Visa highlights ‘enormous’ growth opportunity in Q2 earnings

By the numbers: Visa’s total payment volume grew 8% year over year (YoY) in its fiscal Q2 2024 (ended March 31, 2024), per its earnings release.

• Growth was flat on the quarter but down from 10% a year ago.
• Cross-border volume increased 16% YoY, flat on the quarter but slower than last year’s 24% jump.
• Net revenues grew 10% YoY, up from 9% last quarter but down from 11% a year ago.

Digging deeper: Visa executives spotlit three growth areas during the company’s earnings call.

Value-added services.

• Other revenues for the quarter catapulted 37% YoY, driven by strong consulting and marketing services growth, per CFO Chris Suh.
• And Visa expects value-added services to keep outperforming: CEO Ryan McInerney said the opportunity is significant and broad-based.
• Visa’s top 265 clients on average use about 22 of the company’s value-added services.
• Expanding Visa Protect offerings and launching open banking solutions through Tink in the US should help sustain momentum in this category.

Tap to pay.

• Tap to Pay transactions grew 5 percentage points from last year to account for 79% of all face-to-face transactions outside the US.
• In the US, the share is nearing 50%. New York City became the first US city to reach 75%, which Visa attributes to transit payments and broader acceptance.
• Growing tap to pay spend brings in more frequent volume and higher spending for the company.
• It also helps Visa convert small-ticket cash transactions into Visa credentials.

Visa Direct.

• Visa Direct transactions increased 31% YoY.
• Visa wants this segment to break into new use cases, geographies, and enablers.
• It recently partnered with TUNES, which increased Visa Direct’s push-to-card capabilities in more countries. And a tie-up with JPMorgan brought Visa Direct to the bank’s business clients.

Swipe fees already in the rearview mirror: Visa isn’t concerned with how the recently negotiated settlement will affect its business, instead viewing the deal as a win. McInerney said the settlement will bring clarity and stability to the market and let them move on from the matter.

What’s next? Visa said the “opportunity in consumer payments is enormous.”

• Visa estimated that the global personal consumption expenditures in 2022, excluding Russia and China, was roughly $40 trillion. It says its addressable opportunity is more than $20 trillion of that spend.
• Half of that opportunity, per McInerny, is converting cash and check payments.
• Another is ACH and other electronic transactions. Visa wants to extend Visa as a bill pay method in categories like rent and education.
• Visa is also focused on converting global card payments that run on domestic networks.