Visa, a key player in the payment processing sector, is used by a wide array of businesses – from small retail businesses to large multinational corporations. Visa processed 242 billion transactions globally in 2022, according to data from Statista. Despite its popularity, Visa does have limitations, particularly in regions where local payment methods are popular. Markets, such as China and some countries in Africa, tend to favour local networks and mobile payment solutions, which offer a different set of capabilities and different fee structures.

Businesses that want to know how to use Visa, as well as the implications of Visa payment processing, first need to understand Visa's products and presence in various global markets. This includes learning about which types of businesses and customers Visa can best serve.

As mentioned before, Visa faces competition in markets where local payment systems are prevalent. And while Visa offers many services, including fraud protection and analytics, these offerings are often tailored to the needs of larger organisations rather than small businesses or startups. Visa focuses on security, employing multilayered protection for transactions. But its security capabilities might not align with every enterprise's requirements, especially those looking for custom solutions or operating in sectors with specialised compliance needs.

Below, we'll broadly discuss where and how Visa operates, whom it serves and what alternatives exist in different markets. We'll also examine the details of which services Visa offers, the fees and costs involved, and how Visa handles security and protects payments in each step of the transaction process.

What's in this article?

• What is Visa?
  
• Where is Visa used?
  
• Who uses Visa?
  
• How Visa works
  
• Business benefits of accepting Visa
  
• Visa security measures
  
• Requirements for businesses to start accepting Visa payments
  
• Visa alternatives
  

What is Visa?

Visa is a global payment technology business that connects customers, businesses, banks and governments, enabling them to use digital currency instead of cash or cheques. As a financial intermediary, Visa operates one of the most advanced and extensive payment-processing networks. Visa is a card network, but it doesn't issue cards or set interest rates. Instead, it provides the infrastructure for authorised issuers and cardholders to facilitate electronic funds transfers (EFTs).

Although Visa predominantly handles card-based transactions, it has expanded its capabilities to accommodate mobile payments, contactless payments and blockchain-based solutions. Its adaptability is a major reason why those requiring diversified payment options might choose Visa.

Where is Visa used?

Roughly 3 billion Visa debit cards are in circulation globally, demonstrating that Visa is one of the most extensively used and widely accepted payment networks. Major financial institutions, businesses and governments across the world rely on Visa for facilitating digital currency transactions.

Visa operates in multiple market sectors and geographic regions, and its presence extends across nearly every continent:

• North America and Europe: Visa is the payment card market leader, especially in the United States, United Kingdom and Ireland. Customers and businesses use Visa extensively for various transaction types, from retail to B2B payments.

• Asia Pacific: Visa has a high acceptance rate in countries such as Japan, Australia and Singapore. And it has gained traction in nations with strong domestic payment networks, such as China and India – particularly for international transactions.

• Latin America: From Brazil to Mexico, Visa is a commonly used payment network. It often collaborates with local financial institutions to offer cards and payment solutions tailored to local market needs.

• Middle East and Africa: Visa has gained acceptance in major economic hubs, such as the United Arab Emirates, South Africa and Saudi Arabia, often serving as a preferred option for local and international transactions. It has also taken a proactive approach to entering markets that are still developing their financial and digital payment infrastructures, including countries in sub-Saharan Africa.

Financial institutions across these regions often choose Visa because of its ample security measures, scalability and extensive global acceptance. Given its widespread geographic reach and deep market penetration, Visa remains a top choice for businesses that are operating or transacting internationally.

Who uses Visa?

Visa holds a dominant market share in several key regions – particularly in the US, where it accounts for more than 60% of the total credit card market. As a result, businesses across all industries use Visa to make payments and accept payments from customers. Here's a non-exhaustive list of the major sectors where Visa is commonly used:

• Retail and e-commerce businesses
  Visa is commonly accepted at physical retail locations, ranging from small boutiques to large-scale department stores. It's also a staple payment method on e-commerce platforms, often preferred for its speed and security features.

• Hospitality and travel businesses
  Hotels, airlines and travel agencies use Visa extensively for booking and payment processes. Visa's global acceptance makes it a preferred choice for travellers and international businesses alike.

• Utilities and services
  From telecom businesses to utility providers, Visa is a common method for recurring payments and one-off charges. Automated payment systems often support Visa transactions to simplify customer billing.

• Educational institutions and the public sector
  Government agencies and educational institutions use Visa for procurement and services. It can handle large transaction volumes and offers detailed, level 3 data, which is a comprehensive set of transaction information required for business-to-business and business-to-government credit card transactions. This includes specifics such as item descriptions, quantities, tax details and more. Providing level 3 data can often result in lower interchange fees, making it advantageous for organisations to collect and transmit this information.

• B2B businesses
  Visa supports various B2B payment options, such as virtual cards and bank transfers, which are optimised for vendor payments, payroll and bulk disbursements.

