Businessmodel of Visa

Customer Segments

Visa has a multi-sided business model, with two interdependent customer segments that are both needed in order to operate:

• Consumers: This segment consists of individuals. They use Visa-branded debit, pre-paid, and/or credit cards given to them by issuer banks to pay for products and services from merchants.
• Merchants: This segment consists of businesses. They accept payment from consumers in the form of their various cards and submit them to acquirer banks for processing. ### Value Proposition

Visa offers three primary value propositions: convenience, accessibility, and brand/status.

The company’s payment cards make life easier. Specifically, they enable consumers to obtain money from their bank accounts without having to actually go in their branches; they can just use ATMs. The cards also allow them to make payments to merchants without having cash on hand.

The company also increases accessibility through its products. It offers a variety of payment card types. Consumers can use debit cards to access bank funds; pre-paid cards if they don’t have a bank account; and credit cards when they need to delay payment.

The company is one of the earliest payment card providers, and thus is one of the most well-known. It connects consumers and merchants in more than 200 countries worldwide and conducts 150 million transactions per day. It has been consistently ranked as the most trusted card firm.

Channels

Visa’s main channel is its website, through which it markets its products and services. However, the company also promotes itself through offline advertising on television and through marketing campaigns such as sponsored events. In addition, it offers a mobile app for consumers.

Customer Relationships

Visa’s customer relationship is primarily of a self-service, automated nature. Consumers use its cards and merchants accept them as payment, all while having limited interaction with employees. Also, its website features a “Resource” section providing detailed answers to frequent questions.

That said, there is a personal assistance component as it maintains customer service staff for providing assistance when needed.

Key Activities

Visa’s key activities focus on platform management. The company’s business model entails maintaining a common platform between three parties: consumers, merchants, and banks.

Key Partners

Visa has two key partners in its business. It works with issuer banks to distribute its payment card products to consumers. It also works with acquirer banks to accept and process payment transaction information submitted by merchants.

Key Resources

Visa’s main resource is its processing infrastructure. It utilizes several synchronized processing centers, including two data centers in the United States. These centers analyze payment transaction information and help ensure uninterrupted connectivity for consumers, merchants, and banks.

The company also relies heavily on its customer service staff to assist all involved parties as needed.

Cost Structure

Visa has a cost-driven structure, aiming to minimize expenses through significant automation. Its biggest cost driver is personnel expenses, a fixed cost, as it depends heavily on its human resources. Other major drivers are marketing, administrative, and network/processing expenses, all fixed costs.

Revenue Streams

Visa has four revenue streams, which are as follows:

• Service revenues: These are revenues obtained for providing financial institutions with support services for the delivery of Visa payment products and solutions to consumers.
• Data processing revenues: These are revenues obtained for authorization, clearing, settlement, network access, and other maintenance and support services that facilitate transaction and information processing among banks.
• International transaction revenues: These are revenues obtained for cross-border transaction processing and currency conversion activities.
• Other revenues: These are revenues generated through license fees for usage of the Visa brand; Visa Europe; account holder service fees; licensing and certification; and other activities.