The analyst recommends exiting the position in Visa due to concerns about overvaluation and slowing future growth. Specifically, the analyst cites high government oversight limiting growth compared to competitors, risks associated with Visa's acquisition of Visa Europe, and difficulties expanding as the market matures. While the payments processing industry has strong long-term prospects due to declining cash usage, Visa's premium valuation assumes growth rates that may not be realistic.
Visa Inc. is an American multinational financial services corporation that facilitates electronic funds transfers around the world. It is headquartered in Foster City, California and has a net worth of around $335 billion. Visa operates the VisaNet processing network that is capable of handling over 65,000 transaction messages per second. For the twelve months ending June 30, 2022, Visa reported a net income of $14.601 billion, a 34.4% increase year-over-year.
The document outlines the traditional payments value chain, which includes five core stakeholders: merchants, acquiring banks, networks, issuing banks, and consumers. It describes the roles of each stakeholder and how they interact, with acquiring banks establishing relationships with merchants, networks connecting the entire ecosystem, issuing banks servicing cardholders, and consumers using cards to make payments. Money and fees flow between the stakeholders at each stage of an authorization and settlement transaction.
We bank digital banking decoded for bnm 0618 v1.9(3)Chris Skinner
The document summarizes WeBank, China's first digital bank. It notes that WeBank is backed by Tencent and driven by technology and innovation to provide banking solutions anytime, anywhere. It aims to promote financial inclusion through connecting financial institutions and businesses using data, risk management, capital and products. WeBank utilizes cutting-edge technologies like artificial intelligence, blockchain, cloud computing and big data to rapidly scale products to market and lower costs and risks compared to traditional banks. The document also highlights WeBank's robust growth in customers, assets and profits from 2015-2018.
The document outlines the background, objectives, scope, challenges, users and functionality of an online ordering system project for Steer's fast food restaurant in Tanzania. The project aims to design a website and increase the market for Steer's by enabling customers to order online. Key deliverables include customer satisfaction from an effective and efficient online system. Challenges include limited time and needing to learn programming languages. The system will allow customers to provide feedback, pay online and order food, while management can update menus and view orders.
Neobanks are completely digital banks that do not have physical branches. While they do not have their own banking licenses, they partner with traditional banks for licensed services. Neobanks fill the gap left by traditional banks, which are held back by their reliance on outdated models, by providing efficient digital solutions. They essentially act as a digital layer over the existing traditional banking system. Some popular Indian neobanks mentioned are Jupiter, Niyo, Fi, and ZikZuk.
Digital challenger banks are simplifying the financial world, creating a customer centric approach to services, and transforming the way banking is viewed by the public and the market
This slides helps you to understand the basics of online loan system & its verification. its requirement,s & the procedure it follows with different types of diagrams etc. (This slide is only for idea & its not 100% Accurate.)
For more this report helps you in detailed view of this project.
http://www.slideshare.net/SobanAhmad2/online-loan-application-its-verification-system
Wiseasy is a fintech company that provides payment and financial services through a "cloud + software + terminals" solution. It has served over 114 countries and 3.5 million customers. The company was established in 2012 and has since expanded to include multiple R&D and support centers globally. Wiseasy offers a full ecosystem including payment terminals, software, and cloud services to enable partners to provide diverse payment options.
Visa Inc. is an American multinational financial services corporation that facilitates electronic funds transfers around the world. It is headquartered in Foster City, California and has a net worth of around $335 billion. Visa operates the VisaNet processing network that is capable of handling over 65,000 transaction messages per second. For the twelve months ending June 30, 2022, Visa reported a net income of $14.601 billion, a 34.4% increase year-over-year.
The document outlines the traditional payments value chain, which includes five core stakeholders: merchants, acquiring banks, networks, issuing banks, and consumers. It describes the roles of each stakeholder and how they interact, with acquiring banks establishing relationships with merchants, networks connecting the entire ecosystem, issuing banks servicing cardholders, and consumers using cards to make payments. Money and fees flow between the stakeholders at each stage of an authorization and settlement transaction.
We bank digital banking decoded for bnm 0618 v1.9(3)Chris Skinner
The document summarizes WeBank, China's first digital bank. It notes that WeBank is backed by Tencent and driven by technology and innovation to provide banking solutions anytime, anywhere. It aims to promote financial inclusion through connecting financial institutions and businesses using data, risk management, capital and products. WeBank utilizes cutting-edge technologies like artificial intelligence, blockchain, cloud computing and big data to rapidly scale products to market and lower costs and risks compared to traditional banks. The document also highlights WeBank's robust growth in customers, assets and profits from 2015-2018.
The document outlines the background, objectives, scope, challenges, users and functionality of an online ordering system project for Steer's fast food restaurant in Tanzania. The project aims to design a website and increase the market for Steer's by enabling customers to order online. Key deliverables include customer satisfaction from an effective and efficient online system. Challenges include limited time and needing to learn programming languages. The system will allow customers to provide feedback, pay online and order food, while management can update menus and view orders.
Neobanks are completely digital banks that do not have physical branches. While they do not have their own banking licenses, they partner with traditional banks for licensed services. Neobanks fill the gap left by traditional banks, which are held back by their reliance on outdated models, by providing efficient digital solutions. They essentially act as a digital layer over the existing traditional banking system. Some popular Indian neobanks mentioned are Jupiter, Niyo, Fi, and ZikZuk.
Digital challenger banks are simplifying the financial world, creating a customer centric approach to services, and transforming the way banking is viewed by the public and the market
This slides helps you to understand the basics of online loan system & its verification. its requirement,s & the procedure it follows with different types of diagrams etc. (This slide is only for idea & its not 100% Accurate.)
For more this report helps you in detailed view of this project.
http://www.slideshare.net/SobanAhmad2/online-loan-application-its-verification-system
Wiseasy is a fintech company that provides payment and financial services through a "cloud + software + terminals" solution. It has served over 114 countries and 3.5 million customers. The company was established in 2012 and has since expanded to include multiple R&D and support centers globally. Wiseasy offers a full ecosystem including payment terminals, software, and cloud services to enable partners to provide diverse payment options.
Visa is the world's largest electronic payments network, connecting cardholders, merchants, and financial institutions around the globe. It has grown significantly since starting as BankAmericard in 1958, reaching $1 trillion in annual global sales volume by 1997. Visa continues to build trust in its network through security measures while expanding services like ATMs and achieving milestones such as a $2 trillion annual sales volume in 2001 and the largest IPO in US history in 2008.
Report on e-Notice App (An Android Application)Priyanka Kapoor
The document is a report submitted for a degree at DigiMantra Labs, Ludhiana from January 5, 2014 to May 30, 2014. It describes the development of an e-Notice Application for Android phones. The app allows users to access online notices on their phone and acts as an online notice board where people can communicate and post notices with text, images or videos. It aims to digitize the traditional notice board and allow staff/students to read and respond to notices from anywhere. The app also serves as a mailing list to notify all employees of new notices without needing to maintain a separate mailing list.
US Mortgage - Learn Complete Life Cycle of Mortgage ProductionVijay_30071977
You might be wondering what is US Mortgage? Why it is important? What role it plays in US economy? Why it is important to learn about US Mortgage? Who should learn this domain? Why they should learn this domain? What is the complete life cycle of the Mortgage, right from Origination of the loan to selling the same loan in secondary market, who are the players involved? What all the processes involved? What all the consumer Affairs Laws & Regulations? And Key Terms and Concepts.
The US – Mortgage in a nutshell
Let’s understand What is US Mortgage in a nutshell? US Mortgage, in this course you going to essentially learn about what is US Mortgage Banking, what all the risks involved in mortgage banking, What all the different types of Mortgages available in market? As fundamentals of US Mortgage.
When it comes to Mortgage Production, you will learn about what all the different processes like Loan Origination, Processing, Underwriting, Closing & Funding. Each process again has multiple processes in order to make sure both borrower & lender are in compliance with federal laws.
Let’s see what we going to learn in Mortgage Servicing. This section of the course will talk about Loan servicing processes such as Cash Management, Investor Accounting & Reporting, Document Custodianship etc. Also, this section of the course will talk about Loan Servicing Players such as Loan Servicers, Trustees, Paying Agents, Primary Custodians, Primary Collateral Trustee etc.
Last section of this course is the more exciting one. This section will throw light on Mortgage Secondary Marketing, who are all players, How the Securitization process is structured? What all the government sponsored entities are involved in securitization process? Which are called private conduits and their role in secondary market.
So, who are target audiences? This course is meant for someone who wants to build their career as a business analyst, product owner/manager for Mortgage products, This course is for someone who is interested in Mortgage Business as an investor or financier, This course is meant for academicians who wants teach on US Mortgage domain, This course is prepared for all the people who works in the are of US Mortgage, but do not have complete understanding of how the mortgage is originated and finally sold in the secondary market. This course is intended for anyone who is in finance domain.
So, at the end of this lesson, you will be able to understand the whole process of Mortgage production right from origination to selling them in secondary market, you will be able to answer all the questions related to US Mortgage, if you are investor in mortgage business, you will be much comfortable in your decisions since the decision you make will be informed decisions. If you are a product owner for a mortgage product, you will be enhanced with additional knowledge of mortgage.
The document discusses a remittance management system (RMS) that processes fund transfers from foreign countries to a home country. The RMS allows users abroad to securely send money to recipients at home. It centralizes transactions through an automated system with oversight from central banks. The RMS provides a retail solution for person-to-person transfers via banks and the internet. It also manages information on remitters and beneficiaries to facilitate smooth and secure processing of transactions. The document outlines requirements, functions, processes and future plans for upgrading the RMS to make transfers more efficient, secure and user-friendly.
Use of Articificial Intelligence and technologies in providing financial services is what fintech does. Whether it is Payment gateway, insurance, banking, lending, stock trading, taxes.
How Fintech evolved over the years in the World and Indian Economy.
