As well as operating many of Canada’s credit and debit cards, the VISA International Service Association, shortened to VISA, is the world’s largest processor of payment cards. VISA was the first credit card provider to penetrate the Canadian market.
Card payment processors are the companies that make it possible to pay money between a purchaser and a vendor who bank with different institutions, who would otherwise have to open accounts with a huge group of banks.
VISA is a Californian company. It started in 1958 as the Bank of America card. Other banks had tried to tap into this market as it was becoming common to maintain revolving lines of credit with a number of merchants. However no bank had the market power to make this possible.
Bank of America decided to roll the new card out in the Californian city of Fresno, where they had a very large market share. They sent out pre-approved and unsolicited credit cards by direct mail. This method had never been used before. The roll out made it the first successful credit card. VISA is still based in California, with its headquarters in San Francisco.
In 1968 VISA entered the Canadian market as Chargex, so that it wouldn’t be called the Bank of America Card. It teamed up with a number of banks including CIBC, TD Bank, National Bank of Canada, the Royal Bank of Canada and Scotiabank. In 1977 it dropped the Chargex name and became VISA.
From its foundation until 2008 VISA was an association of card issuers and so was jointly owned and managed by the more than 20,000 institutions that issued the card. In Canada there was also the VISA Canada Association that dealt with the Canadian affairs of VISA. This proved unwieldy and it was decided to make it a profit making company and so in 2008 it floated on the New York Stock Exchange (NYSE). MasterCard, its main competitor had followed the same route two years before.
VISA later started issuing debit cards. These are different from credit cards as they cannot get a credit balance and instead they rely on the balance in the checking account. As they can’t get a credit balance they do not make money through the interest charged, but instead rely on charges to shop owners to process credit card transactions as well as annual and quarterly fees charged to the card holder.
VISA settles its accounts through a network system that it developed. It is centralised and has terminals that feed the data into central hubs. Many people see this as being less resilient than the internet like network that MasterCard uses.
VISA in Canada advertises itself as a card which can be used all over the globe. As the world’s largest credit and debit card provider VISA, doesn’t have issues with coverage that other cards have.
VISA has a zero liability policy on its credit and debit cards if the card has unauthorised transactions. This protects users from liability that would otherwise arise from theft or fraud.
Visa has a large sports sponsorship programme that includes the Olympics and Paralympics, the FIFA international soccer association, the Canadian bobsleigh and skeleton teams and the National Hockey League. It is also a major contributor to the Canada Film Festival.