How Visa Became The Most Popular Card In The U.S.

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$6.7 trillion. That is how much Americans spent using their debit or credit cards in 2019. More than 60% of those purchases were made using cards from Visa, a company that has long dominated the payment card industry. As payment cards become more essential in our daily lives, Visa has quickly grown to become one of the most valuable companies in America. So how exactly does Visa make money and why does it dominate the payment card industry? Watch the video to find out.

Clarification: The 10% mentioned in the video at 11:45 refers to 10% of the average 2.2% of the swipe fee charged to merchants.

Americans are increasingly using plastic to spend their money, enabling Visa to grow its dominance in the credit and debit card space.

People in the U.S. spent $6.7 trillion through credit and debit cards in 2019, up 88% from 2009, according to a 2020 report by HSN Consultants. Of those transactions, more than 60% were made with Visa cards.

This has helped Visa grow into one of the world’s most valuable companies. As of Oct. 19, Visa has a market valuation of more than $491 billion. Its shares are also up more than 170% over the past five years.

However, some retailers argue that Visa’s success has come at the expense of merchants who rely on them to process payments. Some have even said the fees imposed by Visa are too high for businesses to survive.

“I know a lot of business owners and it saddens me because so many people have come to accept it as it is what it is,” Hub Convenience Stores CEO Jared Scheeler said. “These prices are so ridiculous. The amount we pay in swipe fees is so high that we have to do something about it, somebody has to do something about it.”

Swipe fees collected by Visa and Mastercard ballooned to $67.6 billion in 2019 from $25.6 billion in 2009, according to data from the National Retail Federation. The overall processing fees paid by U.S. merchants to accept all card payments jumped to $116.4 billion in 2019, up 88% since 2009.

“This is a central part of the problem with their dominance,” Merchants Payments Coalition executive committee member Doug Kantor said. “The exact way they were set up was to be this dominant price-setting entity and the fact that it’s gone on this long is a problem for everybody else in the economy.”

Visa declined to comment on this story.

To be sure, those in support of Visa argue the company is on the merchants’ side.

“Visa on some level is a victim of their own success in the sense that they’re so ubiquitous and so secure and so easy to use that people begin to take it for granted,” MoffettNathanson analyst Lisa Ellis said. “Visa’s business structure is very balanced and if anything is actually skewed, believe it or not, towards the merchants. They actually get the majority of their revenue from the banks and the ecosystem that’s supporting the merchants.”

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How Visa Became The Most Popular Card In The U.S.

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26 COMMENTS

  6. Hello how are you?
    Can you add one more dollar to fees?
    Credit Union says Brownsville Texas owes 6 million dollars.
    Can you add one more dollar on 6 million cards to pay Credit Union from Brownsville Texas, students can get more educated?
    Visa cards are one of the best credit cards.
    JulioValdez Brownsville Texas
    Good day

  10. As an indian i find it extremely funny how one of the most advanced countries on earth is still bearing card network company monopoly, whereas in india we have unified payments interface and IMPS, under UPI we can scan a QR which the merchant has and we can payment without any charges, its so successful that even small vegetables vendors have it and for bigger transactions there is IMPS, visa and master card were crying before US govt due to revenue loss and we also have our own govt corporation developed card network Rupay🗿

  11. What all GOVs need to do is globally is come together and write up laws against banks to stop them from charging excessive fees to the merchants for card transactions. It is the only way it will happen. Banks are never going to turn round and go “you know what, we’re already making boat loads of money, let’s cut our profits and make it a bit easier on the merchants.” LOL.

    The UK GOV restricted the banks charging people for going over their account limit as 1) the bank is the one who “approved” the transaction, and 2) the banks excuse for the charge was apparently for the time it took the process the breach of overdraft and processing… which lol, is all computerised and automated!
    So now, if you don’t have an overdraft limit the bank won’t allow you to spend more than is in your account and if you do have an overdraft and you breach it, they give you 3 days to sort it out before charging you.

  13. I recently canceled a Visa credit card for the third time due to recurring issues that I think are caused by Visa Account Updater. I have a merchant who was never authorized to charge my card. Despite my efforts to address this with the merchant, they persist in attempting unauthorized charges on my credit card. Bank of America assists by canceling the card on my behalf, but the replacement Visa card appears to be automatically sent to the unauthorized merchant, enabling them to make unauthorized transactions. These ongoing situations lead to recurring incidents of unauthorized transactions each month. I'm not 100% sure this is the case, but everything I've done in my research seems to indicate this is true.

  16. Things are a bit strange right now. Inflation is making the US dollar weaker for buying things, but it's getting stronger against other stuff. So, stuff like stocks, houses, crypto, and precious metals aren't doing so great because folks are putting their money into dollars for safety. I'm worried about my $320,000 savings losing value fast. Where should I put my money to keep it safe?

  24. Governments issued coins when they were invented, same with cash. They should also create digital currencies free for businesses and consumers to use. Being stuck between a private tax and cash is unacceptable.

Comments are closed.