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I originally requested this board to be opened a few days ago for the exact reasons you all posted.

I had some ideas rolling around in my head. This is their business model based on my understanding:

Visa profits are derived strickly from fees (transaction, late, etc.). They are in partnerships with multiple banks worldwide who provide credit lines to consumers (i.e. credit cards). The more consumers utilize their credit, the more profitable they become. Additionally, they profit from business who purchase equipment that process credit transactions (transaction volume increase which results in more fees which results in more money in Visa's pockets).

Bottom line: Visa makes money by being the middle man and pushing all the risks and liabilities to the banks or consumers/businesses.

Pretty sound model to me. In fact, this is the model that was supposed to be part of Merril Lynch's and the other banks' operating strategy until they started BUYING their own CDO's instead of trading them for a fee.

I'm under the belief that this company is along the lines of being a long-term position. This company is here to stay because:

1. The market share is going to grow as countries begin to use more credit versus cash (think 1 billion Chinese farmers moving to the city).
2. Banks and lending institutions are essential parts of growing, modernizing economies (look how many banks have penetrated Ho Chi Minh City).
3. Along the same lines as 3, review GDP statistics for countries worldwide (China 9%+, India 8%+, etc.) and you can see the need for institutions.
4. Even for countries far from reaching a cashless society, foreigners will still need access to ATM's to be able to spend in these countries.

Of course there are downsides:
1. As mentioned before, IPO shares are notorious for "pump and dump" as short-term investors take their profits.
2. Visa could venture into new "creative" methods of boosting profits similar to our wonderful sub-prime issues.
3. Consumers/businesses could pressure Visa and the likes to reduce or remove some or all of the fee structuring, rendering the company non-existant (eliminate the middle man).
4. As mentioned before, the recent success, not the IPO, of Mastercard could make the stock open at inflated values. This would make VISA "pump and dump" even more volatile and risky than Mastercard.

I think if you're in it for the long term. Coupled with the sound business practice of getting lean for the IPO mentioned before, I think it'll be worthwhile. Can you see Visa going out of business? I wonder if Buffet would add this to his portfolio? What do you guys think?
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