I evaluated Visa Inc.’s business and operating models and I believe that the company is a “winner” in its ability to align the two.
Company Overview: Established in 1958, Visa is a global payments technology company that connects consumers, businesses, financial institutions and governments globally to fast, secure and reliable electronic payments. Visa owns and operates its proprietary network – VisaNet. Visa does not issue credit or debit cards. Visa simply provides the technology behind processing electronic transactions.
Business Model: Visa’s business model is to displace all forms of paper-based payments (think cash and checks) globally with Visa transactions processed over VisaNet.
Although one may assume that credit and debit card products already have a high penetration in the market, the data reveals a different picture. As we can see from the charts below, even as of 2015, Visa has a massive opportunity lying ahead both in emerging and developed markets to capture share from cash and checks.
Challenge: The fundamental challenge for Visa in trying to get consumers and businesses to initially switch from cash and checks to electronic payments is trust. Specifically, trust that your Visa card will be accepted, and trust that your transaction will be safe. Trust was a challenge when the company was founded 50 years ago, and trust continues to be the challenge today as the company tries to expand into underpenetrated markets.
Operating Model: Visa is laser-focused on the challenge of winning and maintaining customer trust, and has designed its operating model around this. One key feature of Visa’s operating model is to invest heavily on marketing to build credibility and brand awareness. Thirty years ago, Visa launched a campaign called “Visa: Everywhere you want to be.” The company also began placing Visa billboards in every major airport around the world as a reminder of its global reach, a practice which continues to this day. The core concept of “everywhere you want to be” was to convince customers that Visa was safe, secure, and reliable payment system anywhere in the world – and that you should not feel hesitant to leave your home without any cash. In fact, any moment you find yourself having to pay, Visa is there.
In 2013, Visa relaunched its “everywhere you want to be” campaign, echoing the theme and the company’s consistency and reliability through time. Having worked in the organization, I am aware that the entire company lives and breathes this motto. Both versions of these advertisements (1987 and 2013) are posted below.
Implications for performance and Unique Capabilities: Visa marketing campaigns started at a much smaller scale thirty years ago than what we as consumers see today. These smaller scale campaigns were incredibly successful in getting consumers to trust the company and the Visa brand which drove huge adoption. This rapid rise in adoption helped with the incredible revenue growth that the company has seen so far. More revenues and consequently more cash flows gave Visa the ability to invest more in marketing campaigns and this kept going as a virtuous cycle. Visa now is a ~$200 billion market cap company that generates an annual cash flow from operations of ~$7 billion. Today, Visa is able to launch campaigns that are endorsed by celebrities like Morgan Freeman and Larry Fitzgerald simply due to the capabilities they were able to build in the first place.
Competitive Reaction: Visa’s marketing campaign was so successful that Visa’s biggest competitor MasterCard also launched a big marketing campaign focused on trust. It came up with the “Priceless” (link below) marketing campaign which is ranked one of the most popular advertising campaigns in the history of the payments industry.
Final Thoughts: As the payment industry evolves and more focus is put on digital payments, it will be really interesting to see how Visa is able to translate the message of trust into this space. Consumers don’t yet fully trust the digital world and the release of information into the cloud has been a source of tension for the payments industry. Although the Visa brand is a great starting-point, there are as yet no clear winners in the digital / mobile space. The relevance of Visa as a company will only endure if the company is able to stay nimble with changing industry context.
“Everywhere you want to be” Campaign
Mastercard “Priceless” Campaign
Examples of Visa’s advertising placement