Introduction
Visa Inc. Company is a technological company which facilitates the payments of transactions using an electronic card. Visa Inc. has managed to spread its wings through vigorous advertising. In fact, Visa Company operates in over 200 listed banks with billions of customers globally (“VISA Inc. Story – Profile, History, Founder, CEO | Service Companies | Successstory” 1). This research paper represents a SWOT and Pestle analysis for Visa Inc. Company with the motive of evaluating the steps the company can take to improve customer’s transactions globally.
SWOT Analysis
Strengths
Convenience
Customers prefer visa credit cards because they are convenient to carry and they also make shopping easy for them. Visa has also eased international visits. People can make transactions from whatever location they are in through swiping their cards. Customers have now the option of purchasing the visa cards in the debit or credit card form which is also advantageous for the banks that utilize them.
Good Network Coverage
The company has invested in a good network system which has considerably reduced the technical hitched while using the card and also increasing the number of transactions done (“VISA Inc. Story – Profile, History, Founder, CEO | Service Companies | Successstory” 1). Although visa Inc. does not directly issue the cards to the customers, the company has cooperated with the issuer and the user of the cards to ensure that the transactions are swift and hence reduce delay. Once Visa Inc. receives a signal from a payment system, the network immediately checks the sufficiency of the funds and thus authorizes the payments. Visa Inc. has also collaborated with apple Inc. to ensure that customers can make and receive online payments and also make payments through their mobile applications (“Visa, Mastercard, American Express Boosted By Apple”). Apple Company has created customer’s loyalty which is an addition for the visa Inc. Company since they can bank of the many customers that the company has.
Security
Visa Inc. Company has enhanced security for their users by initiating the modern cards with a chip called EMV (Euro pay, MasterCard and Visa). With the EMV card, every transaction that a customer makes is unique and hence the receiving company cannot use the cardholder’s details to engage in fraud (Tilborg, Henk and Sushil 412). Each card issuer therefore has a microchip which traces the activity of every card thus making the transactions safe for everyone. Customers can hence be assured of their safety while making their transactions hence reducing theft cases especially in stores that has synonymous with a breach of data. By linking the cards to the mobile applications, the card users can comfortably track their transactions to check if there are any malpractices involved.
Weaknesses
High Transaction Costs
Visa card is synonymous with their high interest fees which make it had to reach all the global clients. The cards charged higher for people making transactions in different banks and hence they have also travelled across other nations. Visa Inc. Company has for instance engaged in a tangle with Woolworth over their high transaction fees making the company prefer other modes of payments. The high transaction costs have led to law suits against the company which means that they have lost some of their funds through law suits.
Fraud
The company has faced high fraud cases which makes customers reluctant to make their payments using the cards. Some companies have become notorious for stealing the customer’s details and withdrawing cash directly from their account or engaging in fraudulent activities with their cards. There have been many legal suits with customers complaining that most banking officials collaborate with thieves to steal their client’s cash. The company is however making consistent efforts to ensure that customer’s funds are safe and fraudulent activities have also reduced through the EMV chip cards (Bhunia, Sandip and Susmita 308).
Entry Challenges
Visa has failed to access the Chinese market due to strict government regulations. The Chinese government has ensured that foreign payment systems are not registered in the country and hence the Chinese have to rely on their payment methods. The Chinese government has also restricted other companies from operating using Yuan meaning that only Union Pay can facilitate payments within the country hence making it hard to compete with them.
Opportunities
Visa Inc. Company has the chance of venturing into the developing economies that have not yet used the credit cards. With the growing world’s economy, it has now become necessary for people to own cards to make the transactions. Most underdeveloped countries still rely on cash but they need this new revolution to safeguard their payments and also make international transactions. There is therefore a need for the company to research on countries where they can introduce the digital currency and hence benefit from the great financial returns. Visa Inc. can also expand on the services that they are currently offering their customers like increasing the cash back days so that they do not prefer other cards. The company should also further explore the internet and upscale its advertising to ensure that it reaches more people.
Threats
The card payments business has become competitive with other companies developing modes of payments that seem more convenient and cheaper. For example, Visa faces a huge threat from MasterCard Company which has implemented vigorous advertising to gain more customers globally. Customers do not seem to be loyal to one company and can easily change their cards when they expect to have better perks than the previous one. The global economy has also been facing highs and lows meaning that transactions are fewer and unpredictable. There is a need therefore for VISA to upscale its global advertisements, reduce their fees and enhance their security measures to ensure that customers remain loyal to them.
Pestle Analysis
Political
Visa Inc. Company has to contend with the act that the banking sector is flawed with politics. Most governments want to dictate the activities within the banking sector which may potentially affect the income for Visa Inc. Company. For example, Dodd frank act has ensured that the interchange and swipe fee is reduced thus protecting the retailors but on the other hand reducing the profits for visa (Anand 20). Some governments have also limited access of visa to their economy. China for example, china has also monopolized the payment system by only allowing union pay to transact using the Yuan. Visa therefore has to be watchful of the different legislations set within the countries they operate in to reduce legal suits and make business smooth for them.
Economical
The global economy has not fully recovered following the financial recession experienced in 2008 meaning that more people are wary of taking up credit cards. The global debt ratio is still high and people have become cautious and instead have resulted to saving their cash. There is a still high unemployment rate in most developing countries especially for the young people who would otherwise become prime market for visa Inc. company’s products. There have also been rising rates of fraudulent activities through the visa cards with customers gradually losing their trust on the company.
Social
Visa Inc. Company must strive to ensure that they meet the needs of the customers in the countries that they operate in (Speth and Carly 16). Visa Inc. Company stands to benefit from the fact that most of the customers are young and are financially agile. Young people love to shop online because they have a variety to choose from and it also the satisfaction of easily transaction from anywhere in the world. Visa has also created its brands over time and more people would easily trust the card in the market. Visa however has to deal with the fact that after the financial recession, most people have become cautious with debt which may likely reduce the sales of the credit cards.
Technological
Technology keeps of advancing meaning that Visa Inc. Company has to be up to speed with the recent developments. Visa Inc. Card holders now can transact through the internet which makes cashless transactions possible and easy. The customers need to simply order and enable the companies to make cash deductions through their cards which end up saving on costs in the long run. With the modern EMV chip cards, the company can also enhance customer’s security and hence reducing fraudulent activities (Tilborg,et al.,412).Visa Inc. Company has also facilitated e-business since more people can set up online ventures and effortlessly receive payments without having a physical contact with the customers.
Environmental
Visa Inc. Company is constantly faced with regulations that seem to ban the use of plastic. Visa Inc. therefore has to brainstorm on better ways of making their cards to ensure that they comply with the law. Visa must constantly aim to portray a responsible behavior in the public which includes being open about the deductions they make to the merchants and ensuring that they detect and reduce fraudulent activities to protect the customers.
Legal
Visa Inc. Company ought to comply with the legal measures out in every country that they operate in. For instance, in America, the federal government has implemented the Dodd Frank Act which puts a cap on the fees charged by the company (Anand 12). The act has also limited the company’s market share which also means that their earnings may not grow as desired.
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