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Visa - Stabilized growth across Europe and the United Kingdom

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Leading payment card network across Europe with market share of 68% in 2010:

Visa is the largest end-to-end payment technology provider across Europe, with strong market dominance across Easter Europe controlling market share of 68% in 2010. The company offers horizontally and vertically diversified payment platforms and brands (Visa, Visa Electron, PLUS and Interlink) across 150 countries across the globe. Visa's previous avatar "National BankAmericard Inc" was born in 1970. While Visa is publicly listed on New York Stock Exchange with market capitalization of US$74.3 billion (July 2011), its Europe operations generated operating revenue of US$210 million, with year-on-year decline of 4% in 2010. The company enhanced share buyback program worth US$1 billion in 2009.

United Kingdom consumer credit card transaction decline by 2.7% in 2010:

The United Kingdom credit cards market is worth US$2.85 billion with transaction volume of 24.5 million per day in 2010-2011. The number of issued credit cards stood at 81 million, which works out to approximately 4 cards for every adult in the United Kingdom. Visa has the largest credit card network under circulation across Europe controlling market share of 68% in 2010. MasterCard is the closest competitor with market share of 27.7%. The Eastern European credit card market is close to duopolistic with two largest providers controlling 95% of market space. Further, the contactless card market will witness exponential growth across the United Kingdom over the next 4-5 years.

Focus on contactless card technology across United Kingdom:

Visa Europe operates one processing center in the United Kingdom which is redundant system for catastrophic disasters. In the United Kingdom, the company is aggressively enhancing market positioning across contactless payment cards. In 2011, the company signed a five-year alliance with Monitise, to accelerate the deployment of mobile services to Visa account holders. The contactless payment card market is stipulated to reach 20 million, with year-on-year growth of 100% in 2010-2011. Orange, Barclays, Transport for London and McDonald's are enhancing contactless card technology critical for Visa in the United Kingdom.

Will Visa focus on non-core markets (United Kingdom) due to new regulations in United States?

The Wall Street Reform and Consumer Protection Act passed in July 2010 in the United States offers provisions that will establish regulation and oversight of debit interchange rates and certain other network industry practices. Although the regulation will be indirectly regulating the network fees (part of the core revenue mix for Visa), it might provide the retailers greater ability to route debit transactions onto competitive networks hampering processing fees backed revenue on long-term basis. It is vital to understand changing regulatory policies in the core market, i.e., the United States, to enhance penetration and growth strategies for Visa across the second most advanced payment market, i.e., the United Kingdom and Europe.

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