The
Market For Money
I just read this on Scott Loftesness's blog and
thought it was worth sharing. Scott was an EVP at
Visa in the early 90's and his blog is an unbelievably
comprehensive discussion of the payments space. Here is his
discussion of Visa's recent announcement that this Visa system had
reached $1 Trillion in annual United States transaction volume. It
is an amazing growth curve and reminds me of a comment Peter Thiel,
the former CEO of PayPal, made to me one day when we were having
lunch -- he said that when he was pitching PayPal to VCs he was
tempted to describe his market opportunity as the "market for
money." Visa's numbers prove that that is precisely their market.
VC's are always looking for big markets to penetrate and the market
for money certainly qualifies. Here are Scott's thoughts:
Visa USA announced this morning that, for the first
time, its annual sales volume exceeded $1 trillion.
The record usage means that an average of $32,000 went
through the Visa system every second of every day over the 12-month
period that ended March 31 - or nearly 10 percent of the 2002 U.S.
Gross Domestic Product.
"One trillion dollars is an almost incomprehensible
number, but it represents clear evidence of the silent revolution
we're witnessing in the way consumers pay for goods and services.
It means $12 of every $100 consumers spent in the U.S. is spent
using a Visa card," said Carl Pascarella, president and CEO of Visa
USA. "This is an important milestone in the history of U.S.
commerce. Clearly, more and more people rely upon the security and
convenience of Visa credit, debit and other payment products. To
put it into context, $1 trillion could buy 162,000 Harley-Davidson
motorcycles every day for a year."
By comparison, $1 trillion is greater than the combined
volume of all other U.S. payment organizations, a field that
includes MasterCard, American Express, Discover and
others.
Just before I left Visa in 1994, I remember having a
discussion with a colleague about growth in sales volume. 1993 had
just ended with $500 billion in annual Visa sales on an
international basis. We were focused on that total growing to $1
trillion globally over the next five years. As I recall, the US in
1993 was about 40+% of the global total -- so the growth in US
volume over the last nine years has been pretty amazing. Of course,
this is also one of those statistics that has a nice built-in
inflation hedge too (the numbers just keep growing!). $32,000 a
second -- at a $50 average ticket that works out to an average of
640 Visa transactions per second.[via VentureBlog]