When you insert, tap, or swipe your credit or debit card to make purchases from your favorite retailers, stores, and restaurants, or when you enter your cashback credit card number online to make purchases, you’re requesting your card issuer to pay the merchant in question.
However, the payment must go through a credit card network, a fundamental stakeholder in the card transaction process. It plays an important role as a facilitator in passing relevant information between the acquiring and issuing bank. Your credit card issuer uses the information from the card network to decide whether to allow you to make the purchase or decline it for various reasons.
Two major credit card networks dominate the global payments industry: Visa and Mastercard. It is important to note that they operate as a payment network and don’t issue credit or debit cards to consumers. However, you’ll usually see a Visa or Mastercard logo identifying the credit card issuer’s partnership with the network. Let’s take a comprehensive look at Visa, one of the biggest payment networks in the world.
History of The Company
Visa came into existence in 1958 as a direct competitor to Master Charge, now known as Mastercard. It was founded by the Bank of America as the BankAmericard program. By 1966, it began to license the program to other financial institutions. 1970 saw Bank of America give up direct control of the program and form a consortium with other banks to oversee the program. The program was renamed Visa in 1976.
Interesting Facts About Visa
Visa has firmly established itself as a global leader in leading payment networks. It operates in more than 200 countries and territories. More than 15,000 financial institutions worldwide have partnered with Visa to provide customers with top-class debit and credit card services. There are more than 3 billion cards with a Visa logo in circulation totaling $13 trillion in volume.
It’s important to note that nearly all the transactions processed through Visa occur at four designated secure data centers. These are located in Highlands Ranch, Colorado, Ashburn, Virginia, Singapore and London, England. The company’s headquarters are in Metro Center in Foster City, California.
Visa has invested heavily in securing these data centers and ensuring that payment processing runs smoothly without significant hiccups. The facilities have top-notch security and can operate independently of each other. Also, Visa has ensured that these facilities are safe from natural disasters.
Participants in Visa’s Payment System
Various participants in Visa’s payment system play an active role in running and processing transactions seamlessly. First is the merchant, an entity authorized to accept Visa-powered credit/debit cards to pay for the products and services it offers.
Second is the merchant bank or the financial institution that accepts Visa cards and payments for purchasing the merchant’s goods and services. The cardholder is the authorized user of the Visa-branded cards. The issuing bank is the financial institution responsible for issuing Visa cards to the cardholders and entering into an agreement with the cardholder to provide the facility.
The other important participant is Visa,which partners with financial institutions to provide Visa-branded cards to cardholders. It also operates the payment network to facilitate the daily flow of electronic transactions.
Last but not the least, VisaNet is another important stakeholder. It’s part of Visa’s electronic payment system and acts as an authorization, clearing, and settlement service. All parties are required to work in tandem to make the transaction successful.
How Visa Makes Money
There are several ways through which Visa makes its money. One of the first ways is by collecting fees from financial institutions to issue Visa credit and debit cards to their customers. Financial institutions rely heavily on reliable payment networks such as Visa to facilitate transactions between merchants, cardholders, and other important stakeholders. Therefore, Visa charges fees to act as an intermediary.
Their main profit comes from acting as a middleman or intermediary in electronic transactions. Financial institutions pay hefty fees to Visa to ensure smooth and seamless payment processing. Visa takes such matters very seriously, which is evident in their heavy spending on securing data processing facilities and investing in modern tools and technologies to speed up transactions.
Visa also collects payments from merchants based on the transaction volumes of goods and services. One thing to keep in mind is that Visa doesn’t make money from the interest charged on the credit card payments, as this money goes directly into the pocket of the financial institution.
Visa reports its earnings through one broad segment—payment services. However, these so-called services are divided into four main categories: service revenue, data-processing revenue, international transaction revenue and other revenues.
Visa and Mastercard account for most of the electronic transactions worldwide. They have invested heavily in creating quality products and services. It’s hard to see anyone else challenging their supremacy anytime soon.
Where to Find Visa-Branded Credit Cards
Now that you understand the mechanisms of the Visa payment network, you might want to quickly apply for one and get the ball rolling. It’s important to remember that Visa doesn’t issue credit cards but partners with financial institutions to provide its products and services.
Therefore, you need a platform to compare several Visa options and select the one that fits the bill. Great Canadian Rebates is an online platform that lets you compare Visa credit card options available in Canada and apply for the one that best suits your needs and requirements. You can browse different travel credit cards and find the best Canadian cashback credit cards that add value to your purchases. From Scotia cash back credit card to Scotiabank momentum visa cashback card, you’ll find it all on the platform. Visit their website today for more information.