20
9/30/21
9/30/22
9/30/23
ANNUAL REPORT 2023
3
CEO LET TER
Dear Fellow Shareholders,
We have built one of the most innovative,
convenient, reliable and secure payment
networks in the world, and we are putting
it to work to deliver our purpose: to uplift
everyone, everywhere by being the best
way to pay and be paid. It’s an exciting
time to be a leader in payments, and I am
pleased to share some of our highlights
from our fiscal year 2023 (FY23). Today, Visa’s network spans
more than 200 countries and territories, approximately
14,500 financial institutions, more than 130 million merchant
locations and 4.3 billion payment credentials. All told, during
our FY23, the Visa network enabled $15 trillion in total volume
and 276 billion transactions.
Behind each of these numbers are realworld needs being met — value being
delivered to consumers, businesses and
governments. Visa helps consumers who
need secure and convenient ways to pay
and be paid; creators and businesses
of all sizes who need modern payment
acceptance solutions; and issuers
and acquirers who need innovative
offerings for their customers. We help
governments send payments to people
quickly when they need them most. We
partner with fintechs, neobanks, digital
wallets and enablers to bring them into
the payments ecosystem and help them
achieve scale and growth.
4
VISA
Looking back on FY23
FY23 performance
Fiscal year 2023 was a year of enormous
change. We saw continued economic
growth coming out of the COVID-19
pandemic and the pace of technological
development accelerate, including
generative artificial intelligence (AI),
which has emerged as a once-in-ageneration innovation that will transform
how we live and work, and most certainly
how we shop, buy and pay.
FY23 marked another year of strong
financial performance amid much
uncertainty in the macroeconomic
environment. We drove broad-based
growth in payments volume, processed
transactions and cross-border volume,
all of which enabled us to deliver $33
billion in net revenues and GAAP earnings
per share of $8.28, up 11 percent and 18
percent from the prior year, respectively.
Consumer spending remained resilient
around the world, while the ongoing
recovery in travel continued to be a
tailwind for cross-border volume growth.
Throughout all this, Visa played a vital
role in payments around the world, while
consistently delivering for our clients,
partners and shareholders.
Our business priorities
In FY23, we delivered against our key
growth levers — consumer payments,
new flows and value added services.
We executed with a relentless focus on
supporting our go-to-market teams,
delivering for our clients, enabling
innovative products and solutions and
selling our solutions more effectively to
accelerate our growth, now and in the
future.
Consumer payments
Our consumer payments business
aims to grow digital commerce by
connecting buyers and sellers globally
with safe, simple and innovative digital
payments solutions. We are continuing
to grow our credentials, increase our
acceptance and deepen our engagement
with cardholders, issuers, merchants
and fintechs across the ecosystem.
Over the past year, credentials
grew 7 percent to 4.3 billion and we
surpassed 7.5 billion network tokens.
Total transactions, including cash and
payments transactions, were 276 billion,
meaning that Visa credentials were used
on average 757 million times a day in the
fiscal year. Merchant locations were up 17
percent to more than 130 million, helped
by strong growth in Latin America, Central
Europe, Middle East and Africa. We signed
more than 500 commercial partnerships
with fintechs globally, from early-stage
companies to growing and mature
players. Finally, tap-to-pay transactions,
which continue to be a powerful driver of
engagement, grew another 9 percentage
points to 63 percent of total face-to-face
transactions globally (76 percent of total
face-to-face transactions excluding the
United States).
Visa credentials were
used on average 757
million times a day in
the fiscal year
P2P payments can be sent and received in near real-time with Visa Direct, our push
payment platform.
New flows
We see significant opportunities in new
flows to accelerate our growth and
enable more payments use cases for our
clients and partners. Business-to-business
(B2B) remains the largest component
of new flows today, with small business
and corporate card issuance comprising
the majority of the $1.57 trillion in
commercial payments volume in the
past year. To help address large-ticket
cross-border B2B flows, our Visa B2B
Connect network enables businesses
to make payments to other businesses,
while removing friction, attaching rich
data to the payment and enabling the
tracking of payments in progress. In FY23,
we increased the number of banks that
have signed onto Visa B2B Connect by
more than 70 percent, while the number
of transacting banks more than doubled
as clients activated the service.
Visa Direct, our push payment platform
that allows funds to be sent and received
in near real-time, from person-to-person
(P2P), B2B, business-to-consumer and
government-to-consumer, is a key
enabler of our new flows growth strategy.
Through Visa Direct, we continue to
scale our reach, add new capabilities
and drive adoption across markets and
segments. Visa Direct has the potential
to reach more than 8.5 billion cards,
deposit accounts and digital wallets
around the world. In FY23, we saw more
than 7.5 billion Visa Direct transactions
across more than 65 use cases and over
2,800 programs, helped by more than
500 enablers. For example, one use
case that is a significant opportunity is
cross-border remittances. Cross-border
P2P transactions grew 65 percent this
year enabling us to reach a new record
for Visa Direct payments volume in the
fourth quarter. We are excited about
the momentum across Visa Direct and
will continue to execute our strategy of
growing existing use cases, extending
into new geographies, expanding
into new areas and deepening our
engagement with our partners.
ANNUAL REPORT 2023
5
CEO LET TER
Positioning Visa for the future
In FY23, we
delivered more than
2,000 consulting
engagements
Value added services
Our third growth engine is value added
services — services that help our
clients and partners optimize their
performance, differentiate their offerings
and create better experiences for their
customers. In FY23, we delivered more
than 2,000 consulting engagements that
we estimate created more than $3 billion
of additional client revenue, thanks to our
support. Our growth strategy in value
added services is threefold: deepening
client penetration of existing products,
expanding geographically and building
and launching new solutions. We’ve
made significant progress across each of
these areas over the past year. Our top
265 largest clients now use on average 22
Visa services — double that of our overall
client base.
The payments industry is evolving faster
than ever and we are evolving with it.
By developing the next generation of
products and solutions, delivering on
our purpose and investing in our people,
we will create the next phase of growth
for the company and lead Visa into the
future.
Our products and solutions are some of
the most sophisticated in the world and
we’re on a journey to build the future
of payments and money movement.
We are committed to expanding upon
our product roadmap and integrating
capabilities like generative AI to bring
solutions that address the needs of not
only today, but well into the future. This
includes investing in our data and risk
solutions, processing capabilities and
consulting and analytics expertise to
serve the next generation of users and
help our clients build and grow their
business.
At Visa, we do well by doing good, and
our purpose guides our long-term
aspirations. As we leverage our incredible
partnerships to grow credentials and
expand the reach of our network, we are
bringing more individuals and businesses
Employees at Visa’s Cyber Fusion Center in Virginia build and use AI to detect and secure
cyber threats.
6
VISA
into the financial ecosystem. One
example of how we’re bringing this to life
is through Visa Direct, where we allow
families to receive remittances more
quickly, and facilitate faster access to
wages and government disbursements.
Finally, we amplify our business impact
through our social impact work, which
provides the tools and resources to
digitally enable individuals, businesses
and communities who have historically
been underserved by traditional financial
services.
All of this comes to life thanks to the Visa
team, our talented employees who bring
a variety of experience and background,
like the many communities we serve. We
strive to foster a culture of inclusion and
innovation and are committed to our
employees’ continued growth through
development opportunities to expand
their capabilities and skills, and ultimately
help them better serve our clients and
partners.
In Mexico, Visa employees participated in a reforestation volunteering activity, planting a
total of 1,000 trees.
Looking ahead, to FY24 and beyond
In February of this year, I stepped into
the role of Chief Executive Officer after
having been Visa’s President for almost
10 years. There has been a great sense
of continuity across the company
throughout our leadership transition,
and I would like to thank our shareholders
for their commitment and support. To
all of the approximately 28,800 Visa
employees, thank you for all of your
hard work, leadership and commitment.
And to our clients and partners, you
are the foundation of our business and
everything we do. As an organization, we
are focused on and committed to your
continued success.
Visa is in a strong position. We have a
clear strategy and roadmap, significant
opportunities for growth and a leadership
team dedicated to driving continued
growth and success. At the end of
the day, Visa is not just a leader in the
payments industry, we are helping to
create its future.
Ryan McInerney
Chief Executive Officer
ANNUAL REPORT 2023
7
OUR STRATEGY
CEO LET TER
VALUE ADDED SERVICES
Value added services represent an opportunity for us to diversify
our revenue with products and solutions that differentiate our network,
deepen our client relationships and deliver innovative solutions across other networks.
NEW FLOWS
Visa’s network of networks approach
creates opportunities to capture new sources of
money movement through card and non-card flows
for consumers, businesses and governments around the
world by facilitating P2P, B2C, B2B and G2C payments.
Acceptance
Solutions
Risk & Identity
Solutions
CONSUMER
PAYMENTS
We remain focused on moving trillions of
dollars of consumer spending in cash and checks to
cards and digital accounts on Visa’s network of networks.
