As we continue our £10-a-week investment challenge, our next pick for the Growth Stocks Portfolio is Visa Inc. (NYSE: V). Just as a reminder, we are reviewing normally stocks in our Investment portfolio section and we are also running a couple of challenges for growth stocks and dividend stocks if you are interested to follow/. Now, coming back at Visa, it is time to learn a bit more about it.
This global payments giant has been at the forefront of digital transactions for decades, benefiting from the ongoing shift towards a cashless society. But is Visa still a good investment in 2025? Will it continue to grow as fintech evolves? And how does its valuation stack up against competitors? Let’s dive in.
Visa: A Global Leader in Payments
Visa is a dominant force in the payments industry, operating in over 200 countries and facilitating trillions of dollars in transactions annually. It’s not a bank but acts as the network that connects consumers, merchants, financial institutions, and governments, enabling seamless digital payments.
With an extensive ecosystem, Visa generates revenue from:
- Transaction fees – A small cut from every payment made through its network.
- Cross-border transactions – Higher fees when payments occur across different countries.
- Value-added services – Fraud prevention, data analytics, and consulting.
As the world moves further away from cash, Visa continues to expand its market share in digital and contactless payments, reinforcing its long-term investment appeal.
How is Visa Performing in 2025?
Visa’s latest earnings report (Q1 FY2025) showed impressive financial strength, driven by increased consumer spending and cross-border travel.
- Revenue: $8.6 billion, up 9% year-over-year.
- Net income: $4.6 billion, a 15% increase.
- EPS (Earnings Per Share): $2.41, exceeding Wall Street expectations.
- Payment volume growth: Up 8%, with cross-border transactions rising 16%.
Despite economic uncertainties, Visa continues to benefit from global travel recovery, higher e-commerce activity, and increasing adoption of digital wallets.
Will ‘Buy Now, Pay Later’ (BNPL) Drive Growth for Visa?
One of Visa’s most exciting developments is its entry into the Buy Now, Pay Later (BNPL) space. With BNPL services like Klarna and Afterpay gaining popularity, Visa is positioning itself as a key player through Visa Installments, allowing banks and merchants to offer flexible payment plans. We also purchased another payments growth stock in our previous week that we believe it will see the growth of the BNPL
- Why is this important? The BNPL market is projected to grow to $1 trillion by 2030. Visa’s massive network gives it an advantage in scaling this service.
- How will it impact revenue? Unlike standalone BNPL providers, Visa can integrate these services without taking on lending risks, making it a profitable opportunity.
If Visa successfully capitalises on BNPL, it could add a new revenue stream and strengthen its grip on the payments industry.
Should You Buy Visa Stock in 2025?
Visa has been a long-term compounder, delivering consistent growth and shareholder returns. But should you buy it now? Let’s break it down.
1. Strong Competitive Advantage
Visa operates a highly profitable business model with a wide moat. Unlike banks, it doesn’t take on debt risks, relying instead on transaction-based fees. Its closest competitor, Mastercard (MA), has a similar structure, but Visa holds the largest global market share in payments.
2. Forward Price-to-Earnings (P/E) Ratio
Visa currently trades at a forward P/E of 26, which is higher than some value stocks but reasonable for a dominant, high-margin business. Its consistent earnings growth justifies this premium.
- Comparison: Mastercard (MA) trades at a forward P/E of 27, while PayPal (PYPL) is lower at 14, reflecting PayPal’s recent struggles.
3. Dividend Growth & Share Buybacks
While Visa isn’t a high-yield dividend stock, it offers strong dividend growth:
- Current dividend yield: 0.8%
- 5-year dividend CAGR: 17%
- Payout ratio: Less than 25%, leaving room for future increases.
Additionally, Visa’s aggressive share buyback programme enhances shareholder returns. In the last quarter alone, it repurchased $3.3 billion worth of stock.
4. Risks to Consider
- Regulatory scrutiny – Governments worldwide are increasing scrutiny on payment fees, which could impact Visa’s profitability.
- Competition from fintech – Startups like Block (XYZ) and PayPal (PYPL) are innovating rapidly, though Visa remains dominant.
- Economic slowdowns – Consumer spending dips during recessions, affecting transaction volumes.
Where Will Visa Be in 5 Years? (Forecast 2030)
Visa’s future looks very promising, thanks to three key trends:
- Continued Digital Payment Growth – Cash transactions are declining, and Visa is at the centre of the cashless revolution.
- Expansion in Emerging Markets – Growth in Latin America, Africa, and Southeast Asia presents huge opportunities.
- AI & Fraud Prevention Innovations – Visa is investing heavily in AI-driven fraud detection, enhancing its security features.
Price Prediction for 2030: Based on analysts’ projections and Visa’s historical growth rate, its stock price could reach $450 – $500 by 2030 if earnings continue to compound at 10-12% annually.
Final Verdict: Is Visa Stock a Buy for Our £10-a-Week Investment Challenge?
Visa remains a fantastic long-term investment, offering stability, profitability, and growth. Its entry into BNPL, continued expansion in digital payments, and strong financials make it an attractive buy.
For our £10-a-week investment challenge, Visa fits perfectly into our growth portfolio, providing exposure to the ever-expanding payments industry.
With a dominant market position, rising dividends, and steady earnings growth, Visa is a stock to hold for years.
Would you invest in Visa? Let us know your thoughts! Stay tuned for next week’s pick in our £10-a-week challenge.
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