Visa Set To Grow On Alliances And Pact; Macro Risks Remain

On Aug 22, 2016 we uploaded our research report on Visa, Inc. (NYSE:V) , a leader in global payments.

The company, already with a significant presence in the global payments market, will rise further in rank with its acquisition of Visa Europe that closed in June. Visa Europe provides the company direct access to the very attractive European payments market, which was an early adopter of the mobile payments system. It will further boost Visa’s market position and poise it better than MasterCard Incorporated (NYSE:MA) , American Express Co. (NYSE:AXP) and Discover Financial Services (NYSE:DFS) .

Visa remains committed to technological advancement as evident by the rollout of its initiatives such as Visa Digital Commerce App, Visa Token Service, Visa Checkout and Visa Developer Platform. These initiatives have enabled digitalization of payments which help in checking fraud, which is one of the main purviews of payment processing companies. Also, it is issuing chip installed cards using EMV technology. More than 326 million Visa chip cards were issued as of Jun 2016. The chip in the cards reduces chances of theft of card data.

Visa also reached an accord with Paypal last month which ended more than a decade of rivalry over digital payments. Per the deal, PayPal will stop discouraging customers from linking accounts to Visa cards and share more data with the card network in exchange for "long-term Visa fee certainty" and other incentives which will lead to higher transactions through the Visa network.

No doubt, Visa remains a leader in the payment processing industry. Yet, earnings of this company will be stressed over the coming quarters by the strength in the U.S. dollar on translation and cross-border volumes, continued low oil prices, and weakness in China and oil-based economies. Foreign exchange volatility, higher, incentives, rebates and expenses will also mar overall growth.

Currently, Visa carries a Zacks Rank #3 (Hold).