Issuing
Solutions
CORE PRODUCTS
Visa Direct
Visa Cross-Border
Solutions
Credit • Debit
Prepaid
Tap to Pay
Open
Banking
Click to Pay
Advisory
Services
ENABLERS
Tokenization
Visa Commercial
Solutions
NETWORK OF NETWORKS
Our network of networks strategy means moving money to all endpoints
and to all form factors, using all available networks and being a single connection point
for our partners; and providing our value added services on all transactions, no matter the network.
FOUNDATIONS
We are fortifying the key foundations of our business model, which consist
of becoming a network of networks, our technology platforms, security, brand and talent.
8
8
VISA
V
ISA
Technology
Platforms
Security
Brand
Talent
Executive Committee
(pictured below, seated, left to right)
Jack Forestell
Chief Product and Strategy Officer
Charlotte Hogg
Chief Executive Officer, Europe
Michelle Gethers
Chief Diversity Officer and Head of
Corporate Responsibility
Paul D. Fabara
Chief Risk Officer
(pictured below, standing, left to right)
Julie B. Rottenberg
General Counsel
Christopher T. Newkirk
Global Head of New Flows – Commercial
& Money Movement Solutions
Rajat Taneja
President, Technology
Ryan McInerney
Chief Executive Officer
Frank Cooper III
Chief Marketing Officer
Kelly Mahon Tullier
Vice Chair, Chief People and Corporate
Affairs Officer
Chris Suh
Chief Financial Officer
Antony Cahill
Global Head of Value Added Services
Oliver Jenkyn
Group President, Global Markets
ANNUAL REPORT 2023
9
Board of Directors
(pictured below, seated, left to right)
Ramon Laguarta
Director
Francisco Javier Fernández-Carbajal
Director
John F. Lundgren
Lead Independent Director,
Chair of Nominating and Corporate
Governance Committee
Teri L. List
Director
Lloyd A. Carney
Director, Chair of Audit and Risk
Committee
Ryan McInerney
Director and Chief Executive Officer
(pictured below, standing, left to right)
Linda J. Rendle
Director
Maynard G. Webb, Jr.
Director, Chair of Finance Committee
Pamela Murphy
Director
Kermit R. Crawford
Director
10
VISA
Denise M. Morrison
Director, Chair of Compensation
Committee
Alfred F. Kelly, Jr.
Executive Chairman
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☑
☐
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission file number 001-33977
VISA INC.
(Exact name of Registrant as specified in its charter)
Delaware
26-0267673
(State or other jurisdiction
of incorporation or organization)
(IRS Employer
Identification No.)
P.O. Box 8999
San Francisco, California
94128-8999
(Address of principal executive offices)
(Zip Code)
(650) 432-3200
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Trading
Title of each class
Symbol
Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per share
1.500% Senior Notes due 2026
2.000% Senior Notes due 2029
2.375% Senior Notes due 2034
V
V26
V29
V34
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Class B common stock, par value $0.0001 per share
Class C common stock, par value $0.0001 per share
(Title of each class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☑
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
The aggregate market value of the registrant’s class A common stock, held by non-affiliates (using the New York Stock Exchange closing
price as of March 31, 2023, the last business day of the registrant’s most recently completed second fiscal quarter) was approximately
$364.9 billion. There is currently no established public trading market for the registrant’s class B common stock, or the registrant’s class C
common stock.
As of November 8, 2023, there were 1,580,679,900 shares outstanding of the registrant’s class A common stock, 245,513,385 shares
outstanding of the registrant’s class B common stock, and 9,453,068 shares outstanding of the registrant’s class C common stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s Proxy Statement for the 2024 Annual Meeting of Stockholders are incorporated herein by reference in Part III
of this Annual Report on Form 10-K to the extent stated herein. Such Proxy Statement will be filed with the Securities and Exchange
Commission within 120 days of the Registrant’s fiscal year ended September 30, 2023.
TABLE OF CONTENTS
Page
PART I
Item 1
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
Item 1A
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
Item 1B
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35
Item 2
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35
Item 3
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35
Item 4
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36
Item 6
[Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36
Item 7
Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . .
37
Item 7A
Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
49
Item 8
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
51
Item 9
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . 107
Item 9A
Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Item 9B
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Item 9C
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections . . . . . . . . . . . . . . . . . . . . . . . . 108
PART II
Item 5
PART III
Item 10
Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Item 11
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Item 12
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Item 13
Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . 109
Item 14
Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
PART IV
Item 15
Exhibits, Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Item 16
Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Unless the context indicates otherwise, reference to “Visa,” “we,” “us,” “our” or “the Company” refers to Visa
Inc. and its subsidiaries.
“Visa” and our other trademarks referenced in this report are Visa’s property. This report may contain
additional trade names and trademarks of other companies. The use or display of other companies’ trade names
or trademarks does not imply our endorsement or sponsorship of, or a relationship with these companies.
2
Forward-Looking Statements
This Annual Report on Form 10-K contains forward-looking statements within the meaning of the U.S.
Private Securities Litigation Reform Act of 1995 that relate to, among other things, the impact on our future
financial position, results of operations and cash flows; the approval and implementation of the potential certificate
of incorporation amendments and the potential exchange offers; prospects, developments, strategies and growth
of our business; anticipated expansion of our products in certain countries; industry developments; anticipated
timing and benefits of our acquisitions; expectations regarding litigation matters, investigations and proceedings;
timing and amount of stock repurchases; sufficiency of sources of liquidity and funding; effectiveness of our risk
management programs; and expectations regarding the impact of recent accounting pronouncements on our
consolidated financial statements. Forward-looking statements generally are identified by words such as
“anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “projects,” “could,” “should,” “will,” “continue” and
other similar expressions. All statements other than statements of historical fact could be forward-looking
statements, which speak only as of the date they are made, are not guarantees of future performance and are
subject to certain risks, uncertainties and other factors, many of which are beyond our control and are difficult to
predict. We describe risks and uncertainties that could cause actual results to differ materially from those
expressed in, or implied by, any of these forward-looking statements in Item 1, Item 1A, Item 7 and elsewhere in
this report. Except as required by law, we do not intend to update or revise any forward-looking statements as a
result of new information, future events or otherwise.
3
PART I
ITEM 1. Business
OVERVIEW
Visa is one of the world’s leaders in digital payments. Our purpose is to uplift everyone, everywhere by being
the best way to pay and be paid. We facilitate global commerce and money movement across more than 200
countries and territories among a global set of consumers, merchants, financial institutions and government
entities through innovative technologies.
Since Visa’s early days in 1958, we have been in the business of facilitating payments between consumers
and businesses. We are focused on extending, enhancing and investing in our proprietary advanced transaction
processing network, VisaNet, to offer a single connection point for facilitating payment transactions to multiple
endpoints through various form factors. As a network of networks enabling global movement of money through all
available networks, we are working to provide payment solutions and services for everyone, everywhere. Through
our network, we offer products, solutions and services that facilitate secure, reliable and efficient money
movement for participants in the ecosystem.
(1)
•
We facilitate secure, reliable and efficient money movement among consumers, issuing and
acquiring financial institutions and merchants. We have traditionally referred to this structure as the
“four-party” model. Please see Our Core Business discussion below. As the payments ecosystem
continues to evolve, we have broadened this model to include digital banks, digital wallets and a range of
financial technology companies (fintechs), governments and non-governmental organizations (NGOs).
We provide transaction processing services (primarily authorization, clearing and settlement) to our
financial institution and merchant clients through VisaNet. During fiscal year 2023, 276 billion payments
and cash transactions with Visa’s brand were processed by Visa or other networks, equating to an
average of 757 million transactions per day. Of the 276 billion total transactions, 213 billion were
processed by Visa.
•
We offer a wide range of Visa-branded payment products that our clients, including 14,500 financial
institutions, use to develop and offer payment solutions or services, including credit, debit, prepaid and
cash access programs for individual, business and government account holders. During fiscal year 2023,
Visa’s total payments and cash volume was $15 trillion, and 4.3 billion payment credentials, which are
issued Visa card accounts that were available worldwide to be used at more than 130 million merchant
locations.(1)
•
We take an open partnership approach and seek to provide value by enabling access to our global
network, including offering our technology capabilities through application programming interfaces (APIs).
We partner with both traditional and emerging players to innovate and expand the payments ecosystem,
allowing them to use the resources of our platform to scale and grow their businesses more quickly and
effectively.
•
We are accelerating the migration to digital payments through our network of networks strategy. We
aim to provide a single connection point so that Visa clients can enable money movement for businesses,
governments and consumers, regardless of which network is used to start or complete the transaction.
This model ultimately helps to unify a complex payments ecosystem. Visa’s network of networks
approach creates opportunities by facilitating person-to-person (P2P), business-to-consumer (B2C),
business-to-business (B2B) and government-to-consumer (G2C) payments, in addition to consumer to
business (C2B) payments.
