Visa Inc, the world's largest credit and debit card company, reported a better-than-expected quarterly profit on Thursday due to a good holiday season and a strengthening U.S. job market that encouraged people to spend. The company said e-commerce, which mainly uses cards, was "extraordinarily strong during the holiday season." But Chief Executive Charlie Scharf said consumer spending on the whole, while at "reasonable" levels, was not accelerating.
Currently the Chinese market is largely inaccessible to foreign card networks as only China UnionPay is allowed to handle card payments in China. U.S. card companies such as Visa and American Express are protesting this monopoly, and the U.S. government has taken this issue to the World Trade Organization. If China decides to open up its market, we may witness a steep increase in transaction volumes, which could reach 120 billion by 2019. If this were to occur it would present a 5% upside to our price estimate for Visa.
The Government of the People's Republic of China allows citizens of a few specific countries (see below) to travel to the Chinese Mainland for tourism or business for up to 15 or 30 days without having to obtain a visa. However, these do not include countries in the Americas, the U.K., or Europe. Most foreign travellers to China (travel "to" China being defined as leaving the security zone of an international airport) are required to hold a visa. Exceptions to this requirement exist in certain parts of the country, such as Shanghai and Beijing, but not in most of the entry points into China.
