Growing Visa
Fifteen years ago, I sat down in a coffee shop near my office in Mayfair and opened up a securities prospectus that had recently landed on my desk. Visa had been founded many years before as an electronic payments network but for most of that time it had been structured as a mutual organisation, owned by the financial institutions it served. By October 2007, these financial institutions were ready to sell; the company reorganised into a joint stock corporation and filed for IPO.
The prospectus explained the company well. It described how as a network, Visa sits between bank card issuers and merchants to facilitate payments. After a consumer presents their card to a merchant, Visa routes an authorization request to the consumer’s bank. Provided the authorization checks out, Visa then also routes a clearing message, which contains all the relevant transaction data, and directs the bank to settle funds in an amount it calculates, net of fees.
Visa doesn’t move money – that’s the job of th…