The number includes an estimated 30 million locations through payment facilitators, which are technology providers that provide payment
acceptance services to merchants on behalf of acquirers. Data provided to Visa by acquiring institutions and other third parties as of
June 30, 2023.
4
•
We provide value added services to our clients, including issuing solutions, acceptance solutions, risk
and identity solutions, open banking and advisory services.
•
We invest in and promote our brand to the benefit of our clients and partners through advertising,
promotional and sponsorship initiatives with the International Olympic Committee, the International
Paralympic Committee and the National Football League (NFL), among others. We also use these
sponsorship assets to showcase our payment innovations.
FISCAL YEAR 2023 KEY STATISTICS
(1)
Please see Item 7 of this report for a reconciliation of our GAAP to non-GAAP financial results.
OUR CORE BUSINESS
In a typical Visa C2B payment transaction, the consumer purchases goods or services from a merchant
using a Visa card or payment product. The merchant presents the transaction data to an acquirer, usually a bank
or third-party processing firm that supports acceptance of Visa cards or payment products, for verification and
processing. Through VisaNet, the acquirer presents the transaction data to Visa, which in turn sends the
transaction data to the issuer to check the account holder’s account balance or credit line for authorization. After
the transaction is authorized, the issuer posts the transaction to the consumer’s account and effectively pays the
acquirer an amount equal to the value of the transaction, minus the interchange reimbursement fee. The acquirer
pays the amount of the purchase, minus the merchant discount rate (MDR), to the merchant.
Visa earns revenue by facilitating money movement across more than 200 countries and territories among a
global set of consumers, merchants, financial institutions and government entities through innovative
technologies.
5
Our net revenues in fiscal year 2023 consisted of the following:
SERVICE REVENUES
Earned for services provided in support of client usage of Visa
payment services
OTHER REVENUES
Consist mainly of value added services related to advisory,
marketing and certain card benefits; license fees for use of the
Visa brand or technology; and fees for account holder
services, certification and licensing
DATA PROCESSING REVENUES
Earned for authorization, clearing, settlement; value added
services related to issuing, acceptance, and risk and identity
solutions; network access; and other maintenance and
support services that facilitate transaction and information
processing among our clients globally
CLIENT INCENTIVES
Paid to financial institution clients, merchants and other
business partners to grow payments volume; increase Visa
product acceptance; win merchant routing transactions over to
our network; and drive innovation
INTERNATIONAL TRANSACTION REVENUES
Earned for cross-border transaction processing and currency
conversion activities
(1)
Figure may not recalculate exactly due to rounding.
Please see Item 7 and Note 1—Summary of Significant Accounting Policies included in Item 8 of this report,
which include disclosures on how we earn and recognize our revenues.
Visa provides payment processing for both non-Visa-branded and Visa-branded card transactions. In the
context of non-Visa-branded card transactions, we facilitate payment processing by providing gateway routing
services to other payment networks. At the client’s request, we may provide authorization, clearing or settlement
services on our network before or after we route the transaction to the other payments network. In those
instances, Visa may earn data processing revenues for the specific services provided. In the context of Visabranded card transactions on our network, we provide authorization, clearing and settlement services and may
earn service, data processing, international transaction, or other revenues. Depending on applicable regulations,
some payment processors may or may not use our network to process Visa-branded card transactions. If they
use our network, we may earn service revenues and data processing revenues. If they do not use our network,
we earn only service revenues.
Visa is not a financial institution. We do not issue cards, extend credit or set rates and fees for account
holders of Visa products nor do we earn revenues from, or bear credit risk with respect to, any of these activities.
6
Interchange reimbursement fees reflect the value merchants receive from accepting our products and play a key
role in balancing the costs and benefits that account holders and merchants derive from participating in our
payments networks. Generally, interchange reimbursement fees are paid by acquirers to issuers. We establish
default interchange reimbursement fees that apply absent other established settlement terms. These default
interchange reimbursement fees are set independently from the revenues we receive from issuers and acquirers.
Our acquiring clients are responsible for setting the fees they charge to merchants for the MDR and for soliciting
merchants. Visa sets fees to acquirers independently from any fees that acquirers may charge merchants.
Therefore, the fees we receive from issuers and acquirers are not derived from interchange reimbursement fees
or MDRs.
Visa’s strategy is to accelerate our revenue growth in consumer payments, new flows and value added
services, and fortify the key foundations of our business model.
We seek to accelerate revenue growth in three primary areas — consumer payments, new flows and value
added services.
Consumer Payments
We remain focused on moving trillions of dollars of consumer spending in cash and checks to cards and
digital accounts on Visa’s network of networks.
7
Core Products
Visa’s growth has been driven by the strength of our core products — credit, debit and prepaid.
Credit: Credit cards and digital credentials allow consumers and businesses to access credit to pay for
goods and services. Credit cards are affiliated with programs operated by financial institution clients,
co-brand partners, fintechs and affinity partners.
Debit: Debit cards and digital credentials allow consumers and small businesses to purchase goods and
services using funds held in their deposit accounts. Debit cards enable account holders to transact in person,
online or via mobile without needing cash or checks and without accessing a line of credit. The Visa/PLUS
Global ATM network also provides debit, credit and prepaid account holders with cash access, and other
banking capabilities, in more than 200 countries and territories worldwide through issuing and acquiring
partnerships with both financial institutions and independent ATM operators.
Prepaid: Prepaid cards and digital credentials draw from a designated balance funded by individuals,
businesses or governments. Prepaid cards address many use cases and needs, including general purpose
reloadable, payroll, government and corporate disbursements, healthcare, gift and travel. Visa-branded
prepaid cards also play an important part in financial inclusion, bringing payment solutions to those with
limited or no access to traditional banking products.
Enablers
We enable consumer payments and help our clients grow as digital commerce, new technologies and new
participants continue to transform the payments ecosystem. Some examples include:
Tap to Pay
As we seek to improve the user experience in the face-to-face environment, contactless payments or tap to
pay, which is the process of tapping a contactless card or mobile device on a terminal to make a payment, has
emerged as a preferred way to pay among consumers in many countries around the world. Tap to pay adoption is
growing and many consumers have come to expect touchless payment experiences.
Globally, we have 50 countries and territories with more than 90 percent contactless penetration and more
than 100 countries and territories where tap to pay is more than 50 percent of face-to-face transactions. Excluding
the United States, 76 percent of face-to-face transactions globally were contactless in fiscal year 2023. In the
U.S., Visa has surpassed 40 percent contactless penetration and more than 520 million tap-to-pay-enabled Visa
cards. We have activated more than 750 contactless public transport projects worldwide. In addition, we
processed more than 1.6 billion contactless transactions on global transit systems in fiscal year 2023, an increase
of more than 30 percent year over year.
Tokenization
Visa Token Service (VTS) brings trust to digital commerce innovation. As consumers increasingly rely on
digital transactions, VTS is designed to enhance the digital ecosystem through improved authorization, reduced
fraud and improved consumer experience. VTS helps protect digital transactions by replacing 16-digit Visa
account numbers with a token that includes a surrogate account number, cryptographic information and other
data to protect the underlying account information. This security technology can work for a variety of payment
transactions, both in person or online.
The provisioning of network tokens continues to accelerate. As of the end of fiscal year 2023, Visa
provisioned more than 7.5 billion network tokens, surpassing the number of physical cards in circulation. The
milestone reinforces Visa’s commitment to secure, reliable and efficient money movement, in person and online.
8
Click to Pay
Click to Pay provides a simplified and more consistent cardholder checkout experience online by removing
time-consuming key entry of personal information and enabling consumer and transaction data to be passed
securely between payments network participants. Based on the EMV® Secure Remote Commerce industry
standard, Click to Pay brings a standardized and streamlined approach to online checkout and meets the needs
of consumers shopping across a growing number of connected devices. The goal of Click to Pay is to make digital
payments as secure, reliable and interoperable as the checkout experience in person.
New Flows
New flows focus on facilitating commercial and global money movement across Visa’s network of networks.
This approach creates opportunities to capture new sources of money movement through card and non-card
flows for consumers, businesses and governments around the world by facilitating P2P, B2C, B2B and G2C
payments.
Visa Direct
Visa Direct is part of Visa’s strategy beyond C2B payments and helps facilitate the delivery of funds to
eligible cards, deposit accounts and digital wallets across more than 190 countries and territories. Visa Direct
supports multiple use cases, such as P2P payments and account-to-account transfers, business and government
payouts to individuals or small businesses, merchant settlements and refunds.