Indian Fintech Companies under different categories
Common Fintech practices adopted by Fintech Companies with better flexibility, convenience and accessibile financial products and services
Bank BRI is Indonesia's fourth largest bank by market capitalization that is undergoing a digital transformation. They are digitizing core services, building a digital ecosystem through partnerships and APIs, focusing on data analytics and the customer experience. The bank has adopted Agile methodologies and redefined roles like the Product Owner to be more customer-centric. Their goal is to use digital tools to provide reliable financial services to more of the population.
Investment banking project on Bank of America -Merrill LynchPankaj Gaurav
• Working model to serve the client
• Integrated operating model
• Lines of businesses
• Activities in global commercial banking
• Investment banking activities
• Details of advisory services in recent Deal in M&A, IPO issue
The mortgage process involves several key steps:
1. Getting pre-approved for a mortgage to determine how much you can borrow and protect the interest rate for up to 120 days.
2. Shopping for a home with your pre-approved mortgage amount.
3. Submitting a mortgage application including documents like pay stubs, bank statements, and information about the property.
4. Having conditions like an appraisal met before finalizing the mortgage.
5. Signing legal documents to transfer title and finalize the mortgage.
Deutsche Bank was founded in 1870 in Berlin and has since expanded globally. It operates through four main divisions: private and business clients, asset and wealth management, corporate banking and securities, and global transaction banking. Deutsche Bank follows German and US corporate governance rules. It faces strengths such as its strong market position but also weaknesses including inefficient operations. Competitors include Barclays, BNP Paribas, and Credit Suisse. Deutsche Bank has received awards for its equity and bond businesses. It was involved in the Libor rate-rigging scandal.
The document provides an overview of the banking domain, including:
- Defining key terms like money, financial instruments, assets and liabilities, and non-performing assets.
- Describing the structure of the banking sector in India including the roles of the central bank and different types of banks.
- Explaining various retail banking services offered to individuals and businesses like deposits, loans, credit/debit cards, ATMs, online and mobile banking.
- Providing details on deposit products, retail channels, funds transfer mechanisms, and the services offered by banks in areas like corporate, retail, and investment banking.
2021: The second wave of Fintech Disruption: Trends to watch outIndusNetMarketing
2020 has been a global shock for the world but it has also been a reason for digital adoption. The financial sector is evolving with time and 2021 will visualise many new disruptive trends that are going to shape the future of financial services.
KYC automation using artificial intelligence (AI)EY
Knowing Your Customer (KYC) is the process of understanding and validating the authenticity of the business’ potential clients and risk that it might impose onto the relationship. KYC solutions enable access to detailed information ensuring the credibility of clients and expediting the client onboarding. KYC solution also automate previously manual processes and reduce repetition, saving time and money for the firm.
The KYC solution streamlines the KYC process by automating the processing of customer data, sorting the data by type and storing it in a data lake. The solution reduces clutter and maintains lean operations by centralizing KYC data for any branch to query from. The solution increases operational efficiency and reduces overhead manpower cost incurred in processing consumer data manually. The time to process a client’s information is reduced from 18 minutes to 1 minute by leveraging on automation.
Find out more at www.ey.com/sg/fintechhub.
For enquiries, contact us via email at fintech@sg.ey.com.
This document discusses current trends in digital financial inclusion in India and China. It begins by defining digital financial inclusion as digital access to and use of formal financial services by excluded and underserved populations. It then provides an overview of digital financial inclusion in each country. In India, the government has encouraged innovation through payments banks and digital wallet providers are seeing success. In China, digital financial services developed later but are now advancing rapidly due to policy support for inclusion. A table compares factors related to digital financial inclusion, showing China has higher rates of education, urbanization, bank account ownership, and mobile penetration than India, though both countries have seen reductions in government leakage through digital inclusion. The document concludes that while impediments remain, governments are supporting
User identification and single sign on in ASP.Net Core ApplicationsStamo Petkov
The document discusses user identification and single sign-on in ASP.NET Core applications. It provides an overview of single sign-on and how it relates to validating user credentials and establishing identity across multiple software systems. The document also discusses OAuth2, OpenID Connect, and IdentityServer4 - an OpenID Connect and OAuth 2.0 framework for ASP.NET Core 2 that provides centralized login logic and workflows. It concludes with advertising a demo of IdentityServer4.
This document discusses digital banking in Bangladesh. It begins by defining digital banking as an electronic payment system that enables customers to conduct financial transactions through institutional websites or electronic devices. It then outlines various forms of digital banking available in Bangladesh, including internet banking, online banking, ATM banking, mobile banking, agent banking, and point of sale terminals. Several charts show the growth of digital banking transactions and adoption of mobile banking in Bangladesh. The document also discusses the benefits, weaknesses and opportunities of digital banking in Bangladesh.
- First American Bank is considering using a credit default swap to help mitigate Charles Bank International's credit risk in providing a $50 million loan to CapEx Unlimited, a telecommunications company.
- Through the CDS, CBI would make periodic fee payments to First American Bank in exchange for credit protection on the loan to CapEx. This would transfer some of the credit risk from CBI to First American Bank.
- There are various ways to calculate the appropriate spread for the CDS, including using historical default data or bond prices of comparable companies. The estimated spread would likely be between 1.3-5.5%.
ESG Meets FinTech – A Strategic Analysis Executive SummaryMEDICI Inner Circle
MEDICI’s new ‘ESG Meets FinTech – A Strategic Analysis’ covers the impact of financial technology on Environmental, Social, and Governance (ESG) criteria. It analyzes the various dimensions of ESG and sustainability in the context of FinTech.
Digital 2022 Montenegro (February 2022) v01DataReportal
All the data, statistics, and trends you need to make sense of digital in Montenegro in 2022. Includes the latest reported numbers for internet users, social media users, and mobile connections in Montenegro, as well as key indicators of ecommerce use. For more reports, including the latest global trends and individual data for more than 230 countries around the world, visit https://datareportal.com/
This document discusses financial technology (FinTech) in China and opportunities for Finland. It begins with an introduction to FinTech and the pain points it addresses in the traditional financial industry. It then outlines China's prominent status in FinTech, particularly in mobile payments, and discusses major players and trends in the market. These include the rise of technology enablers, disruptive players like Ant Financial, and traditional players expanding into FinTech. The document also notes Finland's growing FinTech sector and initiatives, and identifies leveraging existing strengths and collaborating globally and with China as keys to further developing Finland's role in FinTech.
Visa is the world's largest electronic payments network, connecting cardholders, merchants, and financial institutions around the globe. It has grown significantly since starting as BankAmericard in 1958, reaching $1 trillion in annual global sales volume by 1997. Visa continues to build trust in its network through security measures while expanding services like ATMs and achieving milestones such as a $2 trillion annual sales volume in 2001 and the largest IPO in US history in 2008.
Report on e-Notice App (An Android Application)Priyanka Kapoor
The document is a report submitted for a degree at DigiMantra Labs, Ludhiana from January 5, 2014 to May 30, 2014. It describes the development of an e-Notice Application for Android phones. The app allows users to access online notices on their phone and acts as an online notice board where people can communicate and post notices with text, images or videos. It aims to digitize the traditional notice board and allow staff/students to read and respond to notices from anywhere. The app also serves as a mailing list to notify all employees of new notices without needing to maintain a separate mailing list.
US Mortgage - Learn Complete Life Cycle of Mortgage ProductionVijay_30071977
You might be wondering what is US Mortgage? Why it is important? What role it plays in US economy? Why it is important to learn about US Mortgage? Who should learn this domain? Why they should learn this domain? What is the complete life cycle of the Mortgage, right from Origination of the loan to selling the same loan in secondary market, who are the players involved? What all the processes involved? What all the consumer Affairs Laws & Regulations? And Key Terms and Concepts.
The US – Mortgage in a nutshell
Let’s understand What is US Mortgage in a nutshell? US Mortgage, in this course you going to essentially learn about what is US Mortgage Banking, what all the risks involved in mortgage banking, What all the different types of Mortgages available in market? As fundamentals of US Mortgage.
When it comes to Mortgage Production, you will learn about what all the different processes like Loan Origination, Processing, Underwriting, Closing & Funding. Each process again has multiple processes in order to make sure both borrower & lender are in compliance with federal laws.
Let’s see what we going to learn in Mortgage Servicing. This section of the course will talk about Loan servicing processes such as Cash Management, Investor Accounting & Reporting, Document Custodianship etc. Also, this section of the course will talk about Loan Servicing Players such as Loan Servicers, Trustees, Paying Agents, Primary Custodians, Primary Collateral Trustee etc.
Last section of this course is the more exciting one. This section will throw light on Mortgage Secondary Marketing, who are all players, How the Securitization process is structured? What all the government sponsored entities are involved in securitization process? Which are called private conduits and their role in secondary market.
So, who are target audiences? This course is meant for someone who wants to build their career as a business analyst, product owner/manager for Mortgage products, This course is for someone who is interested in Mortgage Business as an investor or financier, This course is meant for academicians who wants teach on US Mortgage domain, This course is prepared for all the people who works in the are of US Mortgage, but do not have complete understanding of how the mortgage is originated and finally sold in the secondary market. This course is intended for anyone who is in finance domain.
So, at the end of this lesson, you will be able to understand the whole process of Mortgage production right from origination to selling them in secondary market, you will be able to answer all the questions related to US Mortgage, if you are investor in mortgage business, you will be much comfortable in your decisions since the decision you make will be informed decisions. If you are a product owner for a mortgage product, you will be enhanced with additional knowledge of mortgage.
The document discusses a remittance management system (RMS) that processes fund transfers from foreign countries to a home country. The RMS allows users abroad to securely send money to recipients at home. It centralizes transactions through an automated system with oversight from central banks. The RMS provides a retail solution for person-to-person transfers via banks and the internet. It also manages information on remitters and beneficiaries to facilitate smooth and secure processing of transactions. The document outlines requirements, functions, processes and future plans for upgrading the RMS to make transfers more efficient, secure and user-friendly.
