Resilient VISA in Pandemic

Payment processor succeeds in marketing

Photo by Webaroo on Unsplash

In a rare visit to drive-through window of Starbucks in Ibaraki, I grabbed a regular product from right clean hand of shop keeper. The product varies from tall coffee in paper cup to a mixture of latte and sweet in transparent fragile plastic. A brief Starbucks joyful shopping experience ranges from the product variation to the target segment of fashionitas in the cosmopolitan area. The first joint-venture with Sazaby, a trading house, investigated the core busy street of Tokyo and opened the first store Ginza Starbucks in 1995. Since then, Starbucks opened five stores a day and penetrated into the outskirts of Tokyo, as is the case in other part of Japan. But Ibaraki is very far away from Tokyo. On the Starbucks road, a city driver stunned at the sign, “Be careful of raccoon”.

Even at this remote Starbuck store, local shop keepers take the Visa card as a means of cosmopolitan settlement. Regular customers have two engagements with barista, kind human coffee servers. One is when shop keeper serves the product and customers grab it. The other is when customers settle the payment. Every employee smiles at a variety of payment patterns: cash, credit or debit, electronic settlement such as Apple Pay or Google Pay. Commuter pass is accepted, too.

After the settlement, customers can drive away to pool the car over the road and drink a soothing product for relaxing and energizing for the work in the afternoon. I would do that for years. In one afternoon in the parking lot, your writer sip a cup of coffee and looked at VISA card, which commercial bank clerk suggested me long time ago that I should apply for an unknown plastic card, Visa, to travel around the world, especially America. In the living in America from Seattle to Washington, I didn’t often use the plastic card for settlement at stores. Most of the time, I wrote cheques and paid by cash to the merchandise available at the retail outlets. But at rare visit to fancy restaurants with my family and friends, I showed off the issued card on the table.

Sometimes, though, upgraded place in luxurious street requires the incoming customers to show the product wisely. No one pays by cash on the Ginza Street. Most welcomed means of settlement is Visa Card. The published story of the Economist, a weekly British magazine which I have read for more than a decade, illustrates the processing power of pay bank in transaction. Visa’s market capitalization resisted to fall at $291bn in the investors’ world in corona virus crisis. Since its birth from declining Bank of America card, the American firm rose to connect 61m merchants with loyal buyers with 3.4bn Visa-brand plastics around the globe today. Since the split from a group of conventional banks in 2008, the growth of the plastic provider saw 15-fold, a dramatic growth to expand the geographical presence in 200 countries. More surprising is that the operating margin of the American organization reached 65% as compared with lucrative 20–25% margins of Apple and Alphabet.

No competitions challenge Visa anymore. Since 2008, the firm dashed its earning nearly 30 times with shareholder returns 24% on average, while S&P 500 index listed profit-chasers set merely 10 times. This dominant growth will meet a scrutiny from government with the voice from other financial foes. The government capped the fees, weakening the dominance on consumer data. Shoppers and shopkeepers began to use bank-to-bank transfer to settle the deal. Smartphone accelerate fintech payment with Apple Pay and Google Pay. The Silicon Valley tech titans could erode the Visa and MasterCard duopoly. Any technological edge favors in the future of transaction.

But the real strength of Visa Card lies in its marketing advantage at the retail outlet. The small rectangle plastic is a dedicated gateway to trustful purchase. The smartphone is not the symbolical wallet of settlement. It is rather a product of entertainment gadget. The card-holder hides the plastic in a physical wallet, although the wallet is full of such plastics. With a short whisper to merchants, “V I S A”, they take it and bring it back to leave the receipt on the dinner table. Loyal customers sign it on the paper and leave the table. It is very simple process. Merchants trust the brand. Visa transaction is reliable with high accuracy rate. I have never received a call from a card-issuing organization for years. At a time of social distancing and contactless payment, VISA card is still an effective tool to settle the seller’s final call to pay for the bill. The deal is made with no question asked.

In a frequent visit to drive-through to local Starbucks in Ibaraki, the store keeper has seen me in a short time in the afternoon. Visa is portable, quick, and reliable signal. With the marketing success continues, the firm with thrive in size. The government finally decided to promote a cashless society, driven by industrial ministry of Japan, MITI. The regulator of retail outlets aims at cashless, contactless, and untouchable settlement. Starbucks would never draw a raccoon on its prepaid card, which cosmopolitan dwellers can drink additional cup for discount. But it will be a new style to pay a weekly visit to a drive-through and wave a left hand to a local shop keeper. It is a temporarily way of cosmopolitan life in pandemic Tokyo.

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Hiroshi Hatano

Hiroshi Hatano

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Taught marketing @ universities in Tokyo, ex-I-banker @ UBS & mgmt consultant @ Kurt Salmon (Accenture Strategy now), Utah, Michigan + Georgia Tech educated