Visa Direct utilizes more than 70 domestic payment schemes, 10 real-time payments schemes, 15 cardbased networks and five payment gateways, with the potential to reach more than 8.5 billion cards, deposit
accounts and digital wallets. In fiscal year 2023, Visa Direct processed more than 7.5 billion transactions across
more than 2,800 global programs. Visa Direct solutions supported more than 500 partners across more than 65
use cases. We also announced in fiscal year 2023 Visa’s partnership with DailyPay, i2C, PayPal, TabaPay,
Venmo and Western Union to pilot Visa+, an innovative service that aims to help individuals send money quickly
and securely between different participating P2P digital payment apps.
We continue to build on our network of networks strategy by investing in our own capabilities with Visa+ and
Visa Alias Directory Service, which offers capabilities to our clients to link aliases, such as mobile numbers or
email addresses, to payment credentials, as well as strategically collaborating with digital and mobile payment
providers to expand the reach of Visa Direct and deliver even stronger domestic and cross-border payment and
connection capabilities to our clients.
Visa Commercial Solutions
We are also expanding our network with B2B payments. Our three strategic areas of focus include investing
in and growing card-based payments, accelerating our efforts in non-card, cross-border payments and digitizing
domestic accounts payable and accounts receivable processes. We offer a portfolio of commercial payment
solutions, including small business, corporate (travel) cards, purchasing cards, virtual cards and digital
credentials, non-card cross-border B2B payment options and disbursement accounts, covering most major
industry segments around the world. These solutions are designed to bring efficiency, controls and automation to
small businesses, commercial and government payment processes, ranging from employee travel to fully
integrated, invoice-based payables.
9
Visa B2B Connect is a multilateral B2B cross-border payments network designed to facilitate transactions
from the bank of origin directly to the beneficiary bank, helping streamline settlement and optimize payments for
financial institutions’ corporate clients. The network delivers B2B cross-border payments that are reliable, flexible,
data-rich, secure and cost-effective. Visa B2B Connect continues to scale and is available in more than 100
countries and territories.
Visa Cross-Border Solutions
Formerly Treasury as a Service, Visa Cross-Border Solutions aligns with our global network of networks
strategy, as we are focused on building the infrastructure that enables our clients of all sizes to deliver crossborder products with visibility, speed and security. This includes a series of solutions for our established crossborder consumer payments business, as well as use cases enabled by our digitally native Currencycloud
platform, which includes real-time foreign exchange rates, virtual accounts, and enhanced liquidity and settlement
capabilities.
Value Added Services
Value added services represent an opportunity for us to diversify our revenue with products and solutions
that differentiate our network, deepen our client relationships and deliver innovative solutions across other
networks.
Issuing Solutions
Visa DPS is one of the largest issuer processors of Visa debit transactions in the world. In addition to multinetwork transaction processing, Visa DPS also provides a wide range of value added services, including fraud
mitigation, dispute management, data analytics, campaign management, a suite of digital solutions and contact
center services. Our capabilities in API-based issuer processing solutions, like DPS Forward, allow our clients to
create new payments use cases and provide them with modular capabilities for digital payments.
We also provide a range of other services and digital solutions to issuers, such as account controls, digital
issuance, and branded consumer experiences. Additionally, Visa provides loyalty and benefits solution to issuers
aimed at creating compelling and differentiated cardholder experiences, as well as Buy Now, Pay Later (BNPL)
capabilities. BNPL or installment payments allow shoppers the flexibility to pay for a purchase in equal payments
over a defined period of time. Visa is investing in installments as a payments strategy — by offering a portfolio of
BNPL solutions for traditional clients, as well as installments providers, who use our cards and services to support
a wide variety of installment options before, during or after checkout, in person and online.
Acceptance Solutions
Visa Acceptance Solutions, which includes Cybersource, provides modular, value added services in addition
to the traditional gateway function of connecting merchants to payment processing. Using the platform, acquirers,
payment service providers, independent software vendors, and merchants of all sizes can improve the way their
consumers engage and transact; help to mitigate fraud and lower operational costs; and adapt to changing
business requirements. They can also connect with other fintechs through a global payment management
platform to use their services. Visa Acceptance Solutions’ capabilities provide new and enhanced payment
integrations with ecommerce platforms, enabling sellers and acquirers to provide tailored commerce experiences
with payments seamlessly embedded. Visa Acceptance Solutions enables an omnichannel solution with a cloudbased architecture to deliver more innovation at the point of sale.
10
In addition, Visa provides secure, reliable services for merchants and acquirers that reduce friction and drive
acceptance. Examples include Global Urban Mobility, which supports transit operators to accept Visa contactless
payments in addition to closed-loop payment solutions; and Visa Account Updater, which provides updated
account information for merchants to help strengthen customer relationships and retention. Visa also offers
dispute management services, including a network-agnostic solution from Verifi that enables merchants to
prevent and resolve disputes with a single connection.
Risk and Identity Solutions
Visa’s risk and identity solutions transform data into insights for near real-time decisions and facilitate
account holder authentication to help clients prevent fraud and protect account holder data. With the increasing
popularity of omnichannel commerce and digital payments among consumers, fraud prevention helps increase
trust in digital payments. Solutions such as Visa Advanced Authorization, Visa Secure, Visa Risk Manager and
Decision Manager, Visa Consumer Authentication Service, and payment-decisioning solutions from
CardinalCommerce empower financial institutions and merchants with tools that help automate and simplify fraud
prevention and enhance payment security.
Aligned to our network of networks strategy, Visa is increasingly bringing our expertise and capabilities to
emerging fraud challenges, working with network operators and financial institutions to help mitigate fraud. These
value-added fraud prevention tools layer on top of a suite of our network programs that protect the safety and
integrity of the payment ecosystem, and along with our investments in intelligence and technology, help to
prevent, detect and mitigate threats. These programs and Visa’s fraud prevention expertise are among the core
benefits of being part of the Visa network. Through the combined efforts of security and identity tools and
services, payment and cyber intelligence, insights and learnings from client or partner breach investigations, and
law enforcement engagement, Visa helps protect financial institutions and merchants from fraud and solve
payment security challenges.
Open Banking
In March 2022, Visa acquired Tink AB, an open banking platform, to catalyze fintech innovation and
accelerate the development and adoption of open banking securely and at scale. Visa’s open banking capabilities
range from data access use cases, such as account verification, balance check and personal finance
management, to payment initiation capabilities, such as account-to-account transactions and merchant payments.
These capabilities can help our partner businesses deliver valuable services to their customers.
Advisory Services
Visa Consulting and Analytics (VCA) is the payments consulting advisory arm of Visa. The combination of
our deep payments expertise, proprietary analytical models applied to a breadth of data and our economic
intelligence allows us to identify actionable insights, make recommendations and help implement solutions that
can drive better business decisions and measurable outcomes for clients. VCA offers consulting services for
issuers, acquirers, merchants, fintechs and other partners, spanning the entire customer journey from acquisition
to retention. Further, VCA Managed Services, our dedicated execution arm within the consulting division, is being
increasingly utilized by clients to implement our recommendations and wider value added services product
enablement.
11
We are fortifying the key foundations of our business model, which consist of becoming a network of
networks, our technology platforms, security, brand and talent.
Network of Networks
Our network of networks strategy means moving money to all endpoints and to all form factors, using all
available networks and being a single connection point for our partners; and providing our value added services
on all transactions, no matter the network. The key component of our network of networks strategy is
interoperability. We are opening up our network and increasingly using other networks to reach accounts we could
not otherwise reach and enabling new types of money movement. Visa B2B Connect, Visa Direct, and Visa+ are
examples of our strategy.
Technology Platforms
Visa’s
leading
technology
platforms
comprise
software,
hardware,
data
centers
and
a large telecommunications infrastructure. Visa’s four data centers are a critical part of our global processing
environment and have a high redundancy of network connectivity, power and cooling designed to provide
continuous availability of systems. Together, these systems deliver the secure, convenient and reliable service
that our clients and consumers expect from the Visa brand.
Security
Our in-depth, multi-layer security approach includes a formal program to devalue sensitive and/or personal
data through various cryptographic means; embedded security in the software development lifecycle; identity and
access management controls to protect against unauthorized access; and advanced cyber detection and
response capabilities. We deploy security tools that help keep our clients and consumers safe. We also invest
significantly in our comprehensive approach to cybersecurity. We deploy security technologies to protect data
confidentiality, the integrity of our network and service availability to strengthen our core cybersecurity capabilities
to minimize risk. Our payments fraud disruption team continually monitors threats to the payments ecosystem to
help ensure attacks are detected and prevented efficiently and effectively.
Brand
Visa’s strong brand helps deliver added value to our clients and their customers, financial institutions,
merchants and partners through compelling brand expressions, a wide range of products and services as well as
innovative brand and marketing efforts. In line with our commitment to an expansive and diverse range of
partnerships for the benefit of our stakeholders, Visa is a sponsor of top entertainment and sports events
including the FIFA Women’s World Cup 2023TM, the Olympic and Paralympic Games, and the Super Bowl.