Use of Articificial Intelligence and technologies in providing financial services is what fintech does. Whether it is Payment gateway, insurance, banking, lending, stock trading, taxes.
How Fintech evolved over the years in the World and Indian Economy.
Indian Fintech Companies under different categories
Common Fintech practices adopted by Fintech Companies with better flexibility, convenience and accessibile financial products and services
Bank BRI is Indonesia's fourth largest bank by market capitalization that is undergoing a digital transformation. They are digitizing core services, building a digital ecosystem through partnerships and APIs, focusing on data analytics and the customer experience. The bank has adopted Agile methodologies and redefined roles like the Product Owner to be more customer-centric. Their goal is to use digital tools to provide reliable financial services to more of the population.
Investment banking project on Bank of America -Merrill LynchPankaj Gaurav
• Working model to serve the client
• Integrated operating model
• Lines of businesses
• Activities in global commercial banking
• Investment banking activities
• Details of advisory services in recent Deal in M&A, IPO issue
The mortgage process involves several key steps:
1. Getting pre-approved for a mortgage to determine how much you can borrow and protect the interest rate for up to 120 days.
2. Shopping for a home with your pre-approved mortgage amount.
3. Submitting a mortgage application including documents like pay stubs, bank statements, and information about the property.
4. Having conditions like an appraisal met before finalizing the mortgage.
5. Signing legal documents to transfer title and finalize the mortgage.
Deutsche Bank was founded in 1870 in Berlin and has since expanded globally. It operates through four main divisions: private and business clients, asset and wealth management, corporate banking and securities, and global transaction banking. Deutsche Bank follows German and US corporate governance rules. It faces strengths such as its strong market position but also weaknesses including inefficient operations. Competitors include Barclays, BNP Paribas, and Credit Suisse. Deutsche Bank has received awards for its equity and bond businesses. It was involved in the Libor rate-rigging scandal.
The document provides an overview of the banking domain, including:
- Defining key terms like money, financial instruments, assets and liabilities, and non-performing assets.
- Describing the structure of the banking sector in India including the roles of the central bank and different types of banks.
- Explaining various retail banking services offered to individuals and businesses like deposits, loans, credit/debit cards, ATMs, online and mobile banking.
- Providing details on deposit products, retail channels, funds transfer mechanisms, and the services offered by banks in areas like corporate, retail, and investment banking.
2021: The second wave of Fintech Disruption: Trends to watch outIndusNetMarketing
2020 has been a global shock for the world but it has also been a reason for digital adoption. The financial sector is evolving with time and 2021 will visualise many new disruptive trends that are going to shape the future of financial services.
KYC automation using artificial intelligence (AI)EY
Knowing Your Customer (KYC) is the process of understanding and validating the authenticity of the business’ potential clients and risk that it might impose onto the relationship. KYC solutions enable access to detailed information ensuring the credibility of clients and expediting the client onboarding. KYC solution also automate previously manual processes and reduce repetition, saving time and money for the firm.
The KYC solution streamlines the KYC process by automating the processing of customer data, sorting the data by type and storing it in a data lake. The solution reduces clutter and maintains lean operations by centralizing KYC data for any branch to query from. The solution increases operational efficiency and reduces overhead manpower cost incurred in processing consumer data manually. The time to process a client’s information is reduced from 18 minutes to 1 minute by leveraging on automation.
Find out more at www.ey.com/sg/fintechhub.
For enquiries, contact us via email at fintech@sg.ey.com.
This document discusses current trends in digital financial inclusion in India and China. It begins by defining digital financial inclusion as digital access to and use of formal financial services by excluded and underserved populations. It then provides an overview of digital financial inclusion in each country. In India, the government has encouraged innovation through payments banks and digital wallet providers are seeing success. In China, digital financial services developed later but are now advancing rapidly due to policy support for inclusion. A table compares factors related to digital financial inclusion, showing China has higher rates of education, urbanization, bank account ownership, and mobile penetration than India, though both countries have seen reductions in government leakage through digital inclusion. The document concludes that while impediments remain, governments are supporting
User identification and single sign on in ASP.Net Core ApplicationsStamo Petkov
The document discusses user identification and single sign-on in ASP.NET Core applications. It provides an overview of single sign-on and how it relates to validating user credentials and establishing identity across multiple software systems. The document also discusses OAuth2, OpenID Connect, and IdentityServer4 - an OpenID Connect and OAuth 2.0 framework for ASP.NET Core 2 that provides centralized login logic and workflows. It concludes with advertising a demo of IdentityServer4.
This document discusses digital banking in Bangladesh. It begins by defining digital banking as an electronic payment system that enables customers to conduct financial transactions through institutional websites or electronic devices. It then outlines various forms of digital banking available in Bangladesh, including internet banking, online banking, ATM banking, mobile banking, agent banking, and point of sale terminals. Several charts show the growth of digital banking transactions and adoption of mobile banking in Bangladesh. The document also discusses the benefits, weaknesses and opportunities of digital banking in Bangladesh.
- First American Bank is considering using a credit default swap to help mitigate Charles Bank International's credit risk in providing a $50 million loan to CapEx Unlimited, a telecommunications company.
- Through the CDS, CBI would make periodic fee payments to First American Bank in exchange for credit protection on the loan to CapEx. This would transfer some of the credit risk from CBI to First American Bank.
- There are various ways to calculate the appropriate spread for the CDS, including using historical default data or bond prices of comparable companies. The estimated spread would likely be between 1.3-5.5%.
ESG Meets FinTech – A Strategic Analysis Executive SummaryMEDICI Inner Circle
MEDICI’s new ‘ESG Meets FinTech – A Strategic Analysis’ covers the impact of financial technology on Environmental, Social, and Governance (ESG) criteria. It analyzes the various dimensions of ESG and sustainability in the context of FinTech.
Digital 2022 Montenegro (February 2022) v01DataReportal
All the data, statistics, and trends you need to make sense of digital in Montenegro in 2022. Includes the latest reported numbers for internet users, social media users, and mobile connections in Montenegro, as well as key indicators of ecommerce use. For more reports, including the latest global trends and individual data for more than 230 countries around the world, visit https://datareportal.com/
This document discusses financial technology (FinTech) in China and opportunities for Finland. It begins with an introduction to FinTech and the pain points it addresses in the traditional financial industry. It then outlines China's prominent status in FinTech, particularly in mobile payments, and discusses major players and trends in the market. These include the rise of technology enablers, disruptive players like Ant Financial, and traditional players expanding into FinTech. The document also notes Finland's growing FinTech sector and initiatives, and identifies leveraging existing strengths and collaborating globally and with China as keys to further developing Finland's role in FinTech.
This short document appears to be a test file for uploading purposes. It contains no substantial information beyond the title "Test file for uploading". The document consists of only those 5 words as content.
LOS RETOS DEL PAÍS Y PPK
En nuestra última entrega del año, quisiéramos pasar revista a algunos de los principales retos que afronta el país a nivel económico y social y cómo los va abordando el gobierno de Peruanos por el Cambio (PPK).
El documento lista los nombres y números de lista de 5 estudiantes y menciona que pertenecen al grupo 3-A. También enumera los países de Belice, Guatemala, Honduras, Nicaragua, Costa Rica y El Salvador y el título "Imperio Mexicano en 1822".
El documento describe los estilos de aprendizaje según Honey, Mumford y Alonso, incluyendo los criterios de aprendizaje ideal de Honey y Mumford y la distribución equilibrada de las virtudes teórico-reflexivas, pragmáticas y experimentales para el aprendizaje. Además, menciona la reflexión, elaboración de hipótesis y aplicación de pruebas estadísticas en el diseño e investigación.
Este documento describe una investigación para implementar estrategias que disminuyan el miedo escénico de una estudiante de bachillerato. Presenta el planteamiento del problema, objetivos, preguntas de investigación y marco teórico. Se implementaron estrategias como admitir el problema en público y usar técnicas de relajación. Los resultados mostraron una mejoría en la confianza y desempeño de la estudiante al exponer ante otros.
Wikipedia es una enciclopedia libre en línea creada por Jimmy Wales en 2001 con el objetivo de distribuir el conocimiento mundial de forma gratuita y democrática, permitiendo que cualquier persona modifique y mejore su contenido de forma colaborativa. Aunque es una herramienta educativa rápida y de fácil acceso, su información puede ser opaca y anárquica.
El documento describe los estilos de aprendizaje según Honey, Mumford y Alonso, incluyendo aprendizaje activo, reflexivo, teórico y pragmático. Señala que el aprendizaje ideal ocurre cuando las virtudes están equilibradamente distribuidas, permitiendo a los estudiantes experimentar, reflexionar, elaborar hipótesis y aplicarlas, así como probar ideas estadísticamente.
El documento presenta definiciones breves de varias artes incluyendo la semiótica, arquitectura, cultura, pintura, escultura, música y danza. La semiótica estudia el origen y distinciones entre semiótica y semiología. La arquitectura se encarga de modificar la forma de los edificios y dirige proyectos. La cultura incluye saberes, creencias y costumbres de un grupo. La pintura y escultura son artes de la representación gráfica y de modelar materiales. La música y danza son formas de
This study examined the impact of healthy lifestyle choices, stress, and self-esteem among college students. Specifically, it investigated whether exercise predicts healthy choices, athletic involvement impacts choices and stress, and gender or international status affect choices. Surveys measured stress, self-esteem, diet, exercise and lifestyle. Results showed exercise predicts healthier choices. Athletes reported healthier choices and more stress than non-athletes. Gender and international status did not impact choices. The study aimed to educate students on making healthy decisions and managing stress.
