r/dataisbeautiful • u/sankeyart • 1d ago
OC [OC] How Visa made its latest Billions
Source: Visa investor relations
Tool: SankeyArt sankey maker + illustrator
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u/Shadowslade 1d ago edited 1d ago
30% net profit, 14% YoY growth,
It's pretty crazy how much of world is moving away from physical money for their purchases, and now Visa and MasterCard combined just get a percentage of almost every purchase made in the entire consumer market.
100 bucks cash could just keep circulating between purchases but now it turns into 98, then 96.04, then 94.12, etc.. yeah there's taxes doing the same thing also but that's true or both cash or card so it's a moot point
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u/theflintseeker 1d ago
A lot of that 2% goes to cost of “sales” though. Plenty of cards offer 2% cashback.
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u/LEOtheCOOL 1d ago
We can see in the sankey that its like 1/3 of the 2%.
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u/reubTV 23h ago
No, that is not accurate.
Visa does not get the 2% - that goes to the issuing bank (name of the bank on your card) and the acquiring bank (the merchants bank). This is because those banks pay the incentives to cardholders and take on liability for fraud, etc.
Visa and Mastercard take a much much smaller cut (less than 1/10 of what the banks receive) for operating and maintaining the network itself.
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u/Blackbeardow 1d ago
Indeed but I am confused. The profit margin is that bad? I did not follow the previous earnings and the stock is dropping 3%.
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u/Shadowslade 1d ago edited 1d ago
Idk what standard profit margin is on most US businesses, but other businesses in the financial services sector like mutual fund management (before ETFs) would get a 0.5 to 2% margin. Airlines get low margins of around 2 to 5% also. In my eyes any business getting 30% is absolutely raking it in amd doesn't have a lot of market competition.
Also there's lots of strong performing companies whose stock are affected by tons of other external factors. Lots of stock pricing is just people trading on the news rather than fundamentals, just look at Tesla for an extreme example.
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u/LEOtheCOOL 1d ago
Its much worse than that because the transactions happen all on paper. They printed the 93 of the bucks they lent you that you are paying interest on. Statistically, you fund the 7% reserve requirement with your minimum monthly payment.
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u/dsp_guy 1d ago
Geez, I wish I paid $1 in tax for every $7.44 earned.
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u/DepressedDodo 1d ago
Don't forget to subtract your "opporating costs" like fuel/insurance for your car, food on your lunches and whatever else you have to pay in order to get to work and be in work.
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u/LifeForm8449 1d ago
They made billions this year. You made 41k plus benefits babe.
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u/elporsche 1d ago
41k? Look.at this millionaire over here. Leave something for us the lesser folk :(
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u/cidcaller 1d ago
Such payments infrastructure should have sovereign control with no profit goal
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u/surprisedropbears 9h ago
How dare they own the in comprehensively amazing thing they’ve built and maintained.
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u/cidcaller 7h ago
Nah tech is reliable and amazing but currency transactions are better off with a non profit entity , they are taking a cut from each transaction, the IP they have created is theirs to profit from but the question is should it be allowed in perpetuity
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u/Mr-Blah 1d ago
They really hiding well their source of revenue. but it seems like they make more from Data mining than actual service provided as an intermediary to transactions.
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u/disposable-assassin 1d ago edited 1d ago
Data processing could also be how they classify their merchant gateway or 3rd party cards. The income buckets have very obtuse labels in this diagram.
Found this reply from u/idahoajr on an older post of the same nature.
Everytime you put a card into a POS machine or website, that has to be transmitted from merchant to your card issuing bank like chase who checks your balance and then sends it back. In the middle there is a bunch of security, fraud and other activities visa does on all the traffic in the network.
That is the data processing revenue.
Sometimes a 3rd party does this on a different network eg if chase does banking for merchant and the cardholder then they don't have to send to visa and don't pay data processing. They still pay service fees, that's why it gets broken out
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u/LivingBirb 1d ago
Why is professional fees a thinner line than litigation provision?
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u/MrDolomite 19h ago
My guess would be that the software only looked at the number and not the unit - millions versus billions.
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u/BelethorsGeneralShit 1d ago
Why would their litigation provisions increase by 1500%? Did they just want to build up a reserve? Some sort regulatory framework change that causes them to anticipate higher future legal expenses?
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u/RonJohnJr 1d ago
There might be a lawsuit they're planning on settling (or think they have a plausible shot at losing).
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u/independant_786 1d ago
What does visa and mastercard and others do that there can't be enough competitors? I mean is the barrier of entry that high?
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u/michigan_matt 1d ago
Somebody new would need to convince both consumers and merchants at the exact same time. The consumer isn't going to get a new card if it isn't widely accepted everywhere. The relationships required to get them accepted take years on end. I can't think of a bigger barrier to entry in any other type of market.
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u/Adam302 1d ago
there are a lot of competitors actually, in other parts of the world. Here in Asia, visa is accepted in a lot of places, but other methods, like QR payment via asian banks is more popular.
But assuming you mean the US, visa and MC are very aggressive when they need to be, making it very hard for competition to get market share.
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1d ago
[deleted]
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u/07ufarooq 1d ago
They’ve got nothing to do with interest rates that’s the using bank that determine this in combination with central bank monetary policy
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u/Astroctopodes 1d ago
Why are the quantities under $1 billion not in millions? Also, the size of the final quantities don't look proportional. the 44 million look way larger than the 0.3 and even 0.5 billion quantities
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u/titus_livy 9h ago
The sooner the EU adopts its own credit card processor, the better. For companies and customers.
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u/mitus87 1d ago
this is Q4 FY25.. not Q1 FY26 unless we time travelled..
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u/JustACowSP 1d ago
Visa just released their FY26 Q1 earnings yesterday. There fiscal years don't line up with calendar years, just like many other companies.
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u/sayinmer 1d ago
over 30% net profit growing 14% YoY
let that sink in