Visa (V 0.49%) is a leader in processing debit and credit card payments. It has a presence in 220 countries and territories, and it handled a whopping $16.7 trillion in volume in fiscal 2025 (ended Sept. 30). That's a gargantuan sum that showcases its scale and reach.
This is certainly a high-quality business. But the financial stock only produced a total return of 12% in 2025, underperforming the broader market. If you buy Visa shares today, will they set you up for life?
Image source: Visa.
The rise of cashless transactions provides a durable lift
Over time, the economy expands with gross domestic product growth. With that, spending activity increases. Furthermore, innovative forces have propelled the adoption of cashless and electronic payment methods. This has supported Visa's growth.
Visa's revenue increased at a compound annual rate of 12.9% between fiscal 2020 and fiscal 2025. Wall Street analysts expect Visa's top line to grow at a double-digit percentage pace during the next three years. It's not unreasonable to believe that similar gains can be achieved over the very long term.
The company's most important market is the U.S. However, faster growth can come from emerging economies that have greater potential for development, like in Asia, Africa, and Latin America. Additionally, Visa's value-added services segment, which offers things like analytics, consulting, and cybersecurity, can be another growth lever as the economy continues to become more digital in nature.
Visa's profitability is incredible
It's clear that operating a tollbooth business such as this one is extremely lucrative. If you think about Visa's ecosystem as a highway that's already built, then it makes sense why the company is so profitable, putting up an impressive 50% net profit margin in fiscal 2025. Each transaction that takes place incurs minimal costs, since the infrastructure is already there.
These profits are protected. That's because Visa has built up a wide economic moat that is supported by its powerful network effect. The value proposition of the platform increases for merchants as the number of cards increases because there is a larger potential customer set. On the other side of that same coin, cardholders benefit with more merchants because they can spend at more places. Visa currently has 175 million merchant acceptance locations and 4.9 billion cards plugged into its network. It would be difficult for any business to replicate what Visa has built.
One could argue that the company's competitive position is under no threat of disruption and is actually impregnable. During the past decade, many innovations have entered the financial services space, from fintech payment solutions to stablecoins.
Visa's success continues as it positions itself as the foundational layer of commerce that can integrate with these new solutions. In fact, these novel products and services could benefit Visa, since they make it easier for consumers and businesses to adopt digital payments.
NYSE: V
Key Data Points
Fundamental strength doesn't mean monster shareholder returns
When thinking about buying stocks that can set investors up for life, I envision something like a 100-fold gain in a timeframe that spans 25 years. This translates to an annualized return of 20%. That's a fantastic outcome for any investor, provided they allocate enough capital to the opportunity up front.
I don't believe Visa fits the bill here. It's a mature company, even though it's very likely that strong revenue and earnings growth will continue for the foreseeable future. The starting valuation isn't cheap, with the shares trading at a price-to-earnings ratio of 32.2. There's not much upside for multiple expansion.
For what it's worth, investors shouldn't be looking around for individual stocks that can set them up for life. Putting all your eggs in one basket is a risky move, while building a diversified portfolio is the best course of action.