Visa is recommended as a buy, with approximately 29% upside potential. Visa is well-positioned to benefit from the shift to cashless payments through technological advancements and its acquisition of Visa Europe. Visa's strong brand, scalable network, and economic moats will help sustain its competitive advantage and high profit margins. The analyst expects Visa to increase its market share of non-cash transactions from 58% to 64% by capturing growth in non-cash transactions, processing more transactions through partnerships and innovation, and expanding its international presence through the Visa Europe acquisition.
This document provides a stock analysis report on Visa by Birkey Investment Group. It summarizes the payment card industry, analyzes Visa's financial performance and position within the industry, and recommends purchasing Visa stock. Visa dominates the global payment processing market with over 50% of transactions. It has strong financial trends in revenue, earnings, and margins that distinguish it from competitors like MasterCard. Visa's recent acquisition of Visa Europe will help it grow further in the European market. Based on this analysis, the report recommends Visa as a solid investment opportunity.
A research report recommends buying shares of Visa and issues a one-year price target of $253.77, representing 19.1% upside. The recommendation is based on Visa's potential for revenue growth from reopening of travel, inflation hedging through transaction fees, and an upcoming hike in swipe fees. Visa processes payments globally and is positioned for continued growth through expansion in Asia, investments in new technologies, and acquisitions in open banking and cross-border payments.
The credit card networks industry represents an attractive investment opportunity. It is a profitable oligopoly with strong brand recognition and high barriers to entry. While cash usage is declining, digital payments are on the rise and often rely on the networks. Technological advances like EMV chips and tokenization are strengthening the networks' position rather than disrupting it. The shift from cash to digital payments will allow the networks to capture more of the large commercial spending market. Risks such as economic slowdowns or new payment methods emerging are possible but unlikely to materialize soon. Overall the trends favor continued growth for the credit card networks.
Visa operates the largest electronic payments network globally. It has no credit risk and earns revenue primarily from small transaction fees. Visa has a large opportunity to grow as the world shifts from cash to electronic payments. It has strong network effects and integration with banks and merchants that represent significant barriers to entry. Under favorable conditions like continued global economic growth and cash conversion, Visa's earnings could compound over 15% annually over the next 5 years. However, risks include increased regulation, new technologies, and irrational competition that could pressure margins.
The document discusses the future of payments in the 21st century and how new technologies and business models are disrupting traditional payment systems. It analyzes trends like real-time payments, use of unique identifiers like phone numbers and emails, push-based systems like PayPal versus pull-based card networks, improved security and fraud controls, lower processing costs, and the transition away from paper checks and plastic cards to digital and mobile-based payments. PayPal is highlighted as an example of a company leveraging these 21st century innovations to build a highly successful new payments platform.
Visa operates the largest payment network in the world. It has consistently grown its revenues over 13% annually through processing more transactions globally. While Visa faces challenges like regulatory issues and competition, opportunities exist in partnerships in developing markets and mobile/electronic payments. Visa must continue international expansion, enter China, attract more domestic credit users, and partner with emerging payment firms to maintain its leading position in the rapidly changing industry.
1. Visa is a global payments technology company that connects consumers, businesses, financial institutions, and governments. It operates the world's largest payments network and has a strong brand and market position.
2. Research shows consumers strongly associate with the Visa name over its logo. Visa recently updated its logo to better represent its breadth of services while maintaining the trusted Visa brand.
3. Visa uses different pricing strategies like psychological pricing that positions gold cards as more expensive than silver, segmented pricing with different ATM withdrawal limits, and promotional discounts for cardholders.
The document provides an overview of credit card processing and Advanced Merchant Group. It discusses why it is a good time to be in the processing industry due to rapid changes. It then summarizes Advanced Merchant Group's role in the transaction process, including underwriting merchant accounts and providing customer service.
1. Buying on credit involves purchasing something with the promise to pay in the future.
2. Key players in credit card transactions include the cardholder, merchant, acquiring bank (merchant's bank), issuing bank (cardholder's bank), and card associations like Visa and Mastercard.
3. An acquiring bank contracts with merchants to enable credit card acceptance, while an issuing bank issues cards to consumers and is repaid by cardholders. Card associations govern the system and process transactions.
Merchant acquirers face increasing challenges in the rapidly changing global payments landscape, but these challenges also bring new opportunities. The key functions of acquirers include signing up merchants to accept card payments, authorizing transactions, and facilitating clearing and settlement of funds between merchants and card issuers. Acquirers also provide dispute management and information services to merchants. Major challenges for acquirers include regulatory pressures, compliance issues for small merchants, threats from non-traditional players, and fraud; however, opportunities exist in developing new pricing strategies, technological investments, and multichannel acquiring.
Navigating Payment Processing | Jay WigdoreJayWigdore
A merchant account is a business account with a bank that allows an organization to accept credit card payments for donations or other products/services.
Esteve Camps has over 20 years of experience in technology fields including payments, fraud, banking, e-commerce, and digital transformation. He has leadership experience and is committed to meeting company needs by supporting its mission, vision, and values. The document defines key terms related to e-commerce payments such as payment service provider, acquirer, card-not-present transactions, and interchange fees.
Q 1. Write a detailed note on the credit card payment system and how many parties and involved in this process?
Q 2. What is the difference between E-cash, E-money, and E-wallets?
Q 3 what are the main challenges faced by developing countries in the implementation of E-business?
Q 4 How you will start E-business? explain with your own example.
Q 5 Explain the role and importance of Social Media in E-business
Q 6 write a note on the planning and designing of a website.
Ronghan Group provides overseas e-commerce and cross-border payment services through two main brands. GooPay is an international payment platform that supports major credit cards. OnerWay provides overseas sales fund receiving services for e-commerce companies on platforms like Amazon. Ronghan aims to be a one-stop service for small and medium enterprises conducting cross-border business through payment solutions, data services, and online marketing.
Webinar - Navigating Payment Processing for Nonprofits - 2015-07-23TechSoup
Payment gateways, merchant accounts, credit card terminals, oh my! Overwhelmed by the credit card payment options out there and unsure of how to select the right one for your organization's needs? You've come to the right webinar!
TechSoup and Dharma Merchant Services present a jargon-free walk-through of what all those things mean and some tips on selecting the right services for your organization.
From in-person payment terminals and mobile-friendly card swipers to online merchant accounts and payment gateways, we clear the murky waters of accepting credit cards for donations, event registrations, membership dues, and purchases of branded gear at your events.
Armen Khachadourian is a global payments systems leader with over 30 years of experience developing payment solutions. He has extensive experience in areas like tokenization, mobile payments, and alternative payment methods. Currently, he is the President and Founder of Digital Payments Inc., a consulting firm providing advisory services related to payments. Previously he held senior roles at companies like JPMorgan Chase, Visa, and Tier Technologies developing innovative payment products and expanding card acceptance.
This document provides definitions for common payment terms used in the payments industry. It defines key terms including acquirer, authorization, average transaction size, BIN, capture, cardholder, chargeback, credit card associations, interchange fee, merchant account, mobile payment, payment processor, POS, and transaction fee. Understanding these terms makes working with payment providers and understanding costs easier.
1. 1 University of Oregon Investment Group
May 20th
, 2016
Technology
Covering Analyst:
Alex Marcinkowski – amarcin2@uoregon.edu
Investment Thesis
Visa’s current price represents extreme bullishness on Visa’s future and
exemplifies intrinsic overvaluation because on the attractiveness of Visa’s
industry and market positioning
The high government oversight in the payments processing industry limits
future growth and Visa’s open-loop payments system when compared to
similar closed-loop systems of Capital One and American Express
Visa’s hefty premium paid for Visa Europe does not adequately factor in
the riskiness of the transaction and overestimates growth in Europe where
less than half of personal consumption is settled in cash or check
Given Visa’s slowing growth over the past quarters, the company has begun
to reach a size and global scale where Visa will experience slower future
growth as they see difficulty expanding in a more mature market
Visa, Inc.
Ticker: V Rating: Underperform
Price Target: $66.26
Action Recommended: Exit Position
Current Price: $77.42
0
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Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16
Volume Adjusted Close 50-Day Avg 200-Day Avg
One-Year Stock Chart
Key Statistics
52 Week Price Range
50-Day Moving Average 78.18
Estimated Beta
Dividend Yield
Market Capitalization (B)
3-Year Revenue CAGR
Trading Statistics
Diluted Shares Outstanding (mm) 2,006
Average Volume (3-Month) 8,257,080
Institutional Ownership
Insider Ownership
EV/EBITDA (LTM)
Margins and Ratios
Gross Margin (LTM)
EBITDA Margin (LTM)
Net Margin (LTM)
Debt to Enterprise Value
$60.00 - 78.06
1.15
0.70%
192,165
10.02%
68.68%
47.65%
.08x
93%
0%
18.62x
96.50%
2. University of Oregon Investment Group
UOIG 2
May 20th
, 2016
32.1%
28.3%
20.7%
4.2%
-14.6%
Service Revenues
Data Processing
Revenues
International
Transaction Revenues
Other Revenues
Client Incentives
Source: Google Images
Figure 2: Visa Revenue Segments
Source: SEC Filings, Visa
Figure 3: Visa Revenue Growth
Source: UOIG Spreads
Figure 1: Original BankAmericard
0.0%
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18.0%
$-
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2010 2011 2012 2013 2014 2015
Total Revenue % Growth
Business Overview
Company History
Visa was launched in 1958 by Bank of America as the first consumer credit card
in the world. Initially named the BankAmericard, it was targeted at middle class
consumers and small to medium sized merchants across the United States. Over
the following years, various banks licensed the cards issued by Bank of America,
forming a network of financial institutions backing the payment system. As the
licensee program grew, they began experiencing problems with interchange fees,
oversight, and poor efficiency born out of the rapid and fragmented growth of the
card. In June 1970, Bank of America relinquished control of the BankAmericard
and handed the reins over to the issuing banks, who formed National
BankAmericard Inc. Later, in 1976, it was determined the Visa would form a
single network, and combine all the prior licensing agreements under a single
name, Visa.
