TIVP020:VISA (V): IS VISA STILL THE CARD TO HOLD?

W/ DANIEL MAHNCKE & SHAWN O’MALLEY

18 May 2025

Daniel Mahncke and Shawn O’Malley break down Visa (ticker: V), the global payments powerhouse that acts as the invisible engine behind billions of transactions every day. Visa doesn’t issue cards, lend money, or handle customer accounts — instead, it operates the network that connects banks, merchants, and consumers in over 200 countries.

Whether you’re tapping your card for a coffee, shopping online, or sending money abroad, there’s a good chance Visa is taking a small slice behind the scenes. Visa is to the global economy what highways are to cars — an essential infrastructure layer that makes modern commerce move.

In this episode, you’ll learn how Visa evolved from a consortium of banks to a dominant public company, how it defends its massive competitive moat, where growth will come from beyond traditional card payments, whether emerging technologies like account-to-account payments pose a real threat, how to think about Visa’s valuation, plus so much more!

Prefer to watch? Click ⁠⁠⁠here⁠⁠⁠ to watch this episode on YouTube.

SUBSCRIBE

IN THIS EPISODE, YOU’LL LEARN:

  • How Visa’s business model works and how it earns money from transactions
  • Why every player in the payment process needs Visa
  • Visa’s origin story and how BofA’s BankAmericard changed banking forever
  • Where Visa’s growth will come from in the future
  • What are Visa’s Value Added Services and New Flows
  • Why Visa’s Moat is so impenetrable
  • Who are Visa’s competitors and what are the overarching risks
  • Whether Visa is attractively valued at current levels
  • Whether Shawn & Daniel add V to The Intrinsic Value Portfolio
  • And much, much more!

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:00] Daniel Mahncke: People just expect their cards to work anywhere instantly and with no hiccups. I think the uptime for the Visa network is 99.999%. That’s just huge. So it’s not enough to be good. A network must be absolutely flawless, and Visa has been perfecting this for decades. And finally, visa doesn’t just offer technology.

[00:00:22] Daniel Mahncke: It’s also huge on incentives. So just last year, visa spent almost $14 billion on incentives. So when you add it all up, global reach, brand trust, reliable tech, and then those direct incentives, visa just becomes an obvious partner, even for those bigger banks in the world that might have the resources to build their own network.

[00:00:50] Shawn O’Malley: Hey everyone. Today my co-host Daniel Mahncke, is back with another company pitch. And this time we are diving into a business that is. Sort of quietly involved in every purchase you make or almost so, and that maybe sounds a little bit ominous, but it is true. And whether you’re buying groceries, booking a flight, paying back a friend, or tapping your phone at a coffee shop, there is a good chance that this company earned a small slice of that transaction, maybe without even realizing it.

[00:01:17] Shawn O’Malley: It doesn’t manufacture anything. It doesn’t sell directly to consumers even, but it processes hundreds of billions of transactions a year. It actually moves trillions of dollars through its network. So with that said, this is the story of Visa, a company that started as a credit experiment in California and now has become the invisible backbone of global commerce.

[00:01:41] Shawn O’Malley: So today, Daniel, you will walk us through what Visa really does and doesn’t do, how it makes money, and whether its moat is still as wide as it looks, and it does look very wide. And whether this quiet giant still has room to compound for investors who are looking at it today.

[00:01:58] Daniel Mahncke: I think we’ll see that it has over the course of the episode. I’m excited to pitch Visa today. It really is one of those companies that operates almost invisibly. You don’t shop on a Visa website or you don’t use a Visa app, and yet it plays a role in trillions of dollars of commerce every single year. And pretty much all of us have some form of involvement with Visa.

[00:02:21] Daniel Mahncke: And as we’ll see today, it’s a phenomenal business model, which makes it even more astonishing that about 90% of the market is shared by just two companies, which are Visa and MasterCard, at least if you exclude China, which kind of plays its own role.

[00:02:36] Shawn O’Malley: That’s really the key thing to consider here, and that is to say payments are, of course a core part of the global economy is functioning, but for how important payments are, the railways that these payments go through are dominated by just two companies, as you pointed out with Visa and MasterCard.

[00:02:52] Shawn O’Malley: And usually we start the episodes here with maybe an overview of the company’s history, but in this case. I think it probably makes sense just to bring everyone up to speed on what exactly Visa does and what it doesn’t do.

[00:03:03] Daniel Mahncke: Right. So we probably should first eliminate the biggest misconception about Visa, and that is that Visa does not issue credit or debit cards, even though it’s over is on pretty much all of them and on mine as well.

[00:03:16] Daniel Mahncke: And it’s also not in the business of credit or consumer deposits either. Visa is really just a network, and that network is operating somewhat of a four party model that is the card holder, which are you and me, or basically every consumer or even little business out there. Then there’s the merchant, which could be Amazon, but it could also be your local coffee shop just around the corner.

[00:03:38] Daniel Mahncke: Then you have the issuer and the acquirer. The issuer is the consumer’s bank, so either yours or mine. Then the acquirer is the merchant’s bank. I think it all makes a bit more sense if we just start going through a transaction and see how it all works. You should also see, at least if you watch this on your screen, a graph that is kind of showing you where we want to go with this. Shawn, I think you like coffee, right?

HELP US OUT!

Help us reach new listeners by leaving us a rating and review on Spotify! It takes less than 30 seconds and really helps our show grow, which allows us to bring on even better guests for you all! Thank you – we really appreciate it!

BOOKS AND RESOURCES

NEW TO THE SHOW?

SPONSORS

Support our free podcast by supporting our ⁠sponsors⁠:

CONNECT WITH SHAWN

CONNECT WITH DANIEL

PROMOTIONS

Check out our latest offer for all The Investor’s Podcast Network listeners!

MI + TIVP Promotions

The Intrinsic Value Newsletter