Visa dives further into BNPL, cross-border payments as economic storm clouds gather

The news: Visa expanded its reach into two high-growth segments.

• Installments. Through a tie-up with paytech Nuvei, Visa is bringing its buy now, pay later (BNPL) program to more Canadian retail brands, including Simons and Trévi, per a press release. Visa Installments is an API-based solution that lets cardholders pay for purchases over time through participating issuers.
• Cross-border payments. Visa Direct—Visa’s card-based push payments platform—integrated with cross-border payments startup Thunes, per a press release. The tie-up lets Visa’s clients enable send-to-wallet capabilities to the 78 global digital wallets using Thunes, increasing Visa Direct’s endpoints by 1.5 billion.

What this means: Visa is using its vast network to incorporate payment use cases beyond traditional card transactions.

Here are three reasons why:

Consumers want payment flexibility and payment choice. As economic uncertainty weighs on consumers, many are seeking out payment options like BNPL that help alleviate cost pressures. And payment providers and merchants are recognizing the importance of offering diverse payment methods that appeal to more consumers. Visa is using its infrastructure to support payment use cases like BNPL, which helps strengthen its relationships with merchants and issuers.

Visa wants to stay ahead of the curve as cross-border payments gain steam. Historically, cross-border payments could only be sent and received by the same channel, like account-to-account or wallet-to-wallet. But payment providers are breaking down those barriers so customers can move money across channels, like wallet-to-card or bank account-to-card. Visa most likely sees its network as a way to support this trend.

Fintechs are accumulating power in the payments sector, and Visa may want to avoid disintermediation. Many small businesses and merchants are eschewing legacy banking and payment providers for fintechs with innovative and cheaper solutions. Eighty-nine percent of global small and medium-sized businesses feel underserved by their primary banks and are considering switching to a more accommodating alternative paytech firm, per a recent Capgemini report. Establishing relationships with fintechs like Thunes and Nuvei can help Visa offer clients more innovative payment products.

The big takeaway: Visa’s latest tie-ups can help it sustain revenues—which grew 21% on a constant currency basis in the quarter ending June 30, 2022—as global markets brace for an economic downturn.

This article originally appeared in Insider Intelligence's Payments Innovation Briefing—a daily recap of top stories reshaping the payments industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

• Are you a client? Click here to subscribe.
• Want to learn more about how you can benefit from our expert analysis? Click here.