Visa’s Indian arm has been scaling its presence in India over the last year with multiple bank partnerships and tie-ups with fintechs. The company believes that partnering with new and tradition players will help grow its foothold in India and other emerging markets. The card payments giant posted a net profit of $3 billion in the second quarter of the current financial year (CY), according to its financial results.
In the last year, Visa has partnered with State Bank of India and HDFC Bank to push their merchant payments acceptance network in the country, and with ICICI Bank it launched ‘Visa in a Box’, an accelerator programme for fintechs. In February this year, it joined hands with SBI Payment for the SBI YONO Merchant App launch which is a soft Point-of-Sale offering from the country’s largest bank. Visa will enable 20 million merchants in the coming year to accept payments through ‘Tap and Pay’ or Near-Field-Communication (NFC) technology through YONO Merchant, a statement from the two companies said.
During an earnings call with analysts, Alfred F. Kelly, Jr., Chairman and Chief Executive Officer, Visa Inc said that Visa’s partnership with Paytm has led to 250,000 new contactless-enabled acceptance points to its network. He added that since September 2020, card issuances by Paytm have doubled to a total of 3 million cards. “Wallets and tap-to-phone are just a couple of next-gen partners and capabilities that we believe will help us bring the 1.7 billion unbanked into the financial mainstream, growing the pie for digital payments,” Kelly said.
“The growth will come from a regional approach and open it to partnering with traditional and new players and by developing new ways to engage the ecosystem, all rooted in our strong brand and in technology,” he said. In an earnings call with analysts in January this year, Kelly said that Visa would contribute to India’s payment infrastructure development fund, which would add 1 million points of sale and 2 million QR points across the county every year for the next three years,”. All of these efforts build on our leading credit and debit market share in India, he said.
On supporting digital currencies
Visa has been leading the mainstream adoption of crypto-currencies among the estbalished financial institutions. It currently supports more than 160 currencies and moves billions of dollars a year across thousands of institution.
Visa has been working over the past year with Anchorage, the first federally chartered digital asset bank, towards using Visa’s existing treasury infrastructure to support digital currencies. The company has also launched crypto cards that can store crypto-currencies in a wallet format and can be used across 70 million merchants globally.
“We’ve got over 35 digital-currency platforms and wallets that have chosen to work with us. Coinbase, Crypto.com, BlockFi, Fold, Bitpanda are just some examples. And so that’s certainly a second big opportunity. Thirdly, is enabling financial institutions and fintech partners to be able to have a crypto option for their customers,” Kelly said. Crypto.com has launched Visa cards in 39 markets across their 10 million user base since 2018 and plan to expand to 12 markets globally going forward, he added.
The company has built infrastructure to ensure that its network can convert digital currencies to fiat currency, while also allowing customers to use the crypto card for both digital currencies and fiat. “We’ve upgraded our infrastructure to allow a financial institution to settle with these in a digital currency with stablecoin, starting with USDC. As you know, today, we transact in 160 currencies every day, and we settle every evening in 25 currencies. So we’re going to now be able to support digital currencies as an additional settlement currency on our network,” Kelly said.
Recently, Visa announced that it is working to support Central Bank Digital Currencies. “We’re talking to central banks about the criticality, though, of public-private partnerships, and in particular, the criticality of acceptance because for these central bank digital currencies, to have value, they’re going to have to both be secure in the minds of consumers,” Kelly said.
Growth in e-commerce globally
Visa witnessed an acceleration of e-commerce payments globally as debit card transactions grow by over 25% on an annual basis, while credit card transactions remain flat. “Our growth in card-not-present payment volume, excluding travel, has averaged at least 30% in the United States, Canada, Brazil, United Kingdom, Italy, Germany, India, and Singapore over the last three quarters,” Kelly said.
Kelly said that the company is seeing a real structural change in how everyday spending taking place as payments move from in-person to e-commerce in a big way. “I do think, though, that credit will make a rebound, particularly as some of the larger discretionary spending comes back in, as the affluent gets back into making travel reservations, as the online travel agency business starts to grow, ” he said.
“The COVID-19 pandemic certainly has turned the world upside down in the last year, but we believe we are starting to see the beginning of the end and the recovery is well underway in a number of key markets around the world. This quarter, we saw a return to positive growth for credit and card present transactions and debit and eCommerce growth stayed at very healthy levels,” Kelly said.
- Net Revenue: $5.7 billion in Q2 FY21, down by 2% YoY
- Net Profit: $3 billion in Q2 FY21, down by 2 % YoY
- Total Transactions: Up by 13.7% YoY to $2.43 billion worth of 54.88 billion transactions
- Credit Transactions: Up by 2.4% YoY to $1.14 billion transactions
- Debit Transactions: Up by 26.2% YoY to $1.28 billion transactions
- Total cards: 3.59 billion total cards, 1.15 billion credit cards and 2.43 billion debit cards
- Banks add 4.4 Mn credit cards and 71 Mn debit cards during pandemic: RBI Data
- Visa becomes first card network to settle transactions in cryptocurrency
- Super apps, pay later, cyber risks: Five trends in digital payments for 2021 according to VISA India