How Visa Became The Most Popular Card In The U.S.

$6.7 trillion. That is how much Americans spent using their debit or credit cards in 2019. More than 60% of those purchases were made using cards from Visa, a company that has long dominated the payment card industry. As payment cards become more essential in our daily lives, Visa has quickly grown to become one of the most valuable companies in America. So how exactly does Visa make money and why does it dominate the payment card industry? Watch the video to find out.

Clarification: The 10% mentioned in the video at 11:45 refers to 10% of the average 2.2% of the swipe fee charged to merchants.

Americans are increasingly using plastic to spend their money, enabling Visa to grow its dominance in the credit and debit card space.

People in the U.S. spent $6.7 trillion through credit and debit cards in 2019, up 88% from 2009, according to a 2020 report by HSN Consultants. Of those transactions, more than 60% were made with Visa cards.

This has helped Visa grow into one of the world’s most valuable companies. As of Oct. 19, Visa has a market valuation of more than $491 billion. Its shares are also up more than 170% over the past five years.

However, some retailers argue that Visa’s success has come at the expense of merchants who rely on them to process payments. Some have even said the fees imposed by Visa are too high for businesses to survive.

“I know a lot of business owners and it saddens me because so many people have come to accept it as it is what it is,” Hub Convenience Stores CEO Jared Scheeler said. “These prices are so ridiculous. The amount we pay in swipe fees is so high that we have to do something about it, somebody has to do something about it.”

Swipe fees collected by Visa and Mastercard ballooned to $67.6 billion in 2019 from $25.6 billion in 2009, according to data from the National Retail Federation. The overall processing fees paid by U.S. merchants to accept all card payments jumped to $116.4 billion in 2019, up 88% since 2009.

“This is a central part of the problem with their dominance,” Merchants Payments Coalition executive committee member Doug Kantor said. “The exact way they were set up was to be this dominant price-setting entity and the fact that it’s gone on this long is a problem for everybody else in the economy.”

Visa declined to comment on this story.

To be sure, those in support of Visa argue the company is on the merchants’ side.

“Visa on some level is a victim of their own success in the sense that they’re so ubiquitous and so secure and so easy to use that people begin to take it for granted,” MoffettNathanson analyst Lisa Ellis said. “Visa’s business structure is very balanced and if anything is actually skewed, believe it or not, towards the merchants. They actually get the majority of their revenue from the banks and the ecosystem that’s supporting the merchants.”

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How Visa Became The Most Popular Card In The U.S.

[Alexis_Marcelo]

When I was young, I thought VISA is the same VISA required for traveling abroad.

[mjordan]

I worked for Visa from 1983 to 2009. Just keeping up with growth was a full time job. It was one hell of a ride.

[nakibsayyed]

BlackRock and now Visa, I'm loving this session hopefully they'll continue and not start talking about cars again.

[Rfc]

I'm not sure where they get 10% as the cost of a transaction. In 2015, I was running a company that took credit cards, both by a merchant account and by PayPal. Using a merchant account was about 2.9% of the transaction +30c, but there was a $25 minimum in transaction fees.The highest % cost was PayPal at 3.3% of the transaction +30c and no minimum. The only way it could be near 10% if they mostly have card transactions of $3 or less. I don't understand how they get 10%.

[camadams]

13:27 She isn't wrong. Accepting cash is expensive. I worked at McDonalds for 2 years in college:

1) All the cashiers had to be trained to use a register, get use to counting out change
1b) Anything involving human's results in errors. 1-2 dollars per employee per day is a lot more than transaction fees
2) The manager spent 45 minutes to an hour balancing the books every night
2b) Swapping out the change in the register takes time
2c) Running out of change is always a problem
3) Being "short" whether actually or on paper consumes a ton of time to figure out
4) That cash has to be securely stored and transported


With digital only: No more mistakes, instantly balanced books, no more cash storage logistics.
Additionally, you increase customer through put

[NotShowingOff]

I wouldn’t be surprised if Amazon tried to directly compete with both. The swipe fees of Amazon are probably on Bezos hit list

[dnt_]

Literally had an American Express ad for this video😂

[brandon]

If more people used debit cards, businesses would pay significantly less in swipe fees. It’s a huge difference between debit and credit fees.

[lizhoward]

Those outrageous fees are exactly why I always use cash with store front small businesses.

[IsaiahHollins]

I only use visa because it was issued to me by my bank. I didn’t chose visa, visa chose me

[shankysays]

In india, i find it fascinating that upi (United payment interface) is fast replacing visa and MasterCard as most preferred mode of payment.

[llest]

Consumers rather swipe than carry around cash, or having to go to an ATM. Consumers also get a chance to earn points/ cash back features if they use their credit card. Along with protection and being able to purchase items without actually having the dollar amount at the moment. Consumers prefer the convenience and worry free ability to pay for an item/service. I myself carry some petty cash but 95% of my purchases are done cashless. Also cash is quite dirty and delicate at the same time.

[c.bulakh]

As an indian i find it extremely funny how one of the most advanced countries on earth is still bearing card network company monopoly, whereas in india we have unified payments interface and IMPS, under UPI we can scan a QR which the merchant has and we can payment without any charges, its so successful that even small vegetables vendors have it and for bigger transactions there is IMPS, visa and master card were crying before US govt due to revenue loss and we also have our own govt corporation developed card network Rupay🗿

[ManishKumar-ehol]

Here in India UPI transactions are around 3 billion per month, that too without any charges 🌝

[ymi_yugy]

If VISA makes 25ct per $100 that is 0.25%.
To me that doesn’t seem excessive.
It’s the banks that overcharge.

[VeggieRice]

during the pandemic, the additional processing fees that Visa levied were especially crippling to small businesses. When there's a financial crunch, Visa profits soar, while everyone else struggles.

[Jacarroll]

Ah Visa. The reason gas stations charge 10 cents more per gallon when you use plastic.

[InvestingwithKurt]

Hope they start talking about real investing and Vanguard... one day :)

[capslock]

2-3% fees to not have to deal with the logistics of dealing with cash is a bargain. No logistics, no human errors, and a wider consumer base.

[adityapatel]

Title: How Visa Became The Most Popular Card In The U.S.
Should be: How many legal challenges does Visa settle everyday and still survive.