In 2006, Visa announced that it would merge international brands and restructure
in order to IPO in the following year. On October 3, 2007 Visa completed their
initial public offering under the ticker V, and raised 19.1 billion dollars, making
it the largest initial IPO in U.S. history at that time. Currently, Visa is
headquartered in Foster City, California and employs over 11,000 people globally.
Business Structure
Visa is a payments technology company that provides electronic payments
processing to people and business across the world. Visa operates on open-loop
payments system, wherein Visa connects and facilities exchanges between issuers
and acquirers. The issuers are financial institutions who issue Visa cards to their
customers. The acquirers are the financial institutions that have contracts with
merchants to accept Visa cards and products. An important distinction is that Visa
does not earn any revenue nor are they liable for risk associated with interest or
fees paid by account holders of Visa products. The fees and rates are set by the
issuers.
The aforementioned fees are known as interchange reimbursement rates and are
paid by acquirers to the issuers, and Visa does not receive revenue related to these
fees. In the same manner, Visa does not earn revenue from fees charged to
merchants by acquirers for acceptance by acquirers, most widely known as the
merchant discount rate. These do however directly affect Visa’s ability to conduct
business profitably and attract clients.
Products and Services
Visa offers a variety of payment services that support the products that issuers
offer their account holders. The three products Visa supports are most broadly
defined as debit, credit and prepaid.
Visa’s utility is offering processing services that route payment information and
data to aid in authorization, clearing and settlement of transactions between
acquirers and issuers. Their centralized processing infrastructure is known as
VisaNet, where nearly all transactions are routed through. Visa's processing
services also encompass the merchant gateway and Visa Debit Processing
Services. Merchant gateway services make it easier for eCommerce merchants to
“accept, process and reconcile payments, manage fraud and safeguard payment
3. University of Oregon Investment Group
UOIG 3
May 20th
, 2016
Source: IBISWorld
4% 5%
91%
Increased
Positions
Decreased
Positions
Held
Positions
Figure 4: Visa Institutional Ownership Change
2398.00 2490.00
855.00 896.00
1543.00 1594.00
2014 2015
Total Cards (millions) Credit
Debit Growth
Growth
Source: NASDAQ
Figure 5: Visa Cards in Circulation
Source: Visa Investor Relations
Figure 6: Industry Revenue Growth
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$70,000
2010 2011 2012 2013 2014 2015 2016
Total Revenue % Growth
security online.” DPS provides comprehensive issuer processing services for
participating issuers of Visa debit, prepaid and ATM payment products.
Revenue segments
Visa recognizes revenue based on the 5 segments detailed below, all functioning
around their service of processing transactions.
Services Revenue
These are derived from support services for the delivery of Visa’s payment
products to financial institution clients. Service revenues are driven primarily by
payments volume on Visa cards and products.
Data processing Revenue
These are derived from authorizing, clearing, settling, allowing access and
providing other support and maintenance services among issuing and acquiring
clients. Data processing revenues are primarily driven by the total number of
transactions Visa processes.
International Transaction Revenue
These are derived from cross-border transaction processing, which occurs when
the country of the issuer is different from that of the merchant, and currency
conversion services. These are primarily driven by cross-border volume.
Client Incentives
These are a contra-revenue segment that consists of long-term contracts with
financial institution clients and other partners for the purpose of increasing
acceptance and winning merchant transactions.
Other Revenues
These are derived mainly from license fees for use of the Visa branding, revenues
earned from Visa Europe in connection to the Visa Europe Agreement, fees on
account holder services and other activities related to Visa entities.
Industry
Overview
Visa operates in the credit card processing & money transferring industry. This is
a mature yet evolving industry with strong margins and high growth rates. The
industry has a medium level of concentration, with the top four industry players
commanding an estimated 50.3% of industry revenue in 2016. As a whole, the
industry has fantastic growth potential as consumers decrease cash and check
usage in favor for credit cards and other electronic payment methods.
Given the opportunities in this industry, it is also a highly competitive place to
operate. The industry generates a majority of its revenue through data processing
and transaction fees on debit and credit card purchases, although it consists of a
wide variety of services and activities related to financial intuitions. Because of
the financial nature of the industry, it is one that is very highly regulated and
4. University of Oregon Investment Group
UOIG 4
May 20th
, 2016
0.0%
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60.0%
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100.0%
120.0%
0
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2014 2015 2016 2017 2018 2019
E-Commerce % Change
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2014 2015 2016 2017 2018 2019
CCI %Growth
Source: Yahoo! Finance
Figure 8: Projected e-commerce Growth
Figure 9: Projected Consumer Confidence
Source: IBISWorld
Figure 7: Visa 5-year stock chart
Source: IBISWorld
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May-11 Nov-11 May-12 Nov-12 May-13 Nov-13 May-14 Nov-14 May-15 Nov-15
Adjusted Close 50-Day Avg 200-Day Avg
subject to increasing government oversight, litigation problems and anti-trust
violations.
Outlook
The outlook of the industry looks extremely promising over the coming years.
IBISWorld anticipates revenue for the Credit Card Processing and Money
Transferring industry to grow at an annualized rate of 4.4% to $72.0 billion in the
five years to 2021.The decline of cash and checks is a natural progression in
today’s technologically oriented society and directly correlates to growth in
electronic payments. Continued advances in mobile technology allow users to
access banking information, pay bills, and complete transactions on-the-go; a
significant advantage over cash and check. More specifically, technologies
produced by Apple, Google and PayPal have allowed consumers to sync credit
cards with a mobile phone for in-store purchases and have gained ground in the
credit card space at an alarming rate; and are now supported by almost all major
credit cards and banks in the United States.
Macro factors
Consumer Spending and Consumer Confidence
Consumer spending is an extremely important factor in industry demand, as
volume of purchases drives revenue for the industry. As consumers spend more
on products, Visa and others have the opportunity to process more transactions
and experience greater transaction volume. This spending is largely influenced by
consumers’ expectations of future economic conditions, measured by consumer
confidence. Consumer confidence is expected to increase by 3% over the next 4
years, which is an opportunity for payment processors.
E-Commerce Sales
E-commerce sales represent the percentage of consumer retail purchases done
online as compared to retail stores. Considering online sales are generally required
to be settled in electronic form, they are a key driver of industry revenue. E-
commerce sales have been steadily increasing for years, and have a 5.4% expected
growth from 2016-2021 according to IBISWorld. As e-commerce continues to
grow, the shift away from cash and check payments will by further exenterated
and consumers will naturally move towards electronic methods as the primary
form of payment.
Per Capita Disposable Income
Per capita disposable income reflects an individual’s ability to purchase goods
and services, particular non-essential items. As individuals spend more, it drives
payment volume and transaction numbers, which are important drivers in industry
demand. As more income signifies greater spending, industry operators garner
revenue from greater number and volume of transactions.
Regulatory Environment
The great value of the data being held and transported by firms in this industry
make it subject to high levels of government regulation and oversight. Rules were
implemented in the U.S. during 2011 and 2012 with respect to debit products
under the Dodd-Frank Act, which regulates debit interchange reimbursements
rates, and the availability of debit networks and merchant transaction routing
5. University of Oregon Investment Group
UOIG 5
May 20th
, 2016
0.0%
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2013A 2014A 2015A 2016E
EBITDA Margin EBITDA Growth
Figure 10: Cards outstanding by Company
Source: CardHub Statistics
Figure 11: Visa EBITDA Growth
Source: UOIG Spreads
Figure 12: Annual Purchase Volume (Trillions)
Source: CardHub Statistics
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Annual Monthly
choice. Many jurisdictions have adopted or are considering regulations that
require payments system participants, to monitor, identify, filter, restrict or take
other specific actions with regard to certain types of payment transactions. For
example, “U.S. federal legislation has been enacted that requires payment system
operators to implement a system that allows issuers to identify Internet gambling
transactions so they have the option to decline such transaction requests. State
governments have been interested in the potential blocking of Internet interstate
sales of cigarettes and alcohol, or the collection of state and local sales taxes on
such Internet purchases.” Implementing such systems increases costs for Visa,
and may reduce merchant acceptance of Visa-branded cards and payment
products for these purchases.
Competition
This industry is highly competitive due to its attractive growth prospects and
strong margins. Furthermore, the industry is fairly fragmented because it
comprises a wide variety of companies with different specialties. Services that
this industry performs include nearly every type of financial transaction,
comprising check processing, ACH payments, wire transfers, debit card and credit
card purchases, and e-money. The increase in technological innovation makes this
a rapidly evolving industry, wherein certain competitors are better positioned than
others to capitalize on future growth. Companies like PayPal, Visa, and
MasterCard are better positioned for future changes because they represent the
growing segments of this industry as more payments are being conducted
electronically. In the past few years, new firms have entered the industry because
of innovations in technology and have been able to establish themselves legitimate
market operators.
Although the industry has a large amount of participants, the majority of revenue
is captured by the larger processing enterprises who have the financial resources
to establish a brand and offer competitive prices, which could cause establishment
numbers to decrease. Because universal acceptance of a firm’s products is such a
necessity in this industry, large companies are born out of necessity for scalable
operations. That being said, the raise of e-commerce and e-money have paved the
way for new players to enter the industry with innovative technologies to serve
enterprises and consumers in unique ways. While new players may be entering
the market, the very nature of the industry itself means they are likely buyout
targets, rather than establishment players. In credit card and payments processing,
the market is likely saturated enough to prevent future pure-play competitors from
entering.
Consolidation in the banking sector, as a result of the global financial crisis, has
hurt the industry. As a result of consolidation among banks, existing client
accounts have closed, leaving a smaller pool of potential clients. Now revenue is
derived from a smaller number of large clients, who have significant bargaining
power over industry firms. This consolidation also leaves firms exposed to
increased risk in the event a contract with a large institutional client is lost. This
consolidation has inherently tightened margins and increased competition for
financial clients. Any further merger and acquisition activity in the banking sector
will have a negative effect on market participants in this industry, further
increasing competition in an already highly competitive market.
