Visa’s fiscal Q2 earnings reveal impressive volume recovery

Visa’s total payments volume grew 11% year-over-year (YoY) on a constant currency basis in its fiscal Q2 (ended March 31, 2021)—an upswing compared with the 5% annual increase it posted in the same period last year, when the pandemic was just taking shape. Visa’s debit volume drove most of the growth in the period: Debit jumped 24% YoY while credit growth remained flat. In the same period last year, Visa experienced 9% and 1% YoY increases in debit and credit volume, respectively. Recent spending broadly reflected overall pandemic-driven payment trends, with consumers favoring debit spending over interest-accruing credit spending.

Visa’s recent gains likely stemmed from improving economic conditions and stimulus payments. In the US—which as one of Visa’s largest markets experienced a 17.6% YoY jump in volume, outpacing overall growth—many consumers were in a better financial position compared with the same period last year: US unemployment steadily improved from January to March, and consumer sentiment has shot up in kind. US stimulus payments, which gave many consumers an extra cash injection to spend using their cards, were another major factor that played into Visa’s recovery. Meanwhile, trends around the world have varied from the US as international lockdown measures diverge and countries take different approaches to COVID-19 vaccine distribution.

Going forward, Visa is setting itself up for further potential growth in two key areas:

• Visa is pushing faster payment initiatives, which might drive more volume. The firm partnered with Airbnb to facilitate host payments with its near-instant push payments platform, Visa Direct—opening up a revenue-generating opportunity for Visa as consumers start to vacation again. Visa Direct recorded a 60% YoY surge in fiscal Q2 and could see even further growth down the line as more companies move to adopt it thanks to its recent use case expansion and the overall rising demand for faster payments.
• The network is also diving deeper into cryptocurrencies, positioning it for growth as the sector continues to develop. The card network has been planning its foray into the crypto space and will soon launch its first crypto rewards credit card with BlockFi. And last month, it announced plans to settle transactions in USD Coin, a stablecoin pegged to the US dollar. These moves can help Visa usher in more volume, opening it up to additional partnerships and revenue streams as cryptos gain traction thanks to the speed and security benefits they offer the payments industry.