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Lawrence McOchillo

Why is Visa diversifying from credit cards?

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Visa Inc. (NYSE:V) is acquiring other companies in order to diversify its revenue streams from the traditional transaction fees charged for using Visa-branded credit and debit cards. The company recently released its earnings report for Q1 fiscal 2020 where revenues came in at $6.05 billion missing consensus estimates set at $6.08 billion.

The report further revealed that payment transactions using Visa-branded cards grew 8%, but revenues from the same were lagging given the large number of dual-branded cards in China. Most analysts expect revenue margins from card transactions to fall further as Visa faces stiff competition from MasterCard and other new entrants such as Square Inc.

The company is currently in the process of acquiring Plaid Financial for about $5.3 billion as it looks to diversify its revenue sources and compete with popular fintech companies. The strategy is likely to pay off over the long-term, especially if Visa finds a way to invest in, and monetize blockchain payment services.

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Now the company is going to diversify the sources of all income in order to compete with other companies and acquire billions of dollars, this is why..

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