Revamped Visa Prepares for its IPO

  Visa this year expects to follow in MasterCard's footsteps with plans to conduct an initial public offering, perhaps later this year. The card organization says it plans to restructure to become a global public corporation called Visa Inc. that includes Visa Canada, Visa USA and Visa International.
  Visa President and CEO John P. Coghlan said in October that going public would make Visa more efficient, allow it to gain more access to capital and help it with legal claims. Analysts surmise that Visa will reduce its liability in merchant interchange disputes.
  Visa in 2006 revamped its brand campaign for the first time in 20 years. The new "Life takes Visa" slogan first aired during the Winter Olympics.
  Analysts say branding is perhaps one of the most important efforts a card company can make because it is what consumers remember when making payment decisions. "You need to have people recognize a brand so they use the card," says Gwenn Bézard, research director at Boston-based Aite Group. He says both MasterCard and Visa have huge brand recognition worldwide, more than even global companies such as IBM and McDonald's.
  Visa announced in April that it launched a comprehensive strategy to grow its presence in the small-ticket transaction space with its "No Signature Required" program for transactions less than $25. In addition, Visa offered acquirers lower credit and debit interchange rates for transactions less than $15 in 14 merchant categories.
  "This has been a significant issue for Visa, and it is becoming increasingly important," says Bézard.
  The total number of Visa consumer and commercial credit cards issued in the U.S. by the end of 2006 was 309 million, down 5% from 325.2 million in 2005.
  Total purchases using Visa consumer and commercial credit cards in the U.S. last year totaled 8.8 billion, up 8.6% from 8.1 billion in 2005. U.S. consumer card sales volume totaled $606.8 billion in 2006, up 8% from $563.5 billion in 2005.
  Commercial cards totaled 29.3 million in 2006, up 9% from 26.8 million in 2005. Commercial card sales rose 22.5%, to $174.3 billion from $142.3 billion in 2005. Businesses initiated 1.2 billion transaction using Visa cards last year, up 20% from 1 billion in 2005.
  Visa is now accepted at 24 million locations worldwide, 6.7 million of which are in the U.S.
  Visa reported 2006 net income of $455 million, up 26% from $360 in fiscal 2005. U.S. receivables at the end of 2006 totaled an estimated $340.7 billion, up 4% from $327.6 billion the previous year.
  The number of signature-based, or offline, Visa check cards issued in the U.S. as of the end of 2006 was 204 million, up 10% from 185.6 million a year earlier. Consumers purchased $459.7 billion worth of goods and services using check cards in 2006, up 12% from $410.5 billion in 2005. Cardholders made 12.1 billion check card purchases in 2006, up 13% from 10.7 billion in 2005.
  (c) 2007 Cards&Payments and SourceMedia, Inc. All Rights Reserved.
  http://www.cardforum.com http://www.sourcemedia.com