Visa Q4 - steady growth

25-OCT-18

Our top client holding, by the number of holders, remains fund transfer processor Visa. The San Francisco-based corporation employs just 15,000 people but has a market capitalisation of $300 billion.

As you all know, Visa facilitates electronic funds transfers throughout the world, most commonly through Visa-branded credit cards, gift cards, and debit cards. Apparently, all those transactions are processed at one of four secure data centres located in Ashburn (Virginia, USA), Highlands Ranch (Colorado, USA), London and Singapore. I guess our transactions down here go through London?

Each centre can handle up to 30,000 simultaneous transactions every second. Every transaction is checked past 500 variables including 100 fraud-detection parameters - such as the location and spending habits of the customer and the merchant's location - before being accepted. Pretty cool!

Remember that Visa does not issue cards, extend credit or set rates and fees for consumers; rather, Visa provides their customers (financial institutions with Visa-branded payment products) the ability to provide such to their retail customers.

The world is in the early stages of a massive shift away from cash, to cards, smartphones and online transactions. So you simply have to own Visa, or perhaps their main competitors MasterCard and China's UnionPay.

Visa reported Q4 results ending in September last night, which were in line with expectations. Forward guidance was positive and the stock price rose a little after hours. Total processed transactions for the period were $32.8 billion, up 12% compared to this time last year. Cross-border transaction volumes were up 10% (those are especially profitable, as they involve a currency turn).

Visa sees full-year 2019 revenue growth of low double-digits, but they tend to be conservative. The company raised its quarterly dividend by 19% to 25c per share, which is payable on December 4th. That's just in time for the festive season! Of course, you should reinvest your dividends, not spend them in the stores with your Visa-branded cards.