Talent
Attracting, developing and advancing the best talent globally is critical to our continued success. This year
we grew our total workforce from approximately 26,500 in fiscal year 2022 to approximately 28,800 employees in
fiscal year 2023, an increase of 9 percent year over year. Voluntary workforce turnover (rolling 12-month attrition)
was 6 percent as of September 30, 2023. Visa employees are located in more than 80 countries and territories,
12
with 55 percent located outside the U.S. At the end of fiscal year 2023, Visa’s global workforce was 58 percent
men and 42 percent women, and women represented 36 percent of Visa’s leadership (defined as vice president
level and above). In the U.S., ethnicity of our workforce was 42 percent Asian, 8 percent Black, 13 percent
Hispanic, 3 percent Other and 35 percent White. For our U.S. leadership, the breakdown was 18 percent Asian,
6 percent Black, 13 percent Hispanic, 3 percent Other and 60 percent White.
Given Visa’s ambitious growth agenda and efforts to achieve our purpose, we have focused on enhancing
our employees’ expertise across our business. This includes an enhanced development program for our senior
leaders and a formal technology apprenticeship program to help us broaden and strengthen our talent channels
and pipelines. We have also committed to providing employees with the tools they need to do their work more
quickly and easily, including an artificial intelligence or AI-driven portal with a searchable knowledge base to
create customized results and bespoke solutions. We enhanced our mental well-being and retirement benefits,
which is reflective of our key priority to take care of our employees.
We also are dedicated to ensuring that employees feel valued in their day-to-day work. During our global
employee engagement survey last year, we learned that our employees wanted more opportunities to recognize
and be recognized, in more informal ways. In response, Visa developed a program that better enabled employees
to provide peer-to-peer recognition for each other’s contributions. Using UPLIFT, Visa’s new recognition platform,
employees can celebrate their peers’ achievements, send e-cards to celebrate the employee journey (from
welcoming new hires to recognizing service anniversaries), use an automated internal networking tool that
matches employees based on smart algorithms, and more. Importantly, all our recognition categories are
grounded in behaviors that reflect our employee value proposition or Visa’s Leadership Principles — further
reinforcing that at Visa, it is not only about what you achieve, but how you do it. Employee engagement in peer
recognition has significantly increased since the launch, with monthly active users reaching 78 percent in
September 2023, compared to 45 percent in September 2022. With this enhanced platform, employees are
encouraged to recognize and uplift each other.
Visa is committed to pay equity, regardless of gender or race/ethnicity, and conducts pay equity analyses on
an annual basis. We are also committed to transparency – this year, we launched total rewards statements in the
United Kingdom in addition to those already provided in Asia, to drive a deeper understanding and appreciation of
total rewards value to the individual. We plan to introduce statements in the U.S. as well. For additional
information regarding our human capital management, please see the section titled “Talent and Human Capital
Management” in Visa’s 2023 Proxy Statement as well as our website at visa.com/esg, which includes enhanced
workforce disclosures that include our 2022 Consolidated EEO-1 Report and our 2022 Environmental, Social and
Governance (ESG) Report. See Available Information below.
FINTECH AND DIGITAL PARTNERSHIPS
Fintechs are a vital growth engine for Visa and a key driver in realizing our purpose — to uplift everyone,
everywhere by being the best way to pay and be paid. Fintechs are key enablers of new payment experiences
and new flows. Our work with fintechs is one of our greatest opportunities and has opened new points of
acceptance, extended credit at the point of sale, made cross-border money flows more efficient, moved B2B
spend onto Visa’s network, expedited payroll and provided digital wallet customers access to our services. Our
portfolio of fintech partners is diverse and continues to grow and scale. We signed more than 500 commercial
partnerships with fintechs globally, from early stage companies to growing and mature players, an increase of
25 percent year over year.
To better serve fintechs, Visa has a suite of streamlined commercial programs and digital onboarding tools.
Fintech Fast Track, our flagship program for fintechs is designed to help launch new financial features quickly,
such as launching a new card program or enabling the movement of money with Visa Direct. We provide
streamlined onboarding and turnkey access to hundreds of ecosystem partners. The program has welcomed
hundreds of fintechs who are actively engaged in the program.
13
Visa Ready, our certification program, helps technology companies build and launch payment solutions that
meet Visa’s global standards around security and functionality. Fintech Partner Connect helps build pathways
between Visa’s issuing clients and fintech providers. With our startup engagement programs, like the Visa
Everywhere Initiative that launched in 2022, early-stage companies can build payment solutions based on our
capabilities. Visa also manages programs including She’s Next, Empowered by Visa, a global women’s
entrepreneurship initiative, and Africa Fintech Accelerator Program to uplift underrepresented communities.
MERGERS AND ACQUISITIONS, JOINT VENTURES AND STRATEGIC INVESTMENTS
Visa continually explores opportunities to augment our capabilities and provide meaningful value to our
clients. Mergers and acquisitions, joint ventures and strategic investments complement our internal development
and enhance our partnerships to align with Visa’s priorities. Visa applies a rigorous business analysis to our
acquisitions, joint ventures and investments to ensure they will differentiate our network, provide value added
services and accelerate growth.
In fiscal year 2023, we signed a definitive agreement to acquire Pismo, a cloud-native issuer processing and
core banking platform with operations in Latin America, Asia Pacific and Europe. The transaction is subject to
customary closing conditions, including applicable regulatory reviews and approvals.
CORPORATE RESPONSIBILITY AND SUSTAINABILITY
Visa is committed to operating as a responsible, ethical, inclusive and sustainable company. As one of the
global leaders in digital payments, Visa strives to join with clients, partners and other stakeholders to empower
people, businesses and communities to thrive, to be an industry leader in addressing the corporate responsibility
and sustainability (CRS) topics most significant to our role as a payments technology company, and to meet and
exceed our expectations for performance and transparency. Visa’s purpose is to uplift everyone, everywhere by
being the best way to pay and be paid. We believe deeply in our purpose, and we are focused on empowering
people and economies; securing commerce and protecting customers; investing in our workforce; protecting the
planet; and operating responsibly. Our 2022 ESG Report, as well as other CRS-related resources are available on
our website at visa.com/esg. See Available Information below.
INTELLECTUAL PROPERTY
We own and manage the Visa brand, which stands for acceptance, security, convenience, speed and
reliability. Our portfolio of Visa-owned trademarks is important to our business. Generally, trademark registrations
are valid indefinitely as long as they are in use and/or maintained. We give our clients access to these assets
through agreements with our issuers and acquirers, which authorize the use of our trademarks in connection with
their participation in our payments network. Additionally, we own a number of patents and patent applications
related to our business and continue to pursue patents in emerging technologies that may have applications in
our business. We rely on a combination of patent, trademark, copyright and trade secret laws in the U.S. and
other jurisdictions, as well as confidentiality procedures and contractual provisions, to protect our proprietary
technology.
COMPETITION
The global payments industry continues to undergo dynamic change. Existing and emerging competitors
compete with Visa’s network and payment solutions for consumers and for participation by financial institutions
and merchants. Technology and innovation are shifting consumer habits and driving growth opportunities in
ecommerce, mobile payments, blockchain technology and digital currencies. These advances are enabling new
entrants, many of which depart from traditional network payment models. In certain countries, the evolving
regulatory landscape is creating local networks or enabling additional processing competition.
14
We compete against all forms of payment. This includes paper-based payments, primarily cash and checks,
and all forms of electronic payments. Our electronic payment competitors principally include:
Global or Multi-Regional Networks: These networks typically offer a range of branded, general purpose
card payment products that consumers can use at millions of merchant locations around the world. Examples
include American Express, Discover, JCB, Mastercard and UnionPay. These competitors may be more
concentrated in specific geographic regions, such as Discover in the U.S. and JCB in Japan, or have a leading
position in certain countries, such as UnionPay in China. See Item 1A—Regulatory Risks—Government-imposed
obligations and/or restrictions on international payments systems may prevent us from competing against
providers in certain countries, including significant markets such as China and India. Based on available data,
Visa is one of the largest retail electronic funds transfer networks used throughout the world.
The following chart compares our network with these network competitors for calendar year 2022(1):
Visa
Payments Volume ($B) . . . . . . . .
Total Volume ($B)(2) . . . . . . . . . . .
Total Transactions (B) . . . . . . . . .
Cards (M) . . . . . . . . . . . . . . . . . . .
(1)
(2)
American Express
11,668
14,108
260
4,160
1,540
1,553
10
133
Diners Club /
Discover
243
258
4
80
JCB
Mastercard
312
320
6
153
6,568
8,177
150
2,713
American Express, Diners Club / Discover, JCB and Mastercard data sourced from The Nilson Report issue 1241 (May 2023). Includes all
consumer, small business and commercial credit, debit and prepaid cards. American Express, Diners Club / Discover, and JCB include
business from third-party issuers. JCB figures include other payment-related products and some figures are estimates. Mastercard
excludes Maestro and Cirrus figures.
