Visa, the biggest credit card network in the US, said on Wednesday that it would sell shares to the public as early as next year, following in the footsteps of its smaller rival, MasterCard Inc.
By going public, Visa hopes to streamline its operations, invest more nimbly in emerging markets and new payment technologies like those using cellular phones, and insulate its member banks from potentially billions of dollars in legal damages over antitrust and unfair-pricing claims brought by merchants.
There has also been pressure from Wall Street analysts, who believe a profit-making structure would instill more disciplined management, and by the company's own employees, who have privately sniped at their MasterCard counterparts' rich stock option paydays for months.
"MasterCard's IPO raised stakes for Visa," said Kenneth Posner, an analyst with Morgan Stanley. "If Visa wants to attract and retain and compensate the best people, having currency might be very important."
MasterCard went public in late May at US$39 a share. It has since surged more than 78 percent, to US$69.50, even after falling 3 percent on Wednesday. MasterCard has a current market value of US$9.4 billion. Several analysts said they expect a Visa initial public offering to value the company at least double that, given its dominance.
Visa held about a 60 percent share of credit and debit purchases last year, compared with 27 percent for MasterCard, according to the Nilson Report, a newsletter for the credit card industry.
As of June 30, Visa reported US$771 billion in transactions this year, compared with US$411 billion for MasterCard.
"By any measurement, Visa looks more desirable than MasterCard as an IPO," said David Robertson, publisher of the Nilson Report.
"It has a better, more advanced network, and it sees a lot more traffic on that network," Robertson said.
The most immediate beneficiaries of a Visa stock offering could be its large member banks -- including Bank of America, Wells Fargo and J.P. Morgan Chase -- which could recognize hundreds of millions in capital gains if they sell part of their Visa ownership stake, even as the overall card industry continues to slow.