Visa Inc. Overview August 2010
Disclaimer The following materials and management s discussion of them may contain forwardlooking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements can be identified by the terms anticipate, believe, continue, could, estimate, expect, intend, may, plan, potential, predict, project, should, will and similar expressions that are intended to identify forward-looking statements. In addition, any underlying assumptions are forward-looking statements. Such forwardlooking statements include but are not limited to statements regarding certain of Visa s goals and expectations with respect to adjusted earnings per share, revenue, adjusted operating margin and free cash flow and the growth rate in those items, as well as other measures of economic performance. By their nature, forward-looking statements: (i) speak only as of the date they are made, (ii) are not guarantees of future performance or results and (iii) are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Therefore, actual results could differ materially and adversely from those forward-looking statements as a result of a variety of factors, including all the factors detailed from time to time in Visa s reports filed with the U.S. Securities Exchange Commission, including Visa s quarterly reports on Form 10-Q and its annual report on Form 10-K. You are cautioned not to place undue reliance on such statements, which speak only as of the date of this presentation. Unless required to do so under U.S. federal securities laws or other applicable laws, we do not intend to update or revise any forward-looking statements. 2
What is Visa? What We Are Global payments technology company Transaction-processing network that connects cardholders, merchants and financial institutions What We Are Not Credit card issuer Lender Exposed to consumer credit risk Payments technology company that helps power the global economy. 3
The Visa Inc. organization Global public company (NYSE: V) Headquarters in San Francisco Major operations in Miami, London, Singapore and San Francisco Bay Area More than 6,000 employees worldwide Visa Inc. s clients are issuing/acquiring financial institutions and merchants. Visa Inc. derives revenue primarily from fees paid by financial institution clients, fees based on volume, transactions and other services provided. 4
A 50-year history 1958 1976 1987 1997 2008 2008 Bank of America launches BankAmericard, the first general purpose card program, in California National BankAmericard Inc., an association of financial institutions, changes its name to Visa and introduces the first debit card Visa introduces multi-currency clearing and settlement, increasing transaction efficiency Total payments volume passes US$1 trillion globally Visa lists on the New York Stock Exchange under the ticker symbol V and raises US$19.7 billion in the largest initial public offering in U.S. history U.S. debit payments volume eclipsed that of credit for the first time in the quarter ending December 31, 2008 Visa Confidential 5
Statistical Overview Visa Inc. is the world s largest retail electronic payments network, with more than $4.8 trillion transacted on our payment products over the four quarters ended June 30, 2010. $4.8T Total Volume 2 1.8B Visa Cards 5 1.7M 15,900 ATMs 3 Visa Inc. Operates the world s largest retail electronic payments network 1 Financial Institution Customers $3.0T Payments Volume Statistical data in U.S. dollars; data as of June, 2010 unless otherwise noted. Excludes Visa Europe, unless otherwise noted. Figures are rounded. 1 Based on payments volume, total volume, number of transactions and number of cards in circulation. 2 Includes payments and cash transactions. 3 As reported by client financial institutions as of March 31, 2010. May be subject to change; includes ATMs in the Visa Europe territory. 4 Includes payments and cash transactions. 5 As of March 31, 2010 66B Total Transactions 4 6
Visa s role as payments network Issuing Banks Issue cards Assume cardholder s credit risk Set and collect card fees and interest rates Provide customer service for consumers Provides processing and operational systems Sets standards and rules for financial institution clients Develops products Provides risk management Builds and manages global brand Develops new market opportunities (acceptance) Acquiring Banks Sign up retailers Provide processing Manage authorization, capture and settlement Generate recurring reports/statements Provide customer service for retailers 7
Our relationship with cardholders While financial institutions manage direct, day-to-day interactions with cardholders, Visa works with those companies to offer: Convenience A single global payment product that works virtually anywhere, anytime, in any way. Visa users value its worldwide acceptance and ease of use at millions of merchant locations and at ATMs in 200 countries and territories. 1 Security Because of VisaNet s centralized architecture, Visa is able to see every Visa transaction that flows through its network. This enables Visa to risk-score transactions in real time and provide state-of-the-art security features to potentially stop fraud at the most important point before it happens. Control Electronic payments offer greater control than cash, serving as powerful tools to track and manage spending. [1] As reported by our financial institution customers and therefore may be subject to change; includes ATMs in the Visa Europe territory. 8
Evolving beyond credit Visa has rapidly evolved beyond its credit roots to offer a broader range of payment products and transaction processing. U.S. debit payments volume eclipsed that of credit for the first time in the quarter ending December 31, 2008. As of the four quarters ending June 30, 2010, more than 50 percent of Visa payments volume in the U.S. is on debit products. It is not accurate to refer to Visa as a credit card company. US FY Annual Payments Volume ($ trillions) $2.0 $1.6 Debit Credit $1.2 $0.8 $0.4 $0.0 1990 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 9
Strong secular trends are driving a shift to electronic payments. Consumers Increasingly attracted to convenience, security, enhanced services and rewards Business and Governments Looking to improve efficiency, visibility, control and security Merchants Accepting electronic payments to improve customer convenience 10