Total volume is the sum of payments volume and cash volume. Cash volume generally consists of cash access transactions, balance
access transactions, balance transfers and convenience checks.
Local and Regional Networks: Operated in many countries, these networks often have the support of
government influence or mandate. In some cases, they are owned by financial institutions or payment processors.
These networks typically focus on debit payment products, and may have strong local acceptance, and
recognizable brands. Examples include NYCE, Pulse and STAR in the U.S., Interac in Canada and eftpos in
Australia.
Alternative Payments Providers: These providers, such as closed commerce ecosystems, BNPL solutions
and cryptocurrency platforms, often have a primary focus of enabling payments through ecommerce and mobile
channels; however, they are expanding or may expand their offerings to the physical point of sale. These
companies may process payments using in-house account transfers between parties, electronic funds transfer
networks like the ACH, global or local networks like Visa, or some combination of the foregoing. In some cases,
these entities can be both a partner and a competitor to Visa.
Real-time Payment (RTP) Networks: RTP networks have launched in multiple markets and continue to be
driven by strong government sponsorship and regulatory initiatives to enable and drive adoption (e.g., FedNow in
the U.S., PIX in Brazil and United Payments Interface (UPI) in India), increasing their position as an alternative to
payment card schemes. These networks primarily focus on domestic transactions, with adoption varying by use
cases and geographies. However, with linkages such as PayNow in Singapore and UPI in India, cross-border
RTP networks are advancing and will compete with our cross-border business. RTP networks can compete with
Visa on consumer payments and other payment flows (e.g., B2B and P2P) but can also be customers for value
added services, such as risk management.
Digital Wallet Providers: They continue to expand payment capabilities in person and online for consumers
and merchants and provide consumers with additional ways to pay. While digital wallets can help drive Visa
volumes, they can also be funded by non-card payment options. Digital wallet providers who utilize RTP networks
provide additional competition.
15
Payment Processors: Payment processors may perform processing services on third-party payments
networks on behalf of issuers or acquirers. We compete with payment processors for the processing of Visa
transactions. These processors may benefit from mandates requiring them to handle processing under local
regulation. For example, as a result of regulation in Europe under the Interchange Fee Regulation (IFR), we may
face competition from other networks, processors and other third parties who could process Visa transactions
directly with issuers and acquirers.
New Flows Providers: We compete with alternative solutions to our new flows (e.g., Visa Direct and Visa
B2B Connect) such as ACH, RTP and wires. We compete with other global and local card networks for
commercial card portfolios. Additionally, we may face competition from financial institution clients who are
experimenting with B2B blockchain payments.
Value Added Service Providers: We face competition from companies that provide alternatives to our
value added services. This includes a wide range of players, such as technology companies, information services
and consulting firms, governments and merchant services companies. The integration of technology like
generative AI can create new and better offerings that compete with our value added services, such as
strengthened risk monitorization and managing digital identification. Regulatory initiatives could also lead to
increased competition in these areas.
We believe our fundamental value proposition of security, convenience, speed and reliability as well as the
number of credentials and our acceptance footprint help us to succeed. In addition, we understand the needs of
the individual markets in which we operate and partner with local financial institutions, merchants, fintechs,
governments, NGOs and business organizations to provide tailored and innovative solutions. We will continue to
utilize our network of networks strategy to facilitate the movement of money. We believe Visa is well-positioned
competitively due to our global brand, our broad set of payment products, new flows offerings and value added
services, and our proven track record of processing payment transactions securely and reliably.
GOVERNMENT REGULATION
As a global payments technology company, we are subject to complex and evolving global regulations in the
various jurisdictions in which our products and services are used. The most significant government regulations
that impact our business are discussed below. For further discussion of how global regulations may impact our
business, see Item 1A-Regulatory Risks.
Anti-Corruption, Anti-Money Laundering, Anti-Terrorism and Sanctions: We are subject to anticorruption laws and regulations, including the U.S. Foreign Corrupt Practices Act (FCPA), the UK Bribery Act and
other laws that generally prohibit the making or offering of improper payments to foreign government officials and
political figures for the purpose of obtaining or retaining business or to gain an unfair business advantage. We are
also subject to anti-money laundering and anti-terrorist financing laws and regulations, including the U.S. Bank
Secrecy Act. In addition, we are subject to economic and trade sanctions programs administered by the Office of
Foreign Assets Control (OFAC) in the U.S. Therefore, we do not permit financial institutions or other entities that
are domiciled in countries or territories subject to comprehensive OFAC trade sanctions (currently, Cuba, Iran,
North Korea, Syria, Crimea, and the Donetsk People’s Republic and Luhansk People’s Republic regions of
Ukraine), or that are included on OFAC’s list of Specially Designated Nationals and Blocked Persons, to issue or
acquire Visa cards or engage in transactions using our products and services.
Government-Imposed Market Participation Restrictions: Certain governments, including China, India,
Indonesia, Thailand and Vietnam, have taken actions to promote domestic payments systems and/or certain
issuers, payments networks or processors, by imposing regulations that favor domestic providers, impose local
ownership requirements on processors, require data localization or mandate that domestic processing be done in
that country.
Interchange Rates and Fees: An increasing number of jurisdictions around the world regulate or influence
debit and credit interchange reimbursement rates in their regions. For example, the U.S. Dodd-Frank Wall Street
16
Reform and Consumer Act (Dodd-Frank Act) limits interchange reimbursement rates for certain debit card
transactions in the U.S.; the European Union (EU) IFR limits interchange rates in the European Economic Area
(EEA) (as discussed below); and the Reserve Bank of Australia (RBA) and the Central Bank of Brazil regulate
average permissible levels of interchange.
Internet Transactions: Many jurisdictions have adopted regulations that require payments system
participants to monitor, identify, filter, restrict or take other actions with regard to certain types of payment
transactions on the Internet, such as gambling, digital currencies, the purchase of cigarettes or alcohol and other
controversial transaction types.
Network Exclusivity and Routing: In the U.S., the Dodd-Frank Act limits network exclusivity and
restrictions on merchant routing choice for the debit and prepaid market segments. Other jurisdictions impose
similar limitations, such as the IFR’s prohibition in Europe on restrictions that prevent multiple payment brands or
functionality on the same card.
No-surcharge Rules: We have historically enforced rules that prohibit merchants from charging higher
prices to consumers who pay using Visa products instead of other means. However, merchants’ ability to
surcharge varies by geographic market as well as Visa product type, and continues to be impacted by litigation,
regulation and legislation.
Privacy and Data Protection: Aspects of our operations or business are subject to privacy, data use and
data security regulations, which impact the way we use and handle data, operate our products and services and
even impact our ability to offer a product or service. In addition, regulators are proposing new laws or regulations
that could require Visa to adopt certain cybersecurity and data-handling practices, create new individual privacy
rights and impose increased obligations on companies handling personal data.
Supervisory Oversight of the Payments Industry: Visa is subject to financial sector oversight and
regulation in substantially all of the jurisdictions in which we operate. In the U.S., for example, the Federal
Banking Agencies (FBA) (formerly known as the Federal Financial Institutions Examination Council) has
supervisory oversight over Visa under applicable federal banking laws and policies as a technology service
provider to U.S. financial institutions. The federal banking agencies comprising the FBA are the Federal Reserve
Board, the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the National Credit Union
Administration. Visa also may be separately examined by the Consumer Financial Protection Bureau as a service
provider to the banks that issue Visa-branded consumer credit and debit card products. Central banks in other
countries/regions, including Canada, Europe, India, Ukraine and the UK (as discussed below), have recognized or
designated Visa as a retail payment system under various types of financial stability regulations. Visa is also
subject to oversight by banking and financial sector authorities in other jurisdictions, such as Brazil and Hong
Kong.
European and United Kingdom Regulations and Supervisory Oversight: Visa in Europe continues to be
subject to complex and evolving regulation in the EEA and the UK.
There are a number of EU regulations that impact our business. As discussed above, the IFR regulates
interchange rates within the EEA, requires Visa Europe to separate its payment card scheme activities from
processing activities for accounting, organization and decision-making purposes within the EEA, and imposes
limitations on network exclusivity and routing. National competent authorities in the EEA are responsible for
monitoring and enforcing the IFR in their markets. We are also subject to regulations governing areas such as
privacy and data protection, anti-bribery, anti-money laundering, anti-terrorism and sanctions. Other regulations in
Europe, such as the second Payment Services Directive (PSD2), require, among other things, that our financial
institution clients provide certain customer account access rights to emerging non-financial institution players.
PSD2 also includes strong customer authentication requirements for certain transactions that could impose both
operational complexity on Visa and impact consumer payment experiences. Visa Europe is also subject to
supervisory oversight by the European Central Bank and certain competent authorities in Europe.
