Visa increased both net revenues and net income by 10% YoY to $6.1 billion and $3.3 billion, respectively. Growth in net revenue was driven by “continued growth” in payments volume, cross-border volume and processed transactions. Cross-border volume was up 9% YoY, although it has been impacted in end-January by shifts in the Chinese New Year, and “potentially some initial effects” of the coronavirus outbreak.
The coronavirus: Visa Chairman and CEO Al Kelly said the company’s Q2 revenue outlook does not reflect the potential effects of the recent coronavirus outbreak in China, as “it is too early to assess this impact”. Kelly said the outbreak impact is difficult to assess, as the Chinese New Year is also a fortnight earlier this year, as compared to 2019. “There will be some impact – but we’ll have to see how pronounced it gets and how long it goes. I’m not into predicting game for that at the moment,” Kelly added.
- Payments volume grew by 8% YoY, and 10% YoY excluding China and UK
- Cross-border volume up 9% YoY
- Total processed transactions were 37.8 billion, up by 11% YoY
- Data processing revenues rose 16% YoY to $2.9 billion
- International transaction revenues grew 9% YoY to $2.0 billion
- Total cards increased by 1% YoY to 3.385 billion from 3.345 billion in the corresponding quarter of 2018.
E-commerce grew 3-4 times faster than non-e-commerce. “E-commerce also drove more than one-third of all consumer spend, up two percentage points versus last year. Retail spend growth was stronger than last year, fueled mostly by e-commerce,” Kelly said.
Acquisitions: Visa acquired Rambus in October 2019, which is a token services and ticketing acquisition business. The company also acquired financial services API startup Plaid for $5.3 billion. Plaid’s revenue model is usage-based, “pricing is structured on a pay per API call basis, and varies by product depending on the type of financial data consumed by the customers at the fintech,” Kelly said.
‘Nationalist payment agendas’: When asked about the impact of government-backed systems such as Mir in Russia and Troy in Turkey that mandate domestic processing, Kelly said Visa’s processing platforms with domestic teams are not “terribly new” and the company’s objective is to work closely with both regulators “to make sure it’s an even playing field and then work closely with our clients to make sure that we get a fair share of business”.
When asked if nationalist payments agendas are more visible today, Kelly said it it has become “a little bit more pronounced” and wasn’t as prominent a decade or so ago.
“But again, I think our job is to continue to innovate more closely with regulators and with our clients to have as much of an even playing field as possible and continue to show that processing on Visa or minimally partnering with Visa as your team has good advantages to it that people want to work with us.” – Al Kelly