Scharf's last call at Visa: an aggressive focus on digital, China

Visa Inc. will have digital payments and China on its mind long after Charlie Scharf has left the company as its leader.

Scharf expects Visa to continue to grow its digital footprint in payments and expand into new markets after he turns over the CEO role to Alfred F. Kelly Jr. on Dec. 1. Scharf revealed last week that family commitments on the east coast have convinced him to leave Visa, a company based on the west coast, after four years.

In his final earnings conference call at Visa this week, one in which Visa delivered solid profit growth from increased card spending, Scharf told industry analysts and investors that Visa's position in the global payments ecosystem remains strong due in part to its growing assets.

Michael Nagle/Bloomberg

Many of those assets are now in the digital transaction world, with Visa Direct positioning the card brand with a push payments scheme that falls in line with other faster payments directives in the U.S., Scharf said.

"When we think about what faster payments means for us, we know the capabilities that we have and think about how we have positioned ourselves with Visa Direct," Scharf said. "We feel good about those capabilities."

Last week, Visa Direct and Ingo Money partnered to obtain more clients for Ingo Instant Payments and strengthen the Visa Direct rails for push payments that would eliminate check writing for many companies.

Visa will also test blockchain technology in the future, hoping to "improve something that already exists," Scharf said in describing the need to address inefficiencies in the commercial payments space. Visa plans to approach that through Visa B2B Connect, enabling real-time, high-value international payments between participating banks.

Taking a long-term view of global markets, Scharf said his view on an eventual entry for Visa into the China market has not changed from previous years.

"I've said this over and over again, but this is last time I get a chance to say this," Scharf said. "China is a very important opportunity for us, but it is a long-term opportunity that is not measured in months or even single-digit years."

Last summer, China established rules for foreign payments companies to do business in the country. The major card brands still contemplate how to operate under those guidelines, one calling for foreign issuers to hold about $152 million in capital in a Chinese company to participate.

Visa's thought process and approach to how it can enter a market dominated by UnionPay "does not demand that we are allowed market entry at any specific date," Scharf said.

Visa is not counting on China to be a meaningful contributor to revenue or profit in the short term, because so much of the political and international aspects of doing business in the country are out of the card brand's control, he added.

"At some point, we do believe China will pan out," Scharf said. "But, again, it is a longer term, rather than shorter term, opportunity."

As for the EMV migration in the U.S., possibly the largest project to unfold in Scharf's tenure, along with the acquisition of Visa Europe, Scharf said despite the difficulties in the process, it was the right thing to convert to chip cards in the U.S.

"This is a lot of work, for sure, but it's progressing along a time frame faster than any other part of the world when they have moved from mag stripe to chip," Scharf said.

The most important point for Visa now is to continue to work with all partners in the payments ecosystem, he added, and "to think about what is next, which is certainly looking at the online world and encryption, and new ways of authentication in the physical world."

In departing, Scharf made it clear that the actions of a CEO alone don't carry the weight of what an entire company can achieve in working together.

"There are 13,000 other people here who are going to continue doing what they've done after I go," he said. "And with a leader like Al, I would assume they will do it as well, if not better."