17
In the UK, Visa Europe is designated as a Recognized Payment System, bringing it within the scope of the
Bank of England’s supervisory powers and subjecting it to various requirements, including on issues such as
governance and risk management designed to maintain the stability of the UK’s financial system. Visa Europe is
also regulated by the UK’s Payment Systems Regulator (PSR), which has wide-ranging powers and authority to
review our business practices, systems, rules and fees with respect to promoting competition and innovation in
the UK, and ensuring payment systems take care of, and promote, the interests of service-users. Post-Brexit, the
UK has adopted various European regulations, including regulations that impact the payments ecosystem, such
as the IFR and PSD2. The PSR is responsible for monitoring Visa Europe’s compliance with the IFR as adopted
in the UK.
Corporate Responsibility and Sustainability: Certain governments around the world are adopting laws
and regulations pertaining to corporate responsibility and sustainability performance, transparency and reporting.
Regulations may include mandated corporate reporting (e.g., Corporate Sustainability Reporting Directive) or in
individual areas, such as mandated reporting on climate-related financial disclosures.
Additional Regulatory Developments: Various regulatory agencies across the world also continue to
examine a wide variety of other issues, including mobile payment transactions, tokenization, access rights for
non-financial institutions, money transfer services, identity theft, account management guidelines, disclosure
rules, security and marketing that could affect our financial institution clients and our business. Furthermore,
following the passage of PSD2 in Europe, several countries, including Australia, Brazil, Canada, Hong Kong and
Mexico, are contemplating granting or have already granted various types of access rights to third-party
processors, including access to consumer account data maintained by our financial institution clients. These
changes could have negative implications for our business depending on how the regulations are framed and
implemented.
AVAILABLE INFORMATION
Our corporate website is visa.com/ourbusiness. Our annual reports on Form 10-K, our quarterly reports on
Form 10-Q, our current reports on Form 8-K, proxy statements and any amendments to those reports filed or
furnished pursuant to the U.S. Securities Exchange Act of 1934, as amended, can be viewed at sec.gov and our
investor relations website at investor.visa.com as soon as reasonably practicable after these materials are
electronically filed with or furnished to the U.S. Securities and Exchange Commission (SEC). In addition, we
routinely post financial and other information, which could be deemed to be material to investors, on our investor
relations website. Information regarding our corporate responsibility and sustainability initiatives is also available
on our website at visa.com/esg. The content of any of our websites referred to in this report is not incorporated by
reference into this report or any other filings with the SEC.
ITEM 1A. Risk Factors
Regulatory Risks
We are subject to complex and evolving global regulations that could harm our business and financial
results.
As a global payments technology company, we are subject to complex and evolving regulations that govern
our operations. See Item 1—Government Regulation for more information on the most significant areas of
regulation that affect our business. The impact of these regulations on us, our clients, and other third parties could
limit our ability to enforce our payments system rules; require us to adopt new rules or change existing rules;
affect our existing contractual arrangements; increase our compliance costs; and require us to make our
technology or intellectual property available to third parties, including competitors, in an undesirable manner. As
discussed in more detail below, we may face differing rules and regulations in matters like interchange
reimbursement rates, preferred routing, domestic processing and localization requirements, currency conversion,
point-of-sale transaction rules and practices, privacy, data use or protection, licensing requirements, and
associated product technology. As a result, the Visa operating rules and our other contractual commitments may
18
differ from country to country or by product offering. Complying with these and other regulations increases our
costs and reduces our revenue opportunities.
If widely varying regulations come into existence worldwide, we may have difficulty rapidly adjusting our
product offerings, services, fees and other important aspects of our business to comply with the regulations. Our
compliance programs and policies are designed to support our compliance with a wide array of regulations and
laws, such as regulations regarding anti-money laundering, anti-corruption, competition, money transfer services,
privacy and sanctions, and we continually adjust our compliance programs as regulations evolve. However, we
cannot guarantee that our practices will be deemed compliant by all applicable regulatory authorities. In the event
our controls should fail or we are found to be out of compliance for other reasons, we could be subject to
monetary damages, civil and criminal penalties, litigation, investigations and proceedings, and damage to our
global brands and reputation. Furthermore, the evolving and increased regulatory focus on the payments industry
could negatively impact or reduce the number of Visa products our clients issue, the volume of payments we
process, our revenues, our brands, our competitive positioning, our ability to use our intellectual property to
differentiate our products and services, the quality and types of products and services we offer, the countries in
which our products are used, and the types of consumers and merchants who can obtain or accept our products,
all of which could harm our business and financial results.
Increased scrutiny and regulation of the global payments industry, including with respect to interchange
reimbursement fees, merchant discount rates, operating rules, risk management protocols and other
related practices, could harm our business.
Regulators around the world have been establishing or increasing their authority to regulate various aspects
of the payments industry. See Item 1—Government Regulation for more information. In the U.S. and many other
jurisdictions, we have historically set default interchange reimbursement fees. Even though we generally do not
receive any revenue related to interchange reimbursement fees in a payment transaction (in the context of credit
and debit transactions, those fees are paid by the acquirers to the issuers; the reverse is true for certain
transactions like ATM), interchange reimbursement fees are a factor on which we compete with other payments
providers and are therefore an important determinant of the volume of transactions we process. Consequently,
changes to these fees, whether voluntarily or by mandate, can substantially affect our overall payments volumes
and revenues.
Interchange reimbursement fees, certain operating rules and related practices continue to be subject to
increased government regulation globally, and regulatory authorities and central banks in a number of jurisdictions
have reviewed or are reviewing these fees, rules and practices. For example:
•
Regulations adopted by the U.S. Federal Reserve cap the maximum U.S. debit interchange
reimbursement rate received by large financial institutions at 21 cents plus 5 basis points per transaction,
plus a possible fraud adjustment of 1 cent. Additionally, the Dodd-Frank Act limits issuers’ and our ability
to adopt network exclusivity and preferred routing in the debit and prepaid area, which also impacts our
business. In response to merchant requests, the Federal Reserve has recently taken actions to revisit its
regulations that implement these aspects of the Dodd-Frank Act. For example, in October 2022, the
Federal Reserve published a final rule effectively requiring issuers to ensure that at least two unaffiliated
networks are available for routing card not present debit transactions by July 1, 2023. In October 2023,
the Federal Reserve issued a proposal for comment which would further lower debit interchange rates,
with a mechanism for automatic adjustment every two years. Separately, there continues to be interest in
regulation of credit interchange fees and routing practices by members of Congress and state legislators
in the U.S. In June 2023, legislation was reintroduced in the U.S. House of Representatives and Senate,
which among other things, would require large issuing banks to offer a choice of at least two unaffiliated
networks over which electronic credit transactions may be processed. Similar legislation was introduced
in the previous Congress in 2022 but failed to advance and become law. The current legislation has
additional bipartisan support, and while the ultimate outcome of the legislation remains unclear, its
sponsors continue to strongly advocate for its passage.
19
•
In Europe, the EU’s IFR places an effective cap on consumer credit and consumer debit interchange fees
for both domestic and cross-border transactions within the EEA (30 basis points and 20 basis points,
respectively). EU member states have the ability to further reduce these interchange levels within their
territories. The European Commission has announced its intention to conduct another impact assessment
of the IFR, which could result in even lower caps on interchange rates and the expansion of regulation to
other types of products, services and fees.
•
Several countries in Latin America continue to explore regulatory measures against payments networks
and have either adopted or are exploring interchange caps, including Argentina, Brazil, Chile and Costa
Rica. In Asia Pacific, the Reserve Bank of Australia (RBA) completed its review of the country’s payment
system regulations and adopted a series of measures, which include lower interchange rates for debit
transactions. The RBA also continues to assess the potential merits of mandating co-badging and
merchant routing choice on dual network debit cards. In addition, the New Zealand Parliament passed
legislation capping domestic interchange rates for debit and credit products. Finally, many governments,
including but not limited to governments in India, Costa Rica, and Turkey, are using regulation to further
drive down MDR, which could negatively affect the economics of our transactions.
•
While the focus of interchange and MDR regulation has primarily been on domestic rates historically,
there is increasing focus on cross-border rates in recent years. For example, in 2019, we settled certain
cross-border interchange rates with the European Commission. In 2020, Costa Rica became the first
country to formally regulate cross-border interchange rates by direct regulation. Cross-border MDR is also
regulated in Costa Rica and Turkey. Finally, in June 2022, the UK’s PSR initiated two market reviews:
one focusing on post-Brexit increases in interchange rates for transactions between the UK and Europe,
and another focusing on increases in the UK in what are referred to as scheme and processing fees.
•
As referenced above, with increased lobbying by merchants and other industry participants, we are also
beginning to see regulatory interest in network fees in the UK, Europe and Chile. In addition, industry
participants in some countries like Argentina, Chile, Colombia, Dominican Republic, Paraguay, Peru and
South Africa have sought intervention from competition regulators or filed claims relating to certain
network rules, including Visa’s restrictions on cross-border acquiring. Other countries, like New Zealand,
are adopting regulations that require us to seek government pre-approval of our network rules, which
could also impact the way we operate in certain markets.
