Visa's core card-processing services still drive the
It's because the San Francisco-based firm and its rival global card networks have made so much headway over the last decade in converting cash and paper-based transactions to cards and digital channels, that Visa must turn to new growth frontiers in the next 10 years, analysts say.
The pressure to sustain that growth falls on Antony Cahill, appointed in February 2023 to be Visa's global head of value-added services. A former financial consultant and longtime Australian bank executive who joined Visa in 2018 as managing director of Visa Europe, and rose to become deputy CEO before assuming his present role, Cahill developed broad payments expertise from 11 years spent at Australia's ANZ and nearly nine years at National Australia Bank, where he rose to chief operating officer.
"I spent a long time on the other side as a Visa bank customer, so I was actually consuming a lot of these services, which gives me huge insight into what our customers think about the products and what type of value they provide," said Cahill, whose job spans some of Visa's most complex technologies across five broad categories that include risk and identity; acceptance; issuing solutions; open banking and advisory services.
A key part of Cahill's job is anticipating demand for new products and services in global markets, and developing them as value-added services, where appropriate.
Most recently Cahill oversaw the rollout of three new AI-powered products to help banks and merchants prevent fraud in account-to-account and online payments, both on and off of Visa's network. Dispute management, provided through Visa's Verifi arm, is another top priority for Cahill, as merchants grapple with skyrocketing levels of first-party fraud.
"Visa essentially saturated the addressable market for modernizing payments in the developed world, and while there's still a lot of opportunity out there to convert more payments from paper to electronic in mature and emerging markets, the company must now leverage its position [to sell more products] to financial institutions, merchants, businesses and consumers," said Sanjay Sakhrani, managing director and senior analyst at equity analyst firm Keefe, Bruyette & Woods.
New flows, which includes commercial cards and Visa Direct account transfers, is driving brisk growth. The category produced a 14% revenue increase during the most recent quarter, which ended March 31, 2024, compared to the same period a year earlier, topping $2 billion.
But the sprawling value-added services (VAS) unit is growing even faster, rising 23% during the same period to reach $2.1 billion in constant dollars, and maintaining that level of growth is a top priority for the firm, Visa Chief Financial Officer Christopher Suh told analysts at the Bank of America Securities Global Technology Conference earlier this month.
"One of the first moves [McInerney] made as CEO was to really put a greater focus on VAS," Suh said, noting that VAS has driven "consistent 20%-plus revenue growth over the last several quarters."
Cahill sees open banking as another area with significant opportunities to expand Visa's operations by helping businesses directly access customer funds. Visa is making progress this year in advancing North American activity through its Tink open banking subsidiary
Issuing solutions, where Visa has a dominant U.S. market position in issuing and processing debit and prepaid cards, is also ripe for expanding services to banks including using Visa's platform to offer loyalty and insurance products to end users, and supporting an expanding range of digital payment services via mobile apps and digital wallets, Cahill said.
On the advisory side, Cahill is building a deeper bench of experts who can help card issuers and merchants with their marketing by offering strategic insights and analytics, including having Visa marketing experts work "shoulder to shoulder on the ground for months" with issuers to develop their business, he said.
One of the more high-pressure tasks Cahill faces this year is leveraging growth in
"Pismo is cloud-based, agile and easily configurable, enabling Visa to support issuing across different card networks to help banks and merchants continue their digital payment transformation journeys," Cahill said.
That may be easier in theory than in practice, said one observer, who notes that capturing mutual benefits for Pismo's lightweight technology with Visa's vast machinery could be harder than it looks.
"Pismo, and other Visa acquisitions like
For Visa to maximize the value of Pismo and other key acquisitions, the firm will need to exert artful leadership and discipline, Grover said. "If Visa can balance and manage the tension between an industrial-strength global payment network and more scrappy fintechs they bring into the tent, it should work."
Pismo could also help Visa catch up with some of the yardage fintechs gained in recent years in issuing digital debit cards, according to Sakhrani.
"Visa is still the leader in the core area of debit-card issuing, but it has lost share from to other fintech players like Marqeta and Galileo that have found ways to tap into some of Visa's debit business, but I think Pismo could give Visa a capability more comparable to the modern card issuers. Visa could then leverage its unique position, being the intermediary around the world between banks and even fintechs, and win. They don't even have to be the market leader in digital-card issuing, but they use Pismo to protect their turf," Sakhrani said.
Working with partners in this way and using its scale and global reach, Visa has "a big runway" to drive growth around the world through its various value-added services for years to come, provided the card network's organizational performance holds up and there are no major economic shocks, he said.
"Visa must continue to execute and do it at a high level to retain and win new customers through VAS, and there's also the possibility that in an economic downturn, some of these prospective customers may not want to invest in Visa's value-added platforms and products," Sakhrani said.
Cahill, who sports a photo on his LinkedIn profile of the Formula 1 race car Visa co-sponsors in conjunction with the Oracle Red Bull Racing franchise, believes that after 18 months leading the unit and putting the right people into place, VAS has a strong framework to deliver on its growth expectations for the foreseeable future.
"We've reached the point where we have the correct level of focus and passion to drive growth in this business, both in terms of understanding what customers want, engineering it and taking it to market," Cahill said.
