Whilst the constituent companies of the Global Leaders portfolio are, for the most part, well established, they are also masters of adaption.


Adaption can often be regarded as a series of defensive measures to address competition but it is as easily understood, in the context of companies that outperform endemic growth rates, as grasping new and developing opportunities.

In this Deep Dive series we identify developing growth vectors for companies in the portfolio. We define growth vectors as elements of each companies’ business that will generate super-normal (that is above the endemic growth rate of a sector) for at least the next 10 years.

A common view of VISA (applicable also to MasterCard) is that it will inevitably be swept aside by financial innovation. It has an enviable and therefore breachable moat based upon the tight and mutually beneficial relationship with issuing banks. It possesses a 40% market share in global payments volumes. It enjoys very high margins. Aspects of its business ecosystem would look very different if that ecosystem was established from scratch today. Our relationship with plastic is undergoing change.

Upon inspection, though, we find that the relationship between financial incumbents and emergent financial technology (FinTech) innovators is multifaceted, with the two often simultaneously acting in collaboration and competition. In 2019, 64% of consumers worldwide had used at least one FinTech platform, up from 33% in 2017. The global FinTech market attained a market value of US$194bn in 2022, which is expected to grow at a CAGR of 16.8% to reach a value of US$493bn by 2028.

VISA’s response has been to establish itself as a partner of choice through facilitating new markets and services in a drive to benefit from the new solutions looking to address pain points in the commerce value chain and mitigate the disruptive influences. Through establishing a VISA-centric ecosystem, VISA has supported the industry through connecting FinTech services to its partners to deliver new commerce experiences at scale.

This is achieved through a two-pronged method. Firstly, a “open network” business model stimulates consistency across global payment experiences via open interoperable standards. Secondly, it’s “network-of-networks” strategy promotes universally accepted media of transaction by providing single points of connection. VISA argues that through bringing traditionally competitive closed-loop players into its partnership-based openloop environment, VISA is able to both share (and set) the standards for a global secure and trusted network, protect its market share and grow marketplace acceptance.

The security aspect should not be underplayed. As we will see in the profiles that follow, financial fraud (amateur and professional, highly organised and opportunistic) is the most reliable bull-market at work in the world today. VISA (MasterCard and American Express) are global experts in transacting high volumes at low risk.

VISA currently has 3.5 billion issued cards in circulation today and 2 billion accounts. However, VISA has partnered with over 4,000 startups since 2015 via through programmes such as the VISA Everywhere initiative, adding over 1.5 billion non-cardholder credentials, resulting in >6.5 billion endpoints and raising more than US$16bn in funds. Moreover, working with these providers have enabled new acceptance methods, with Alipay and WeChat alone opening up acceptance in China, adding roughly 65 million new acceptance locations for VISA users in China.

This Journal is taken from the Cerno Global Leaders Investment Report – Q1 2023, which can be read in full here.

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