How Visa Makes Money

Visa makes money through service fees, data processing fees, and international transaction fees

Last Updated July 23rd 2021
7 Min Read

Visa Inc. (V) is perhaps one of the most popular and recognised names in the financial industry across the globe. One of the leading global digital payments brands, Visa provides services in more than 200 countries and territories encompassing individuals, merchants, financial institutions, and governments.

Visa offers a wide range of services such as authorisation, clearing, and settlement services for financial institutions and merchants. Furthermore, even though Visa does not issue credit or debit cards, it provides credit, debit, and pre-paid card services to individuals and businesses. It is Visa's clients which issue the actual cards.

Visa makes money and earns its profits by selling its services as an intermediary between financial institutions and merchants. However, Visa does not profit from the interest charged on Visa-branded card payments. That goes to the financial institutions that issue the cards. Visa is a dominant player in the market with only a few big rivals such as Mastercard Inc. and the digital payments company PayPal Holdings Inc.

Key Points

  • Visa is a digital payments company that facilitates transactions between financial institutions, consumers, merchants, and banks
  • The company earns most of its revenue from data processing operations
  • Visa's approach is to expand its presence in digital vehicles such as contactless payments, e-commerce, and the like
  • Visa acquired the fintech company YellowPepper in November 2020

Visa's Financials

Visa has reported a $3.1 billion net income on $5.7 billion of net revenue in the first quarter of the 2021 fiscal year (FY) that ended on December 31, 2020. This was a net income decline of 4.5% and a net revenue decline of 6.1% compared to the figures from the corresponding period of the previous year.

After an adverse impact of the COVID-19 pandemic in 2020, Visa’s revenue has begun to show some signs of recovery now. However, like the other businesses world over, the pandemic situation continues to pose a lot of uncertainty to the company’s plans.

Visa’s net revenue from its U.S. business, which constitutes around 47% of its total net revenue fell 1.8% in the first quarter of the 2021 FY. The remaining 53% of the total net revenue, from the international sources, also fell.

A fall of 9.5% in that portion of revenue was driven by year-over-year (YOY) changes in cross-border volume, which was affected by the pandemic situation and higher client incentives. However, the growth in the volume of national payments and processed transactions partially offset the shortages in the net revenue.

Visa's Business Sectors

Visa operates in a single business segment, Payment Services. However, it regularly divides the revenue into four sub-segments that act as its major revenue generators. These segments are classified as Service Revenue, Data Processing Revenue, International Transaction Revenue, and Other Revenue.

Although Visa defines these sub-segments as "elements" of its net revenue, they are reported gross of client incentives. For the Q1 FY 2021, the sum of the revenue totals for each segment amounted to gross revenue of about $7.5 billion. Visa's net income of $5.7 billion for the period is equal to the gross revenue minus client incentives.

How Visa Makes Money

1. Service revenue

Visa earns revenue from its service sub-segment where the company earns income from services provided for supporting the client’s use of its payment services.

This specific service is in addition to the authorisation, clearing, and settlement services related to Visa’s payment services. In the Q1 FY 2021, Visa had earned $2.7 billion as service revenue, which is about 35% of the company's total gross revenue. This figure is more than 4.8% compared to the figure from the corresponding quarter of the previous year.

2. Data processing revenue

Visa also earns income from its data processing services. This revenue includes all income generated from the company's clearing, settlement, authorisation, network access, and other value-added services.

In the Q1 FY 2021, Visa earned its largest portion of gross income from its data processing revenue. This amounted to 40% of the revenue - $3.0 billion. This figure has gone up by 5.9% when compared to Q1 FY for the previous year.

3. International Transaction Revenue

As a global service provider, Visa has several international services in its portfolio such as cross-border transaction processing and currency conversion.

All these services generate income for the company, and it is accounted as international transaction revenue. Visa’s international transaction revenue amounted to $1.5 billion, which accounted for about 19% of its gross revenue in Q1 FY 2021. However, this was a fall of 28.1% compared to the figures from the same period in the previous year.

4. Other revenue

Apart from the above mentioned areas, Visa earns income from other services such as license fees, value-added services, account holder services, and more.

All these are grouped as other and they account for 5% of the company’s Q1 FY 2021 gross revenue, which translates into $384 million. This segment accounts for the smallest portion of the company’s total revenue. Other revenue grew 5.2% compared to the figure from the corresponding period of the previous year.

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Recent Developments

Despite the uncertainty due to the global pandemic situation, Visa completed its acquisition of YellowPepper in November 2020. YellowPepper is a fintech company that supports leading financial institutions and start-ups in Latin America and the Caribbean.

The acquisition is the first of its kind in the region for Visa. With this, Visa is hopeful of strengthening its presence in the region and accelerating its "network of networks" strategy. As a result of the acquisition, Visa is said to be able to offer a single point of access for initiating different types of transactions and facilitating secure money transfers.

In this context, it is also worth mentioning that recently Visa terminated a merger agreement with Plaid Inc., following an antitrust lawsuit filed by the U.S. Department of Justice (DOJ). The company also agreed with the Department of Justice to dismiss the litigation related to the same.


Visa earns a major chunk of its income from within the U.S. and from the digital payment services it offers. However, it is also smart enough to spot opportunities and devise strategies to benefit from the ever-changing dynamics of the finance industry.

The acquisitions and mergers show that the company is looking forward to growing and would not shy away from making the best of the opportunities that come its way.

Of course, the current pandemic situation and the uncertainties it brings with it make planning and strategising difficult. However, despite the ups and downs, Visa seems to be poised for even better performance and making a stronger impact in fintech services in the days to come.

And, if things go their way, it would not be surprising to see the future revenue figures beating the past performances.

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