Visa has seen tepid returns of payments volume as economies reopen, but the renewed virus cases and government responses have created an extra layer of uncertainty — particularly for cross-border transactions and travel.
“Both
Visa reported a 9% boost in European payment volume for the full fiscal year, driven by partnerships with fintechs such as Revolut and Lydia. Kelly said this improvement demonstrates that Visa’s merger with Visa Europe is reaping benefits.
But as the coronavirus shows signs of spiking again, renewed closures could harm recovery, though the extent depends on how governments respond, said Vasant Prabhu, Visa’s vice chair and CFO.
“We live in uncertain times and it’s hard to hazard a guess,” Prabhu said. "To impose restrictions will have an effect on spending. If the response is to keep things open there will be less of an impact. It will differ region by region and country by country.”
For the quarter ending Sept. 30, Visa reported earnings of $1.12 per share, down 24% from the prior year, on revenue of $5.1 billion, or a 17% decline from the prior year. That was better than the Investors.com estimate of $1.09 on revenue of $5.02 billion.
Visa did not forecast revenue, citing unpredictability in coronavirus infection rates, stimulus programs and vaccines. It did say net revenue will likely decline in the first half with a potentially strong recovery in the second half. Visa also projected expense boosts in the second half, including spending on its sponsorship of the Olympics.
While credit card volume has fallen, there is some offset from strong growth in debit card usage and contactless payments. Debit transaction volume grew 8% in the most recent quarter, while credit card payment volume declined 20%.
“People would rather spend the money they have rather than borrow the money,” Kelly said.
Visa reported 43% of all face-to-face transactions are contactless, and 65% outside the U.S., is contactless. Active e-commerce merchants (excluding travel) expanded 14%, and Visa’s overall network reached 70 million merchants over the past year, up 16% over the prior full year.
The card brand reported early signs of recovery in some business categories that were particularly hard hit in the spring.
Restaurant spending is almost back to 2019 levels, and domestic travel payment volume is up about 6% month-to-month in September, but off of monthly declines of about 40% in the spring. Most nations still have cross-border travel restrictions, which have kept those payment streams suppressed, Visa reported, categorizing the cross-border payment volume as a “L shaped recovery” — down 20% for the quarter. Domestic volume resembles a “V shaped recovery” as travel corridors that do open benefit from pent up demand.
Like Mastercard, Visa has turned to ancillary services to augment its softer payment volume during the pandemic. Value-added services revenue grew 15% in the most recent quarter, and 18% for the year. As more volume moves online, fraud concerns are creating demand for services and consulting, Kelly reported. For example, Visa has gained traction with
“There are services like marketing and data that are growing at robust levels,” Kelly said.
Kelly also touched on a couple of acquisitions. Visa earlier on Wednesday announced an agreement to acquire
The U.S. government is scrutinizing another Visa deal, a $5.3 billion acquisition of
Banks have disparaged Plaid’s data aggregation technology, which
