Visa 2013 Annual Report Download - page 3

A letter from our CEO
While we are proud of these results, we know that you, like
us, are equally focused on what we are doing to build our
business for the long term. Visa operates in a dynamic industry
with tremendous growth potential, but we have strong and
increasing competition of all types and sizes. We do not take
our leadership position for granted, and we are working hard to
maintain our position at the forefront of electronic payments
globally.
Building on Our Legacy
In the one year since I became CEO of Visa Inc., I have learned
a great deal about the company and our history. In particular, I
have come to appreciate how our history charts a clear path for
our continued success.
Our business traces its roots to 1958, when an innovation center
run by Bank of America began to mail cards to its customers in
Fresno, California, where it did business with about 45 percent
of the families living there. At the same time, the bank met with
local retailers and explained that many local families would
soon have these cards. In a short space of time, a network was
created that would benefit both parties.
The benefits to accountholders and retailers were clear,
assuming enough people used the card and enough retailers
accepted the card. For the consumer, the idea that one card
could provide the benefits of a charge card with access to
instant credit was appealing. For local merchants, credit cards
opened new opportunities for growth. Unlike their large
counterparts, smaller retailers were unable to effectively offer
store credit or other emerging payment options. General
purpose credit cards offered two advantages:
1. Customers could walk into a store and not be constrained
by the amount of cash in their pockets.
2. Banks could step in and provide a host of services
for the merchant, such as recordkeeping, assessing
creditworthiness and managing that credit.
Both merchants and consumers recognized the value
proposition, and each was willing to pay for the benefits, but
the product only made sense if both parties fully participated.
The credit card business had its ups and downs in these early
years and, after several years of trying to build a network within
the bank, Bank of America believed more value could be
realized by creating a broader, more open network. They began
to license the program to banks across the world in the late
1960s, allowing them to use different brand names locally.
Two changes took place in the 1970s that defined our
organization and reshaped an entire industry. First,
BankAmericard became an independent entity that was
eventually united under a common global brand — Visa.
Second, Visa launched VisaNet, the world’s first truly electronic
authorization, clearing and settlement system, which enabled
transactions to be completed in seconds.
Dear Shareholders,
Visa had another strong year in 2013. Net revenue
was $11.8 billion, a 13 percent increase over 2012.
Net income increased 18 percent to $5.0 billion, and
diluted earnings per share increased 23 percent to
$7.59, compared to 2012 adjusted results. These results
are gratifying as they were achieved in a period of
modest and uneven economic growth, political
uncertainty, and diplomatic tensions across the world.