• Digital-wallet and mobile payment providers
  Emerging payment technologies, including digital wallets such as Apple Pay or Alipay, often incorporate Visa as one of the primary card networks for tokenised transactions.

• International commerce
  Visa excels in cross-border payments, providing currency conversion and multicurrency support. This is particularly relevant for global enterprises that focus on international commerce, as well as digital natives who make international purchases.

• Subscription services
  Media platforms, software-as-a-service (SaaS) providers and various subscription-based models rely frequently on Visa for automated recurring charges.

• Financial markets
  Hedge funds, asset managers and other entities within the financial sector use Visa for a range of investment activities, including fund transfers and liquidity management.

One of the main reasons why institutions worldwide use Visa so frequently is because it's also widely used by a diverse set of customers, including:

• Individual customers
  Visa cards are often the default payment option for everyday individuals, catering to a broad array of needs, from basic shopping to complex financial management. Many people prefer Visa because of its widespread acceptance and security features.

• Individuals with high net worth
  For people with significant financial resources, Visa offers premium card options with benefits that include travel insurance, concierge services and exclusive access to events. These cards often come with higher spending limits and advanced financial tracking capabilities.

• Freelancers and gig workers
  Independent professionals use Visa for receiving payments and covering business-related expenses. Visa's range of financial products caters to the flexibility and diverse income streams that characterise this work model.

• Digital natives
  People who are heavily engaged with digital technology – particularly younger demographics– often opt for Visa because of its compatibility with digital wallets and mobile payment systems. Visa's technology infrastructure, including QR codes and tokenised transactions, aligns well with the habits of digital natives.

• Travellers
  Frequent fliers and international travellers often choose Visa because of its global acceptance and multicurrency capabilities. Many travellers specifically look for cards that offer no foreign transaction fees, a feature available in many Visa offerings.

• Small-business owners
  Visa's small-business cards offer specialised solutions that include expense management and rewards for business-related spending. Many such cards come with tools to categorise and track expenditures, making tax preparation easier.

• Entrepreneurs and startups
  New business ventures often rely on Visa for its easy integration with payment platforms and point-of-sale (POS) systems. With options such as virtual cards and bank transfers, Visa accommodates the agile spending requirements of startups.

• Students
  Visa debit and prepaid cards are popular with students for their ease of use and low fees. These cards often serve as an introduction to financial management, allowing students to monitor spending and build credit history.

• Retirees
  Older adults find value in Visa's simplicity and widespread acceptance. Many opt for cards with straightforward rewards and low maintenance, often using them to manage pensions or Social Security payments.

Each of these customer categories finds value in the features and benefits that Visa offers. The payment network's adaptability to various spending behaviours and lifestyles makes it versatile and broadly appealing.

How Visa works

Visa plays a role in transaction authorisation, clearing and settlement. Transactions are encrypted and processed in real time, typically within milliseconds, which is important in high-volume, low-latency environments. Visa focuses on fraud prevention and data security by employing advanced algorithms and machine-learning techniques to detect fraudulent activities and protect account information. This is particularly useful for enterprises and platforms because of the volume of payments that they deal with – and the liabilities at scale posed by fraud risks.

Here's an overview of how Visa facilitates payment processing, as a card network:

• Card issuance and partnerships
  Visa collaborates with financial institutions that issue Visa-branded cards. These institutions are responsible for customer relationships and risk assessment.

• Transaction initiation
  When a cardholder initiates a transaction, information moves from the business's POS terminal to the acquirer (the business's bank).

• Transaction routing
  Visa then acts as an intermediary, routing the transaction information to the issuing bank for approval or denial, based on various factors such as available funds or potential for fraud.

• Data security
  During this routing process, Visa employs multiple layers of security protocols to protect sensitive information and deter fraudulent activity. This includes tokenisation and multi-factor authentication methods.

• Settlement and clearing
  Once the transaction has been approved, Visa coordinates the transfer of funds from the issuing bank to the acquiring bank. This involves steps to reconcile and settle all transactions, which are generally executed in batches at the end of each working day.

• Fee structure
  For each transaction, Visa charges a small fee, usually a fraction of the overall transaction amount. This fee is distributed among the business, the issuing bank and the acquiring bank in accordance with predefined agreements.

• Transaction data
  Visa also provides analytics and reporting capabilities that enable businesses to monitor transaction patterns, customer behaviour and other relevant metrics. This information is often used to improve operational efficiency and formulate business strategies.

Visa also offers a range of application programming interfaces (APIs) and software development kits (SDKs) that allow payment functionality to be integrated easily into various digital environments. Its network interoperability enables cross-border transactions, making it suitable for businesses that operate globally.

Business benefits of accepting Visa

Accepting Visa provides businesses with benefits that extend beyond basic transaction facilitation. Here's what businesses can gain:

• Wider customer reach: accepting Visa widens market access, reaching customers who prefer card payments or those without access to other forms of payment. This is especially true for international customers who rely on globally recognised payment systems.