As the world increasingly shifts to electronic payment methods over cash and
check, this will spur the entrance of new competitors seeking to capitalize on this.
Most importantly, the ability to have excellent mobile and e-commerce
technology will by key to sustained success in this industry. The ability to provide
6. University of Oregon Investment Group
UOIG 6
May 20th
, 2016
Revenue $13,880
EBIT $9,064
Net Income $6,328
Operaing Cash Flow $6,822
NWC -$1,494.00
FCF $5,990
EBITDA $9,558
Figure 13: Enterprise Value
Source: UOIG Spreads
Source: IBISWorld
Figure 14: Visa Key 2015 Statistics
Source: UOIG Spreads
Figure 15: Visa Dividend Increases
Source: Yahoo! Finance
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Visa MasterCard American
Express
PayPal Total System
Services
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
8/1/2011 8/1/2012 8/1/2013 8/1/2014 8/1/2015
cost-effective, easy-to-use and secure platforms will be a differentiator among
firms going forward.
Barriers to entry
Barriers to entry in this industry are very high due to its highly technical and
regulated nature. Participants in the industry must be in accordance with all
federal and state laws associated with money transferring on top of establishing a
client base in a highly competitive industry. The initial capital cost of building a
client base is immense and nearly impossible for a firm competing against
streamlined, establish brands like Visa and PayPal. Additionally, firms must
invest heavily in infrastructure like data centers and server farms to securely
process large numbers of transactions. Continual capital expenditures are
necessary as well in order to maintain state-of-the-art infrastructure. This industry
requires necessary economies of scale in order to be successful, and to attain those
benefits, a firm must be very large and global in nature.
Strategic Positioning
Market Share
Visa dominates the global market for electronic payments, accounting for nearly
half of the global credit card and three quarters of global debit card transactions.
Because of this, they have built and maintained a strong client base of the biggest
merchants and banks in the world. The Visa brand has become synonymous with
cards and their recognition as the premier provider of processing services is un-
paralleled. Market share is of particular importance in this industry because the
success of Visa depends on the universal acceptance of their cards. As more
merchants accept their cards, it incentivizes others to due to the same because
more of their customers will be using Visa cards.
Leverage over Clients
As Visa is the largest payment processor in the world, it holds significant leverage
over its financial and merchant clients. The amount of business Visa represents
for financial institutions makes them an indispensable client. Furthermore,
customers of financial firms and merchants alike have grown accustomed to Visa
as a form of payment and are familiar and comfortable with the brand. As such,
the Visa Brand has significant staying power due to its entrenchment in the
industry.
Wide Economic Moat
Visa’s wide moat is primarily due to the irreparability of its payment network. A
payment network that is widely accepted is very attractive to customers, and a
payment method that many customers use is very attractive to merchants.
Therefore, the sheer amount of use and universality of Visa products makes it a
difficult company to emulate. To create the system that Visa has requires large
contracts with banks, merchants and the ability to establish acceptance of the
firm’s proprietary payment system. In addition, the trust and security Visa has
built into their relationships is something merchants and financial value as
paramount when dealing with money transfers.
Security
Visa’s highly secure network makes it an ideal choice for merchants, banks and
consumers alike. Visa engages actively with financial institutions, merchants,
7. University of Oregon Investment Group
UOIG 7
May 20th
, 2016
0
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Capital Expenditure (% of Revenue)
Figure 16: Visa New Products
Source: SEC Filings, Visa
Figure 17: Visa Projected EBIT Growth
Figure 18: Visa CAPEX Projections
mVisa
Visa Checkout
Visa PayWave
Visa Direct
Mobile cardless purchasing solution
E-Merchant bank account and
payment system
Payment through smartphone and
contactless card
Peer-to-peer payment system
Source: UOIG Spreads
governments, regulators, and law enforcement to mitigate security concerns and
establish best practices in the industry. At Visa’s scale, they have the size and
resources necessary to innovate security solutions and maintain state-of-the art
software and hardware. “In 2015, Visa launched a number of new fraud
prevention and risk management capabilities, including Mobile Location
Confirmation, Decision Manager Replay for merchants, and an enhanced Alerts
capability available through APIs. Visa also introduced tokenization, which
replaces account number with digital token for online and mobile payments.” This
removes essential account information and has potential to reduce fraud risk. Visa
also introduced EMV chip technology in 2015, which reduces point-of-sale fraud
by securing data by storing it on chips, instead of the magnetic stripes.
Business Growth Strategies
E-Commerce and M-Commerce
The growth of e and m-commerce require the need to move beyond physical
cards and adapt technology to be able to effectively process payments online or
on the phone. Visa needs to adapt its technology in order to seamlessly operate
over these new platforms and need to ensure they promote acceptance over both
their merchant and financial institution clients. Visa has actively sought
partnerships with companies in this space like Samsung, Google, Square and
Apple. The early success of Apple and Samsung Pay bode well for Visa’s
success in these areas.
New Payments Products
Visa is attempting to maintain the dominance they have seen in the physical
world into the digital age. In 2015, Visa launched their Digital Solutions
Platform. 2015 also started the mVisa pilot in India. mVisa is a new mobile
payment service that enables consumers to make cardless purchases, pay bills
and send money to other individuals via “pushing” a payment from their bank or
stored value account via their mobile phone as opposed to the traditional method
of a merchant “pulling” funds on a terminal from a piece of plastic. It is being
piloted with merchants across the Bangalore region and with customers of our
four large Indian bank clients.
Visa Checkout: Visa Checkout is a payment method that allows consumers to
pay for goods online on a smartphone, tablet, laptop or desktop. Visa Checkout
is essentially the equivalent of a PayPal account, although it is not as widely
accepted presently. 2015 did see the expanded the adoption of Visa Checkout
and today Visa Checkout covers nearly $85 billion of addressable E-commerce
volume with nine million registered users in 16 countries. This service is
presently available for e-commerce merchants and financial institutions in 16
countries around the world including Australia, Argentina, Brazil, Canada,
Chile, China, Colombia, Hong Kong, Malaysia, Mexico, New Zealand, Peru,
Singapore, South Africa, United Arab Emirates, and the U.S.
Visa payWave: With Visa payWave technology, consumers are able to pay for
products and services via smart phone or other devices, and by using their
contactless cards at physical retailers. PayWave is essentially Visa’s proprietary
application that functions similarly to Apple Pay or Samsung Pay, but it can also
be enabled for physical cards.
8. University of Oregon Investment Group
UOIG 8
May 20th
, 2016
Figure 19: Visa International Growth
Source: UOIG Spreads
Figure 20: Visa Growth since Pitch
Source: Yahoo! Finance
0
500
1000
1500
2000
2500
3000
3500
4000
4500
2016 2015 2014 2013 2012 2011
U.S. International
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
Feb-14 May-14 Aug-14 Nov-14 Feb-15 May-15 Aug-15 Nov-15 Feb-16 May-16
Adjusted Close 50-Day Avg 200-Day Avg
Source: UOIG Spreads
Figure 21: Visa Executive Compensation
Source: Morningstar
0
10
20
30
40
50
2011 2012 2013 2014 2015
Total executive compensation ($mm)
Visa Direct: Visa Direct provides a fast, secure and convenient solution for
Visa’s ecosystem of clients and partners. It enables customers to send and
receive person-to-person payments and funds disbursements, and facilitates
business to business settlements directly to eligible Visa account holders quickly
and securely.
Visa Europe
In November of 2015 Visa announced the signing of an agreement to acquire
Visa Europe. Visa Europe is the only regional association which didn’t merge
into Visa Inc. in 2007 and remained a separate entity owned by its members.
Visa Europe represents a significant growth opportunity for Visa and its ability
to capitalize on the European market. The terms of the agreement are an upfront
payment of 11.5 billion euros and 5 billion euros’ worth of convertible preferred
stock followed by an earn-out provision. The agreement was then amended to
increase the upfront by 750 million euros and replace the earn-out with a 1-
billion-euro payment at 4% annual interest payable 3 years after closing. The
agreement hopes to realize synergies between the two entities and their clients.
The two companies have worked closely together since their split before Visa’s
IPO in 2007. The full integration is expected to take 3 to 4 years after closing.
China and Emerging Markets
China is currently writing final rules which will create a process to allow
payment processing firms to apply for a license to compete in the domestic
Chinese electronic payments market. Visa is actively working on plans and
intend to submit their bid to enter the chines market this year. This is a long-
term play and Visa views this a long-term commitment and opportunity to help
grow commerce domestically in China. In 2015, Visa added over 140 million
new cards and delivered meaningful progress in expanding into new acceptance
categories, including education, transit, debt repayment, childcare and taxes.
Visa has 69 Visa Ready mPOS (mobile phones as acceptance devices) and they
now estimate that 5.8 million merchants are using mPOS. In addition, Visa
brought new players into the financial system through a series of Financial
Inclusion programs around the world, including developing a women’s mobile
banking network in Bangladesh; increasing access to digital payments to village
communities in Vietnam; developing alternative credit scoring models in Kenya;
and improving micro-merchant acceptance in Mexico.
Management and Employee Relations
Charles W. Scharf – CEO
Charles has served as Chief Executive Officer and a director of Visa Inc. since
November 1, 2012. Previously, Mr. Scharf was a Managing Director of One
Equity Partners, the private investment arm of JPMorgan Chase & Co. From July
2004 to June 2011, Mr. Scharf served as Chief Executive Officer of Retail
Financial Services of JPMorgan Chase & Co. For 2015, Charles Scharf’s
compensation was $15,180,000; $4,310,000 of which was paid in cash.