Non-Discretionary Spend Non-discretionary consumer spend is the most resilient and fastest growing part of Visa s business USA Region, Consumer Credit and Debit Volume Primary Merchant Segments 2001 2007 2009 2010 1 Discretionary Discretionary retail Restaurants Lodging Airlines 75% 67% 46% 64% 44% 64% 59% 43% Non-Discretionary Gasoline Bill payment Grocery Discount stores Drugstores Quick service restaurants 2 Notes: Debit includes Interlink 1 Quarter ended June 30, 2010 2 Prior to Q409, quick service restaurants were classified as Discretionary. Historical data is updated to reflect current definition Source: Visa Inc. analysis through June 2010 29% 41% 25% 33% 54% 44% 36% 56% 48% 36% 57% Credit Debit Credit Debit Credit Debit Credit Debit 51% 11
Globally diversified business Total volume by region, four quarters ended June 30, 2010* Visa Canada 4% Visa CEMEA 12% Visa US 44% Visa AP 25% Visa LAC 15% * Includes payments and cash transactions. Figures are rounded. 12
Visa s unique competitive advantages Clients Large and Diversified Client Network Brand Powerful, Compelling, Memorable Brand Products Broad Set of Products and Services Processing State-of-the-Art Processing Capabilities 13
State-of-the-art processing capabilities with VisaNet Reliable Flexible VisaNet Secure Scalable VisaNet provides cost and functional advantages. 14
Leading global brand creates significant value Visa Leads Global Payment Brands in Brand Equity* Key Sponsorships Strong Brand Equity Attributes Accepted 126 85 MasterCard Convenient Secure 50 American Express Brand Equity - Global % Creates powerful permission to introduce new products to customers * Source: Brand Health Study was commissioned by Visa and conducted by global research firm, Ipsos-ASI, using its proprietary model and normative database, most recently surveyed in Q2 2009. See appendix for details. 15
Visa Accolades May 2010 Bloomberg BusinessWeek Visa ranked #26 for its accomplishments in IT services in its first year of inclusion on the list of the world s 100 best performing tech companies of 2010. April 2010 Fortune 500 Visa ranked #326 out of America s 500 largest corporations and #2 within the financial services category. March 2010 World's Most Admired Companies Visa ranked #1 in the Consumer Credit Card and Related Services Category for the second year in a row. February 2010 World's Most Respected Companies Visa ranked #32 on this list of the most highly regarded public companies. February 2010 All-American Investor Team, Institutional Investor Visa ranked #10 overall in February 2010 with individual #1 rankings in five areas. February 2010 TrustR Brand List Visa ranked #6 on the list of the ten most trusted brands in the U.S. and #5 among the ten most trusted and recommended global brands. 16 16
Visa payment types Visa s network facilitates a broad range of payment transactions. Pay Later Pay Now Pay Before Credit products draw funds from a credit line Debit products, such as Visa Check card draw funds from a current account Prepaid products draw funds from a pre-funded card account that can be funded from a variety of sources 17
Strategic initiatives to drive growth Prepaid ecommerce Money Transfer Mobile 18
Prepaid opportunity Prepaid addresses consumer segments and payment sectors not served by other products Underserved: general purpose reloadable Government: benefits disbursement Branch and retail: travel and gift Corporate disbursements: incentive, rebates, vouchers Healthcare: health savings, healthcare reimbursement Visa s position in the category is unique Full suite of branded products Network services, including ReadyLink, partial authorization/balance return and auto-substantiation Issuer processing Co-brands 19
Mobile opportunity With more than 4 billion devices, mobile may be the world s first ubiquitous technology. 4 Billion Mobile Devices 2.1 Billion TVs 1 Billion PCs 1.6 Billion Internet Users 1.8 Billion Visa Cards 218 Million ipods Source: ipods: Apple.com (July 2009); PCs: Gartner (April 2008); Internet users: Internetworldstats.com (Dec 2008); Mobiles: International Telecommunication Union (Jan 2009), GSMA (Feb 2009) 20
Mobile strategy Visa s mobile strategy extends Visa payment, money transfer, value-added services and acceptance capabilities to mobile channels. Payment Point of Sale Mobile Visa paywave payment Remote Via IVR, SMS, mobile Internet Money Transfer Remittances Cross-border and domestic Value-Add Offers Mobile offers and discounts Alerts and Notifications Customer-set parameters and issuer-triggered alerts Acceptance Mobile Acceptance Mobile device enabled to accept Visa payments 21
Money-transfer opportunity 22
ecommerce opportunity Marketplace Situation Forrester reports global ecommerce sales are growing >20% annually and will approach US$1 trillion by 2010 Security and convenience are key consumer concerns in the ecommerce channel Customer loyalty (powered by permission-based marketing) remains the top merchant priority, making data acquisition and appropriate customer profiling highly valuable Initiative Strategy Increase merchant preference for Visa through value-added products/services Enhance cardholder value proposition of security, convenience and reliability Continually enhance and promote security to maintain stakeholder trust Improve ease of cross-border transactions and enhance international consumer and merchant experience Continue to build upon Visa s investment in the payment system Sources: Visa; Forrester, The State of Retailing Online 2008: Marketing Report, Updated August 19, 2008 23
Global Brand Health Tracker Methodology Appendix: Summary Purpose/Methodology Brand Health Study Purpose: The purpose of this Visa-commissioned quantitative study is to measure the Health and Equity of the Visa brand Vendor: Ipsos ASI Ltd. Method: U.S.: Telephone interviewing (random digit); Outside of U.S.: Face-to-face or telephone interviewing depending on country Dates: U.S.: Continuous interviewing from 2005 to 2009 for this report; Outside of U.S.: Interviewing waves, from 2005 to 2009 for this report Number of interviews: U.S.: Approx. 80-90 completes per week; Outside of U.S.: Varies by country, at least 1,000 per year per country Qualifying criteria: Those not working for conflicting interest. U.S.: adults 18+ who own at least one payment card, with a household income of at least $10,000; Outside of U.S.: Banked adults 18+ Representation: Individual countries are weighted by composite measure (payment card penetration and PCE) Global Countries: U.S., Canada, Brazil, Mexico, Australia, South Korea, Japan, China, India, Russia, GCC (UAE, Saudi Arabia) 24