The total volume of card purchases made on Visa (V) branded products globally has risen from around $2.1 trillion in 2006 to $3.1 trillion in 2010, driven by increased purchases made on debit and credit cards. Visa saw strong earnings in the first quarter of 2011, backed by continuous growth in payments volume (14% year-over-year), both U.S. and internationally. The company mainly competes with card networks like MasterCard (MA), Discover (DFS) and American Express (AXP). We have an $85 price estimate for Visa, which is around 8% over the current price.
Visa recently entered into the personal payment market by partnering with CashEdge and Fiserv. This move will enhance the usefulness of Visa's network by enabling consumers use it to pay one another.
Combine that with an increase in the number of cards issued and the growing number of mobile transactions, and we expect Visa's payment volumes to register healthy growth ahead. While we anticipate payment volumes to reach $4.7 trillion by the end of our forecast period, Trefis members predict the volumes will cross $5.3 trillion, implying an upside of 4% to our price estimate for Visa stock.
Card Issuance Growth
Card issuance is growing at mid- to high-single-digit rates globally, demonstrating the continuing growth opportunities for Visa as a result of the ongoing shift toward electronic payments from traditional cash.
The number of mobile payment users worldwide increased to 73.4 million in 2009, and crossed the 100 million threshold in 2010. According to In-Stat, a market intelligence firm, the mobile payment trend will become global in the years to come with the of number of mobile payment users reaching 375 million by 2015.
Visa is leveraging the growth trend in mobile payments. Last year, it partnered with DeviceFidelity. Now, by using its In2Pay technology, Visa issuers can load the Visa mobile payment application to microSD cards, providing account holders with the convenience and security of mobile contactless payments.
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