) has recently announced that it will venture into the personal
payments market and offer the ability to transfer or receive funds
directly to a Visa credit, debit or prepaid card accounts in the
U.S. Visa is the largest global electronic payment solutions
company in the world and has the largest network of credit and
debit cards in circulation. The company makes money by providing
transaction information and resources between the customer,
merchant and their respective banks, collecting a fee based on the
number and dollar value of transactions that it
processes. Visa competes with other card networks
like MasterCard (
), Discover (
Our price estimate for Visa stands at $85.03
, which is about 19% above the market price.
Visa has partnered with CashEdge and Fiserv to provide this
service where a customer can enter a 16-digit Visa account number,
phone number or e-mail address to send funds directly to that
account. Financial institutions outside of the U.S. are already
offering Visa personal payments with more than 70 program around
the world enabling consumers to send funds to Visa accounts but
this service is offered for the first time in the U.S. by a major
payment network. The utility of Visa's network will be enhanced by
this service from enabling payments at the point of sale, to
enabling consumers to pay one another.
The market for personal payments is currently dominated by
online payment company PayPal which has more than 94 million active
registered accounts. Some recent startups such as Venmo and Square
have also gained popularity. Square is processing about $1 million
in payments per day and up to 100,000 new users are signing up
every month which conforms the growing market for personal payments
in the U.S.
It is still unclear what kind of fees Visa will charge for this
service, but it will definitely increase the number of
transactions handled by the Visa's payment network. The number of
transactions processed by Visa has been growing steadily at around
10% year on year and reached 47.6 billion in 2010 as consumers
become comfortable with the electronic payment systems.
We expect the growth to continue fueled by the rise in plastic
money, personal payments and mobile payments.
See our full analysis for Visa.