The 3 Key Businesses That Make Visa Worth $86

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Visa ( V ) is the largest global electronic payment solutions company in the world and has the largest network of credit and debit cards in circulation. Below we look at the three key business divisions which drive Visa's stock value. Visa competes with other card networks like MasterCard ( MA ), Discover ( DFS ) and American Express ( AXP ).

Our price estimate for Visa stands at $86.09 , which is about 8-9% above the current market price.

The 3 Most Important Business Divisions for Visa


1) Transaction Fees - 29% of the company's stock value

Visa's transaction processing services involve the routing of payment information and related data to facilitate the authorization, clearing and settlement of transactions between Visa issuers (financial institutions that issue Visa cards to cardholders) and acquirers (financial institutions that offer Visa network connectivity and payments acceptance services to merchants). Visa earns data processing revenues from the authorization, clearing, settlement, transaction processing services and other maintenance and support services that facilitate transaction and information processing among customers globally and Visa Europe.

See the top forecasts for the transaction fee division

2) Assessments - 26% of the company's stock value

Assessments are charged to customers (banks and financial institutions) for their participation in card programs carrying marks of the Visa brand. An association with the Visa brand helps a customer (bank and other financial institution) to attract consumers by providing them with a large network of Visa merchants and ATMs. Thus participation in Visa card programs is beneficial for banks and other financial customers.

Assessments are Visa's primary source of revenue for financing marketing and operations. Sometimes the company may introduce assessments for specific purposes such as market development programs etc.

See the top forecasts for the assessments division

3) Service Fee - 21% of the company's stock value

Services  offered by Visa consists primarily of optional services  such as extended cardholder protection and concierge services, cardholder services and fees for licensing and certification. A service fee is charged when cardholders use Visa's value added services. Service fee revenues also include revenues earned from Visa Europe in connection with the Visa Europe Framework Agreement.

See the top forecasts for the service fee division

See our full analysis of Visa here



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks , US Markets

Referenced Stocks: AXP , BAC , DFS , MA , V

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