• Quick transactions: Visa's technology enables swift transaction authorisation, clearing and settlement. This speed benefits the business and the customer, processing higher volumes of sales in less time.

• Risk management: Visa offers robust security protocols to protect against fraudulent activities. This reduces the risk exposure that businesses might face in digital transactions.

• Customer insights: with detailed transaction data available, businesses can analyse customer behaviour to make data-driven decisions. They can then use this information for marketing strategies, inventory planning and other operational aspects.

• Versatility: from POS terminals to e-commerce websites, Visa's compatibility with multiple payment platforms gives businesses flexibility in how they accept payments.

• Operational advantages: Visa offers APIs and SDKs that can be integrated into existing business systems. This enables easier accounting, inventory tracking and financial reporting.

• Loyalty programmes: Visa's infrastructure supports the integration of loyalty and rewards programmes, encouraging repeat business and customer engagement.

For businesses in all sectors, Visa provides data-driven insights that can inform decision-making. Through advanced analytics, businesses can gain a deeper understanding of customer spending behaviours and transaction trends. This detailed data can help significantly in formulating payment strategies.

Visa security measures

Given the diverse set of businesses and customers that Visa serves, as well as its global reach, security is incredibly important for Visa's vast payment environment. Sophisticated, layered security mechanisms safeguard transactional integrity and data confidentiality. These include:

• Encryption methods
  Visa uses a more layered encryption strategy than just the basic SSL/TLS technologies. For example, Visa encrypts data that's being transferred differently to data that's being stored, reducing vulnerabilities at different stages of data processing.

• Tokenisation
  Tokenisation replaces card data and often integrates with additional data points – such as transaction history – to create a multidimensional token that's hard to decrypt.

• Risk assessment algorithms
  These algorithms perform continuous, real-time assessments using machine-learning models trained on huge datasets, making them increasingly accurate.

• Multi-factor authentication specifics
  This feature includes SMS-code-based authentication, as well as application-based and hardware-based second factors – such as security keys – that are resistant to phishing.

• Biometric modalities
  Visa is expanding the number of biometric modalities that it supports, going beyond fingerprint and facial recognition to include voice recognition and behavioural biometrics.

• Regulatory compliance
  The European Union's PSD2 – Second Payment Services Directive – is a regulatory framework that is aimed at improving payment security, fostering innovation and enhancing customer protection within the EU's electronic payments market. While the EU's PSD2 is well known, different jurisdictions, such as Singapore, Australia and Canada, have their own sets of regulations that Visa complies with. In some cases, these regulations specify the kind of encryption or data storage requirements that must be met.

• High-risk sectors
  Businesses in high-risk sectors – for example, those that deal with regulated substances – face additional scrutiny. This can include higher transaction fees or requirements to use specific advanced security features.

• Customised products
  Different cards or payment solutions often have custom security features. For instance, corporate cards might feature advanced spend controls and real-time notifications, which function as financial management and security features.

Visa offers adaptable, multilayered security solutions which reflect the complexity of global payment processing – and the security commitment it demands.

Requirements for businesses to start accepting Visa payments

Through various APIs and SDKs, businesses can integrate Visa's infrastructure directly into custom payment gateways, gaining scalability and adaptability across multiple platforms and applications. To start accepting Visa payments – similar to accepting other types of card payments – businesses typically need to set up a merchant account through an acquiring bank or a payment processing provider, such as Stripe.

For businesses that accept payments using Stripe products, Visa acceptance is already enabled – and there's no need to open a separate merchant account because Stripe provides this functionality already. The contractual terms, conditions, obligations and rights are usually laid out in the agreement between the business and the merchant services provider.

After establishing merchant account functionality, businesses usually integrate payment terminals or POS systems that are compatible with Visa cards. This might include different hardware and software, depending on whether businesses need to accept payments in person, online or within a mobile app. Visa and Stripe accommodate payments in all of these environments, for customers using physical Visa credit and debit cards, as well as cards stored in a digital wallet.

Whether using Visa or any other card network, businesses should comply with the Payment Card Industry Data Security Standard (PCI DSS), which is a set of security standards designed to protect card information during and after a financial transaction.

Visa alternatives

Visa is not the only option for global payments. Viable alternatives are available to businesses and customers based on their specific needs, and the options can differ significantly depending on geographic location, transaction type and the costs involved. In the US, the other major card networks are:

• Mastercard: often a close competitor to Visa, Mastercard offers similar benefits and global acceptance. Mastercard also has specialised business services, such as analytics tools.

• American Express: although less universally accepted, American Express often offers more robust rewards programmes and benefits, such as purchase protection and travel insurance.

• Discover: accepted mainly in the US, Discover is known for its customer service and relatively low fees.

You can read more about US card networks here and more about other payment networks here, all of which provide alternatives to Visa.