Ryan McInerey – President
Ryan McInerney is President of Visa Inc. where he is responsible for leading
Visa’s global client organization, He also is responsible for client support
9. University of Oregon Investment Group
UOIG 9
May 20th
, 2016
15.4%
21.5%
15.4%
20.8%
25.3%
1.7%
14.9%
20.7%
18.1%
25.7%
20.5%
0.0%
Healthcare Tech Financial IME Consumer Cash
Tall Firs Benchmark
12.8%
3.6%
81.0%
2.6%
8.7%
18.7%
72.7%
0.0%
Small Mid Large Cash
Tall Firs Benchmark
Figure 22: Tall Firs Portfolio Allocation
Source: UOIG PowerPoint
Figure 23: Fall Firs Benchmarking
Source: UOIG PowerPoint
services, global product management and a new solutions group, which focuses
on building and bringing to market new products and services to Visa’s issuer,
acquirer and merchant partners. Prior to joining Visa, Mr. McInerney served as
CEO of Consumer Banking for JPMorgan Chase. His toal compensation for 2015
was $8,154,275.
Vasant M. Prabhu – CFO and Executive VP
Vasant M. Prabhu joined Visa Inc. in February 2015 as Executive Vice President
and Chief Financial Officer. In his role, he overseas Visa Inc.’s financial
strategies, planning and reporting, in addition to all finance operations and
investor relations. Prabhu joined Visa from NBCUniversal Media, LLC, where he
served as chief financial officer. His total compensation for 2015 was $6,056,253.
Rajat Taneja - Executive VP of Technology
Rajat Taneja is Executive Vice President of Technology for Visa Inc., responsible
for the company's technology innovation and investment strategy, product
engineering, global IT and operations infrastructure. He joined Visa in this role in
November 2013. Prior to joining Visa, Taneja was Executive Vice President and
Chief Technology Officer of Electronic Arts Inc., from October 2011 until
November 2013. His total compensation for 2015 was $8,400,625.
Management Guidance
Management guidance has been historically accurate, leaning on the conservative
side of average over performance of expectations of 1.6%. They provide yearly
and quarterly guidance on many metrics, including free cash flow, revenue,
operating margin and EPS among others. Management has typically hit these
targets within a reasonable error of +/- 2% for the prior 3 years of guidance.
Portfolio Strategy
Visa is currently held in the Tall Firs portfolio and has been held since January
31, 2014. The purchase price was $216.22, or $52.88, adjusted for the stock split
with an implied price target of $57.57. Visa is currently trading at $76.83 a share,
representing a 45% appreciation on the investment. Visa has also paid out $1.20
of dividends per share over this period.
Given Visa’s intrinsic overvaluation, Visa is being pitched as a sell for the Tall
Firs Portfolio.
Recent News
Visa Inc (V) and Wal-Mart Stores, Inc. (WMT) Are at Each Other’s Throats
… Again - Nasdaq
Walmart is suing Visa over the signature confirmation method Visa is insisting
Walmart rely on to use for its payment confirmation. Walmart wants to require a
PIN to authorize transactions, but this results in lower fees earned by Visa. Visa
and Walmart have previously engaged in lawsuits, and the high swipe fees
continue to be a point of contingency between payment processers and
merchants.
10. University of Oregon Investment Group
UOIG 10
May 20th
, 2016
Prepaid
Card
Services
7%
Check
Processing
15%
ACH
Products
18%
Credit
Card
Services
22%
Debit Card
Services
38%
Figure 24: Industry Product Mix
Source: IBISWorld
Figure 25: Industry Cliental Breakdown
Source: IBISWorld
Corporate
Data security
40%
Security
Threat
Protection
40%
Cost
Reduction and
Risk
Management
20%
Catalysts
Upside
Visa has premier market position as the biggest player in the payments
processing industry and can capitalize on the economies of scale this
industry is dependent on
The merger with Visa Europe represents significant growth potential and
the completion of a truly global reach that could see increased synergies
for Visa and its subsidiaries.
Visa’s early focus on e and m-commerce show a willingness by
management to adapt to a changing industry and become a leader in
digital payments
Downside
The high regulation in this industry is poise to increase both domestically
and internationally, specifically for Visa as the face pf the industry, and
could hurt Visa’s ability to create the healthy margins it currently has
Visa’s pending litigation with Walmart and others could result in
significant penalties and cash payouts
The US and European markets only settle around 30% of payments in
cash or check, meaning there isn’t as much room for Visa to grow in
developed countries
Comparable Analysis
I valued Visa’s common stock using comparable companies that operate in the
credit card, mobile, and e-payments processing industry. To screen for companies,
I selected ones that hade market capitalization of at least $10 billion and operated
sin the same industry as Visa, either with similar offerings or offering a substitute
service. I then screened based of 3 year EBIT growth rates, D/E ratios, and brand
equity values. Following this, I eliminated companies that operated as commercial
banks in addition to extending credit, because they would handle debt, interest
and cash much differently than tech firms. As a result, Capital One, Discover and
Synchrony Financial were not used despite being solid comparables. The
following 4 companies are a result of this screening process and are weighted in
proportion to the number of the above metrics they fulfill.
MasterCard – MA (50%)
“MasterCard Incorporated, a technology company, provides transaction
processing and other payment-related products and services in the United States
and internationally. It facilitates the processing of payment transactions, including
authorization, clearing, and settlement, as well as delivers related products and
services. The company also offers value-added services, such as loyalty and
reward programs, and information and consulting services. In addition, it provides
cross-border and domestic processing services; and issuer and acquirer processing
solutions, and payment and mobile gateways. Further, the company offers various
payment products and solutions for cardholders, merchants, financial institutions,
and governments; programs that enable issuers to provide consumers with cards
11. University of Oregon Investment Group
UOIG 11
May 20th
, 2016
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
V MA AXP PYPL TSS
Revenue Growth 2016 Revenue CAGR
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
V MA AXP PYPL TSS
EBIT Margin EBITDA Margin
Figure 26: Multiples Weightings
Source: UOIG Spreads
Figure 27: Comps Revenue Projections
Source: UOIG Spreads
Figure 28: Comps Margins
Source: UOIG Spreads
Multiple Implied Price Weight
EV/Revenue 51.77 -
EV/Gross Profit 58.27 -
EV/EBIT 86.72 -
EV/EBITDA 78.23 66.67%
EV/(EBITDA-Capex) 83.53
Market Cap/Net Income = P/E 91.62 33.33%
Price Target $82.70
Current Price 77.42
Undervalued 6.82%
to defer payments; payment products and solutions that allow its customers to
access funds in deposit and other accounts; prepaid payment programs and
management services; and commercial payment products and solutions.” –
Yahoo! Finance
MasterCard is the best pure play competitor to Visa. Offering nearly identical
services in an open-loop system like Visa, MasterCard represents Visa’s biggest
and most similar competitor. Second only to Visa in size, MasterCard has similar
EBIT growth rates, D/E ratios and brand equity value, therefore warranting a 50%
weighting.
American Express – AXP (20%)
“American Express Company, together with its subsidiaries, provides charge and
credit payment card products and travel-related services to consumers and
businesses worldwide. The company’s products and services include charge and
credit card products; network services; expense management products and
services; travel-related services; and stored value/prepaid products. Its products
and services also comprise merchant acquisition and processing, servicing and
settlement, merchant financing, point-of-sale, and marketing and information
products and services for merchants; fraud prevention services; and the design of
customized customer loyalty and rewards programs. The company sells its
products and services to consumers, small businesses, mid-sized companies, and
large corporations through direct mail, online applications, in-house and third-
party sales forces, and direct response advertising.” – Yahoo! Finance
American Express represents a large-cap competitor to Visa that also operates on
a global scale. Their similar EBIT growth rates and product and service offerings
make them a near pure-play competitor. American Express does operate on a
closed-loop system, meaning they interact directly with consumers and
merchants, not the banks, which slightly distorts their risk, debt and revenue. Even
so, American Express represents an important alternative structure to Visa with
similar brand equity, warranting a 20% weighting.
PayPal Holdings – PYPL (20%)
“PayPal Holdings, Inc. operates as a technology platform company that enables
digital and mobile payments on behalf of consumers and merchants worldwide. It
enables businesses of various sizes to accept payments from merchant Websites,
mobile devices, and applications, as well as at offline retail locations through a
range of payment solutions, including PayPal, PayPal Credit, Braintree, Venmo,
and Xoom products. The company's platform allows customers to pay and get
spaid, transfer and withdraw funds to their bank accounts, and hold balances in
their PayPal accounts in various currencies.” – Yahoo! Finance
PayPal is Visa’s greatest threat in the e and m-commerce industry, and represents
the shift to these payment methods in the market. PayPal operates exclusively
over the web or phone and acts as a merchant account over the internet.
Qualitatively, PayPal competes directly with Visa in these spaces and has similar
brand equity. PayPal also has high growth rates and market capitalization,
warranting a 20% weighting.
12. University of Oregon Investment Group
UOIG 12
May 20th
, 2016
Figure 29: MasterCard 5-year Return
Source: Yahoo! Finance
Figure 30: Visa Europe
Source: Visa Europe Online
Figure 31: American Express 5-year Return
Source: Yahoo! Finance
$0.00
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$40.00
$60.00
$80.00
$100.00
$120.00
May-11 Nov-11 May-12 Nov-12 May-13 Nov-13 May-14 Nov-14 May-15 Nov-15
Adjusted Close 50-Day Avg 200-Day Avg
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
$100.00
May-11 Nov-11 May-12 Nov-12 May-13 Nov-13 May-14 Nov-14 May-15 Nov-15
Adj Close 50-Day Avg 200-Day Avg
Total System Services – TSS (10%)
“Total System Services, Inc. provides payment processing, merchant, and related
payment services to financial and nonfinancial institutions in the United States,
Europe, Canada, Mexico, and internationally. The company offers account
processing and output services, including processing the card application,
initiating service for the cardholder, processing card transaction for the issuing
retailer or financial institution, and accumulating the account’s transactions. It
also provides fraud management services to monitor the unauthorized use of
accounts; fraud detection systems for identifying fraudulent transactions; and
other services, such as customized communication services to cardholders, and
information verification services associated with granting credit, debt collection,
and customer service.” – Yahoo! Finance
Total System Services acts as a sort of middle-man between merchants and credit
card companies, helping merchants manage credit card relationships with
financial institutions. Therefore, they operate in the same industry as Visa, but
provide a different service and represent a good comparable. TSS has strong
growth margins, similar D/E ratios but are limited in size and brand equity,
warranting a 10% weighting.