•
Government regulations or pressure may also impact our rules and practices and require us to allow
other payments networks to support Visa products or services, to have the other network’s functionality or
brand marks on our products, or to share our intellectual property with other networks. As innovations in
payment technology have enabled us to expand into new products and services, they have also
expanded the potential scope of regulatory influence. For instance, new products and capabilities,
including tokenization, push payments, and new flows (e.g., Visa B2B Connect) could bring increased
licensing or authorization requirements in the countries where the product or capability is offered.
Furthermore, certain of our businesses are regulated as payment institutions or as money transmitters,
subjecting us to various licensing, supervisory, and other requirements. In addition, the EU’s requirement
to separate scheme and processing adds costs and impacts the execution of our commercial, innovation
and product strategies.
Regulators around the world increasingly take note of each other’s approaches to regulating the payments
industry. Consequently, a development in one jurisdiction may influence regulatory approaches in another. The
risks created by a new law, regulation or regulatory outcome in one jurisdiction have the potential to be replicated
and to negatively affect our business in another jurisdiction or in other product offerings. For example, our
settlement with the European Commission on cross-border interchange rates has drawn preliminary attention
from some regulators in other parts of the world. Similarly, new regulations involving one product offering may
prompt regulators to extend the regulations to other product offerings. For example, credit payments could
become subject to similar regulation as debit payments (or vice versa). The RBA initially capped credit
interchange, but subsequently capped debit interchange as well.
20
When we cannot set default interchange reimbursement rates at optimal levels, issuers and acquirers may
find our payments system less attractive. This may increase the attractiveness of other payments systems, such
as our competitors’ closed-loop payments systems with direct connections to both merchants and consumers. We
believe some issuers may react to such regulations by charging new or higher fees, or reducing certain benefits to
consumers, which make our products less appealing to consumers. Some acquirers may elect to charge higher
MDR regardless of the Visa interchange reimbursement rate, causing merchants not to accept our products or to
steer customers to alternative payments systems or forms of payment. In addition, in an effort to reduce the
expense of their payment programs, some issuers and acquirers have obtained, and may continue to obtain,
incentives from us, including reductions in the fees that we charge, which directly impacts our revenues.
In addition, we are also subject to central bank oversight in a growing number of countries, including Brazil,
India, the UK and within the EU. Some countries with existing oversight frameworks are looking to further
enhance their regulatory powers while regulators in other jurisdictions are considering or adopting approaches
based on these regulatory principles. This oversight could result in new governance, reporting, licensing,
cybersecurity, processing infrastructure, capital, or credit risk management requirements. We could also be
required to adopt policies and practices designed to mitigate settlement and liquidity risks, including increased
requirements to maintain sufficient levels of capital and financial resources locally, as well as localized risk
management or governance. Increased oversight could also include new criteria for member participation and
merchant access to our payments system.
Finally, policymakers and regulatory bodies in the U.S., Europe, and other parts of the world are exploring
ways to reform existing competition laws to meet the needs of the digital economy, including restricting large
technology companies from engaging in mergers and acquisitions, requiring them to interoperate with potential
competitors, and prohibiting certain kinds of self-preferencing behaviors. While the focus of these efforts remains
primarily on increasing regulation of large technology, e-commerce and social media companies, they could also
have implications for other types of companies including payments networks, which could constrain our ability to
effectively manage our business or potentially limit how we make our products and services available.
Government-imposed obligations and/or restrictions on international payments systems may prevent us
from competing against providers in certain countries, including significant markets such as China and
India.
Governments in a number of jurisdictions shield domestic payments providers, including card networks,
brands, and processors, from international competition by imposing market access barriers and preferential
domestic regulations. To varying degrees, these policies and regulations affect the terms of competition in the
marketplace and impair the ability of international payments networks to compete. Public authorities may also
impose regulatory requirements that favor domestic providers or mandate that domestic payments or data
processing be performed entirely within that country, which could prevent us from managing the end-to-end
processing of certain transactions.
In China, UnionPay remains the predominant processor of domestic payment card transactions and operates
the predominant domestic acceptance mark. Although we filed an application with the People’s Bank of China
(PBOC) in May 2020 to operate a Bank Card Clearing Institution (BCCI) in China, the timing and the procedural
steps for approval remain uncertain. There is no guarantee that the license to operate a BCCI will be approved or,
if we obtain such license, that we will be able to successfully compete with domestic payments networks.
Co-badging and co-residency regulations also pose additional challenges in markets where Visa competes with
national networks for issuance and routing. Certain banks have issued dual-branded cards for which domestic
transactions in China are processed by UnionPay and transactions outside of China are processed by Visa or
other international payments networks. The PBOC is contemplating that dual-branded cards be phased out over
time as new licenses are issued to international companies to participate in China’s domestic payments market.
Accordingly, we have been working with Chinese issuers to issue Visa-only branded cards for international travel,
and later for domestic transactions should we obtain a BCCI license. However, notwithstanding such efforts, the
phase out of dual-branded cards have decreased our payment volumes and impacted the revenue we generate in
China.
21
UnionPay has grown rapidly in China and is actively pursuing international expansion plans, which could
potentially lead to regulatory pressures on our international routing rule (which requires that international
transactions on Visa cards be routed over VisaNet). Furthermore, although regulatory barriers shield UnionPay
from competition in China, alternative payments providers such as Alipay and WeChat Pay have rapidly expanded
into ecommerce, offline, and cross-border payments, which could make it difficult for us to compete even if our
license is approved in China. NetsUnion Clearing Corp, a Chinese digital transaction routing system, and other
such systems could have a competitive advantage in comparison with international payments networks.
Regulatory initiatives in India, including a data localization mandate passed by the government that suggest
growing nationalistic priorities, has cost implications for us and could affect our ability to effectively compete with
domestic payments providers. Furthermore, any inability to meet the requirements of the data localization
mandate could impact our ability to do business in India. In Europe, with the support of the European Central
Bank, a group of European banks have announced their intent to launch a pan-European payment system, the
European Payments Initiative (EPI). While EPI subsequently announced a focus on account-to-account instant
payments across a range of use cases, it is noteworthy that the purported motivation behind EPI is to reduce the
risks of disintermediation of European providers by international technology companies and continued reliance on
international payments networks for intra-Europe card transactions. Furthermore, regional groups of countries,
such as the Gulf Cooperation Council (GCC) and a number of countries in Southeast Asia (e.g., Malaysia), have
adopted or may consider, efforts to restrict our participation in the processing of regional transactions. The African
Development Bank has also indicated an interest in supporting national payment systems in its efforts to expand
financial inclusion and strengthen regional financial stability. Finally, some countries such as South Africa are
mandating on-shore processing of domestic transactions. Geopolitical events, including sanctions, trade tensions
or other types of activities have intensified any or all of these activities, which could adversely affect our business.
For example, in the aftermath of U.S. and European sanctions against Russia and the decision by U.S. payments
networks, including Visa to suspend operations in the country, some countries have expressed concerns about
their reliance on U.S. financial services companies, including payments networks, and have taken steps to bolster
the development of domestic solutions. Separately, Russia has called for the BRICS countries (a five-country bloc
made up of Brazil, Russia, India, China and South Africa, and which recently extended invitations to Argentina,
Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates), to lessen dependence on Western payments
systems by, among other things, integrating payments systems and cards across member countries.
Central banks in a number of countries, including those in Argentina, Australia, Canada, Brazil, Europe and
Mexico, are in the process of developing or expanding national RTP networks and instant payment solutions with
the goal of driving a greater number of domestic transactions onto these systems. In July 2023, the U.S. Federal
Reserve launched its FedNow Service with core clearing and settlement functionality, and expects to add more
features and enhancements over time. Some countries are also exploring cross-border connectivity of their
respective RTP systems. Finally, an increasing number of jurisdictions are exploring the concept of building
central bank digital currencies for retail payments. If successfully deployed, these national payment platforms and
digital currencies could have significant implications for Visa’s domestic and cross-border payments, including
potential disintermediation.
Due to our inability to manage the end-to-end processing of transactions for cards in certain countries (e.g.,
Thailand), we depend on our close working relationships with our clients or third-party service providers to ensure
transactions involving our products are processed effectively. Our ability to do so may be adversely affected by
regulatory requirements and policies pertaining to transaction routing or on-shore processing. In general, national
laws that protect or otherwise support domestic providers or processing may increase our costs; decrease our
payments volumes and impact the revenue we generate in those countries; decrease the number of Visa
products issued or processed; impede us from utilizing our global processing capabilities and controlling the
quality of the services supporting our brands; restrict our activities; limit our growth and the ability to introduce
new products, services and innovations; force us to leave countries or prevent us from entering n…