Visa Shifts Focus To Cross-Border And International As US Market Slows

February 1, 2024
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2024 has gotten off to a “solid start”, says Visa CEO Ryan McInerney, but a slowdown in the US means that a pivot to cross-border and overseas markets is on the cards.

2024 has gotten off to a “solid start”, says Visa CEO Ryan McInerney, but a slowdown in the US means that a pivot to cross-border and overseas markets is on the cards.

In its fiscal Q1 2024 earnings, Visa reported that consumer spending globally “remains resilient”.

Visa’s total growth in payments value came in at 8 percent year-on-year (YoY), while growth in total transactions came in at 9 percent.

However, the US market lagged behind significantly, with total growth in value coming in at 5 percent.

Growth in US debit card payment value lagged behind in particular, ending at around 3 percent in late January.

Source: Visa

Speaking to investors, Visa CFO Chris Suh downplayed the drop-off in US growth, attributing it “primarily” to a “less favourable mix of weekends and weekdays” compared with last year.

However, he also noted that Visa suffered a “modest” impact from Regulation II (Debit Card Interchange Fees and Routing), which came into effect on July 1, 2023.

Regulation II establishes an “interchange fee standard” that prohibits issuers from charging more than $0.21 per debit transaction, plus a 0.05 percent value markup and a $0.01 fraud prevention adjustment.

Going forward, in the remainder of 2024, Suh said that Visa is currently expecting no additional impact from Regulation II, and is expecting “no recession”. 

Visa looks to opportunities overseas

While growth slowed in the US, Visa’s cross-border payments business once again delivered a strong quarter.

Ending January at 16 percent growth, this was almost unchanged compared to the end of the previous quarter.

Note: CP denotes "card present" and CNP denotes "card not present"
Source: Visa

Within these numbers, there are more granular success stories, such as the growth seen by Visa Direct, an instant peer-to-peer (P2P) payments platform.

Total transactions using Visa Direct grew 20 percent, and total cross-border transactions using Visa Direct grew more than 65 percent.

Current and upcoming partnerships will also look to strengthen this growth.

Visa Direct has expanded its relationship with Meta, for example, allowing content creators on Meta-owned platforms to cash out their earnings to a debit card. This feature is currently live in the US, UK, France and Italy.

Visa has also signed a long-term global partnership with Western Union covering issuance, Visa Direct and other services in 40 countries across five regions.

Similarly, Visa has expanded its relationship with Remitly to enable customers from 30 countries to send cross-border payments to eligible debit cards and bank accounts in more than 100 countries.

And last month, Visa partnered with CIBC and Simplii in Canada, allowing clients to send money to digital wallets in key remittance destinations such as the Philippines, China and Bangladesh.

“Through these renewals and new partnerships, you can see how we are focused on building a deep relationship across all the capabilities Visa offers,” said Visa CEO McInerney.

Acquisitions opening new opportunities

Finally, in the past two months Visa has announced two key acquisitions that will aim to expand its opportunities globally and in Mexico.

In January, as covered by Vixio, Visa completed its $1bn acquisition of Pismo, a global cloud-native issuer processing and core banking platform.

With operations in Latin America, Europe and APAC, Pismo is a multi-product issuer that covers credit, debit and commercial cards and offers connectivity to local payment networks, such as Brazil’s Pix.

Among issuing clients, McInerney said two top priorities are transforming their technology stacks to cloud-native, API-based technology and expanding their issuance operations to new developing markets.

“Our goal is for Pismo to be the platform of choice for our issuing partners around the world, enabling them to accelerate their global expansion and transition to cloud-native platforms,” McInerney added.

Similarly, in December last year, Visa announced plans to acquire a majority stake in Prosa, a Mexico-based payments network that already processes 10bn transactions per year.

When the acquisition is complete, Prosa will continue to operate independently using its own technology, while Visa will look to expand its product offering with new digital solutions.

McInerney said digital payments are poised for expansion in Mexico, where more than 50 percent of consumer spending is still done by cash or cheque.

“We believe we can bring enhanced technology infrastructure and lay the groundwork to develop new innovative ways for consumers, small businesses and local issuers and acquirers in Mexico to pay and be paid,” he said.

“Together, these efforts will help further digitise payments in the country.”

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