Discounted Cash Flow Analysis
In order to evaluate the intrinsic value of Visa, I constructed a DCF analysis with
a projection period through a 2024 fiscal year. After determining enterprise value,
debt (less non-operating cash) was subtracted and divided by diluted shares
outstanding to obtain an implied price.
Revenue Model
Revenue was forecast based on growth assumptions for each of Visa’s revenue
segments. I was able to break down the revenue drivers for the main segments,
and was able to see past correlation with the driver and the individual revenue
segment. Then, I qualitatively projected growth for each segment based on
driver/segment correlation and my beliefs about the growth of each segment. In
the short run, my projections were in-line with management guidance. In the
longer run, I incorporated the eventual decline of data processing from regulatory
oversight and larger growth in international transaction revenues from emerging
markets and globalization. Client incentives was held constant as a percent of
revenue to be conservative in an industry where competition is increasing.
Visa Europe Acquisition
The visa Europe Acquisition was factored into the model in several ways. I
projected the acquisition to go through in Q4 of this year based on management
guidance and a conservative timetable based on current delays. Visa Europe
revenue was projected separately based on management guidance and then
trended to reflect Visa’s revenue growth as they become more efficient and
powerful under the partnership. In addition, the shares of preferred stock to be
issued in the merger were factored in the Treasury Stock Method to calculate total
shares outstanding and are dilutive in nature. The cash payment is reflected in the
DCF in Q4 of 2016 and in 2019 and reflect the euro value of the payout multiplied
by Visa’s euro currency hedge rate. Visa Europe’s PP & E are added in Q4 of
13. University of Oregon Investment Group
UOIG 13
May 20th
, 2016
Implied Price Undervalued/(Overvalued)
Terminal GrowthRate Terminal GrowthRate
-0.5% 0.0% 0.5% 1.0% 1.5%
0.89 73.62 76.81 80.42 84.55 89.34
0.99 67.70 70.35 73.33 76.71 80.58
1.09 62.54 64.76 67.25 70.05 73.21
1.19 58.00 59.89 61.98 64.31 66.94
1.29 53.98 55.59 57.37 59.34 61.53
AdjustedBeta
Figure 32: Beta Weightings
Source: UOIG Spreads
Figure 33: Visa Network
Source: SEC Filings, Visa
Figure 34: Sensitivity Analysis, Visa
Source: UOIG Spreads
Beta CashAdjusted SE Weighting
1 Year DailyBeta 1.14 1.24 0.06 0.00%
3 Year DailyBeta 1.12 1.21 0.05 50.00%
5 Year DailyBeta 1.03 1.11 0.03 30.00%
3 Year WeeklyBeta 1.07 1.15 0.10 0.00%
5 Year WeeklyBeta 1.02 1.10 0.07 0.00%
3 Year DailyHamada- Comps 1.08 1.08 20.00%
Final CashAdjustedBeta 1.15
2016 to Visa’s total PP & E and are depreciated from there. Overall, Visa Europe
has had historically lower margins than Visa and this was taken into account when
projecting based off of revenue. Visa should be able to cut costs in Visa Europe
as they adapt to Visa’s more streamlined business model and are consolidated into
a single Visa Europe unit, not beholden to European banks. Any near term
operational problems are not factored into the valuation as Visa has historically
handled mergers well and the two companies have a strong working relationship.
Any temporary increase in operational expenses or working capital requirements
should be material in nature and would not affect the overall valuation.
Beta
The beta used in my valuation was 1.15, arrived at by taking a combination of
Visa’s 3-year daily, 5-year daily and a regressed comparable beta. The benchmark
for regression was the S & P 500 index. Visa’s beta seems reasonable given its
exposure to macro-economic spending offset by a global reach. Visa’s beta is in
line with comparable companies.
Cost of Goods Sold
As Visa does not issue any physical cards, their cost of services consists of
Network and Processing fees, which is the cost to process transactions and
maintain the VisaNet system, is very low at about 4% of revenue and trended
down to 3% down due to increased economies of scale and technological
improvements.
Personnel
Personnel expenses represent Visa’s biggest cost, historically around 15% or
revenue. These expenses consist of employee salaries, share-based compensation
and incentives. I trended this upward to 17% of revenue due to completion for
talent among tech firms.
Marketing
Marketing has historically made up around 6% of revenue, and has been trending
downward since Vis’s IPO. I continued this trend into the future as Visa continues
to expand and sees reduced marginal returns on advertising for a company that
already has so much brand equity.
General & Administrative
General & Administrative consists of corporate expenses, facilities costs, travel
activities and foreign exchange gains and losses. This was trended upward due to
conservatism surrounding the strong US dollar and uncertainty in Forex markets.
Visa’s hedging has been historically poor, so this estimate represents a safety-net
for future hedging strategies.
Depreciation & Amortization
Deprecation was projected as a percentage of net PP & E using the historical
depreciable life of the underlying assets as a benchmark. Visa does not have many
tangible assets, so this includes amortization of software as well. Depreciation is
scheduled to remain fairly steady over the coming years.
14. University of Oregon Investment Group
UOIG 14
May 20th
, 2016
Undervalued/(Overvalued)
Terminal Growth Rate
-0.5% 0.0% 0.5% 1.0% 1.5%
0.12 (37.97%) (35.86%) (33.50%) (30.84%) (27.84%)
0.10 (29.27%) (26.80%) (24.05%) (20.96%) (17.46%)
0.08 (19.08%) (16.20%) (12.99%) (9.38%) (5.29%)
0.06 (7.11%) (3.74%) 0.03% 4.26% 9.05%
0.04 7.01% 10.97% 15.40% 20.37% 26.00%
WACC
Considerations Implied Price
Terminal Growth Rate
Avg. Industry Debt / Equity 28.57%
Avg. Industry Tax Rate 26.00%
Current Reinvestment Rate 6.06%
Reinvestment Rate in Year 2024E 5.86%
Implied Return on Capital in Perpetuity 9.10%
Terminal Value as a % of Total 61.5%
Implied 2015A EBITDA Multiple 14.1x
Implied Multiple in Year 2024E 3.8x
Free Cash Flow Growth Rate in Year 2024E 3%
Termianl Year CAPEX % of Revenue 6%
Figure 35: Sensitivity Analysis, Visa
Source: UOIG Spreads
Source: UOIG Spreads
Figure 18: Visa Final Price
Source: UOIG Spreads
Figure 36: DCF Considerations
Method Implied Price Weight
Discounted Cash Flow 62.16 80%
Forward Comparables 82.70 20%
Implied Price 66.26
Current Price 77.42
Overvalued (14.41%)
Litigation Provision
Visa has historically been involved in frequent litigation and has also paid out
significant penalties in the past, most notably $4.1 billion in 2012. Considering
they currently have pending litigation with several firms, I accounted for possible
penalties in my model by building in over $1.5 billion in possible penalties
through 2023.
Capital Expenditures
Capital expenditures has been historically low for Visa as a percentage of
Revenue and represent investments in technology assets and VisaNet
infrastructure. I believe Visa will continue to have to invest in assets in order to
account for increasing volume and to maintain state-of-the art security. Therefore,
Capital expenditures is trending slightly upward in the future.
Tax Rate
Visa’s tax rate was projected at 30% going forward. This was derived from
guidance, industry figures and market consensus. Determining Visa’s marginal
tax in countries where it records revenue was not possible due to Visa’s lack of
transparency around this and changing sales mix in revenue generating countries.
Net Working Capital
Net working capital was determined based on current assets less cash, trade and
investment securities. The receivables and payables were projected based on days’
sales outstanding and are projected to be fairly constant as a percent of revenue
with a slight downtrend in settlements. Deferred tax assets were eliminated from
calculation because Visa recently reclassified them as long-term assets. In the
same manner, tax liabilities were also netted out of the historical current liabilities
and then projected net of tax liabilities to maintain cohesiveness. Current client
incentives were projected based off their historical average ratio with client
incentive liabilities (the matching account). Customer collateral was removed
from calculation because it is an offsetting account. Visa Europe’s NWC was used
merely as a reference. Their current structure of ownership by European Banks
heavily distorts their payables and receivables
Recommendation
As a global leader in payments processing, Visa has established itself as an
excellent business with a wide economic moat. However, there is a distinction
between a good investment and a good business. Investors are overvaluing Visa
based on unrealistically high expectations about future performance. While this is
possible, the chance of litigation, merger problems, or slowing growth is a far
more likely outcome. If Visa does not maintain double digit growth for the
foreseeable future, they are likely to decline in value as investors re-evaluate their
expectations. The level of upside based on Visa’s current price is extremely slim,
and therefore should be sold. With a final price target of $66.26, Visa is
intrinsically overvalued at its current price of $77.42. My valuation warrants an
underperform rating, and therefore I recommend a sell for the Tall Firs Portfolio.
22. UOIG 22
University of Oregon Investment Group 5/20/16
Appendix 8 – Sources
Visa SEC Filings
FactSet
FinViz
Visa Investor Relations
IBISWorld
Visa Earnings Calls
S&P Capital IQ
Visa Press Releases
Visa Investor Presentations
CreditCard Hub
ECB Online
NASDAQ
University of Oregon Presentation Materials