36% increase in Visa Direct transactions

Three years into the pandemic, and Visa’s Tap to Pay continues its steady march, with real-time payments and faster payments – via Visa Direct – proving popular in an increasingly complicated global arena as well. .

To that end, the payments network showed that total payment volume jumped 10% in its fourth fiscal quarter, with credit outpacing debit. Additional documents released by the company show throughput volume increased 5% in constant currency to $1.45 trillion; this performance was largely exceeded by credit volumes, which increased by 20% to $1.48 trillion. Drilling down into the details of US-based spend, payment volume grew 12% year-over-year, or 145% of 2019 volumes.

Cross-border volumes, on a like-for-like basis, excluding intra-Europe volumes, were up 49%.

The total number of cards in force increased by 9% to just over 4 billion in the last quarter. Debit cards grew 10%, followed by credit card growth of 7%. Merchant locations, including payment facilitator locations, increased by 11%, indicating an expansion of network acceptance.

But in these spending habits lies evidence of continued digitalization – and a movement of the payment network far beyond just enable who spend, but also to make it safer (and faster).

CEO Al Kelly said on the call that token credentials were up 9% year-over-year and 13%.

“Excluding Russia, we exceeded 4.8 billion tokens, surpassing the number of card identifiers,” he said, nearly doubling the levels seen last year. And in response to analyst questions about this line of business, Kelly said the company sees tokenization as “essential to ecosystem security and ultimately ecosystem confidence in relates to card transactions”, adding that “we expect this to have very positive impacts on our issuers and merchants in terms of fraud.

Tap to pay

The digital shift is firmly entrenched in stores: as Kelly noted on the call, global tap-to-pay penetration grew by 10% to a total of 54% of face-to-face transactions, outside Russia.

“This was helped by 20 additional countries crossing the 50% penetration mark,” noted Kelly, who added that tap-to-pay transactions on global transit systems crossed the 1 billion transaction mark over the course of the year. exercise – a first for the company. In the US, tap-to-pay generated over 1 billion monthly tap transactions for the first time ever in July, overtaking the UK as the largest country for tap-to-pay transactions.

“That’s almost double the number of transactions from last year and more than five times the number of transactions from two years ago,” Kelly said on the call.

B2B growth – and faster payments

Kelly also highlighted growth in the B2B segment, where Visa saw nearly $1.5 trillion in payments volume for the full year, growing 30% in constant dollars. In the fourth trimester. B2B payments volume reached nearly $400 billion, up 21% year-over-year in constant dollars.

“Within B2B, our strategy is focused on card payments, cross-border payments, and accounts receivable and payable payments, and we have made progress in all three areas,” Kelly said.

As for faster payments: Visa Direct recorded 5.9 billion transactions during the fiscal year, excluding Russia, up 36%. In the fourth quarter, Visa Direct recorded 1.7 billion transactions, up 7% from the third quarter, and now reaches three billion cards and more than two billion accounts. Management pointed out that cross-border remittances and account-to-account transactions were particularly attractive.

As Kelly said on the call, Visa Direct’s robust security and the addition of all these features “provide a consumer with tremendous peace of mind compared to a transaction where money is immediately transferred from your bank account on an RTP network to pay someone – and if there’s a problem, there’s no one to turn to. There are no rules governing what happens. Visa Direct, he said, thus offers a “solid alternative” to RTP networks.

Customers signing up for Visa Advanced Authentication and Visa Risk Management products tripled between October 2019 and September 2022 and these customers span 14 different European countries.

A little moderation

With a nod to at least some moderation in growth amid continued recovery from pandemic lows, Chief Financial Officer Vasant Prabhu said “the recovery in cross-border travel continues however, the pace of recovery has moderated as most borders are now open with the exception of China.” The volume of cross-border travel, excluding intra-European transactions, increased by 12% in the fourth quarter against a gain of 22 points in the third quarter. “There is more recovery to come in Asia, especially as China begins to lift restrictions,” Prabhu said.

Looking ahead, while guiding towards low double-digit growth rates in domestic spending and cross-border e-commerce growth rates in high percentage rates of teenagers, Prabhu said that “there is clearly a high risk of a global recession, but we don’t have a specific view on if, when or what type of recession we might have,” adding that “for internal planning purposes, we assume there is no there is no recession. Of course, we will remain very vigilant.

For now, Kelly noted, while there may be a substitution effect in the goods consumers choose to buy, and therefore changes in consumer behavior, “they are still spending the same amount of money and they still pay the same way,” he told analysts.

Routing rules discussion

Asked on the call how Federal Reserve rules requiring there to be at least two payment networks in place to process debit transactions could impact Visa, Prabhu argued that “we will have to wait and see the rate at which the second network is activated on cards and on e-commerce transactions”, and added that the impact on the current fiscal year would be minimal. “People come to us because of the value that we create, and that value comes in the form of a dual messaging network…and all that goes with it. The security and reliability we offer is unmatched.

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