If Visa’s focus on its digital marketplace wasn’t clear before, CEO Charles Scharf made it clear during Wednesday’s (Oct. 29) earnings call.
Its role in the digital marketplace also involves its popularity with Apple Pay users. While Visa is a strong backer of Apple Pay, Scharf took time to emphasis the company’s own digital payments innovations backed by the already strong of products like Visa Checkout, which is approaching 2 million registered users and currently has more than 200 financial services partners. Recently signed merchants include United Airlines, Virgin America and American Apparel.
Digital efforts “are a huge focus for us inside the company. This quarter, we’ve started to see some tangible progress as we have begun to introduce new digital solutions into the marketplace,” he said. “We are aggressively pursuing this market with the expectation of growing our share. We’ve seen several things to support this; Visa Checkout, Visa Token Services, Visa Digital services and Apple Pay.”
Visa’s strong support for Apple pay is backed by statistics of the app’s user base. More than 600,000 of the one million cards that were loaded onto Apple Pay in the service’s first three days were Visa cards. Visa is working with more than 1,000 financial institutions to support Apple Pay. That leads Visa into its next plans, which is releasing a series of developer tools and a programming “sandbox” to encourage new digital payment and mobile commerce services.
“We’re excited about Apple Pay but for us as we think about what’s going to be coming into the marketplace, it’s only the beginning. We expect a proliferation of exciting mobile and digital solutions leveraging our new capabilities,” he said. “In October, we launched our sandbox development and testing environment for Visa Digital services as well as updated our SDKs that will enable issuers to begin embedding new forms of contactless payments in their Android applications.”
Scharf focused a good portion of his thoughts about the company’s growth on its digital efforts and emphasized Visa’s strong partnership with merchants to ramp up its digital growth.
“We intend to win and love the fact that we’re partnering with merchants to drive Visa Checkout as a preferred solution in online commerce,” Scharf said. “To-date, over 33 billion in live addressable volume accepts Visa Checkout, another 30 billion has been signed and we’re very confident that these numbers will be much larger as we get to the end of 2015.”
Scharf said the end goal is to allow merchants and approved third parties to use the safety and security of Visa payments to “create new proximity payment experiences for their uses,” which will be commercially available in the U.S. in January of 2015.
Scharf also encouraged issuers to participate in Apple Pay, calling the early days of its launch “encouraging.” He did, however, emphasize that Apple Pay is the first of many of its kind in the market, which was underscored by his comments about Visa’s plans to remain a leader in the digital payment industry through its own products.
“We’re excited about our participation (in Apple Pay). We believe it’s good for consumers, it’s good for merchants and it’s good for our industry. Our focus has been on security, scalability and inclusiveness,” he said. Scharf followed his enthusiasm for Apple Pay with a bit of insight into the industry itself.
“There’s been much talk about disruption in payment and what it means for us. Most of the disrupters are great enablers for consumers, merchants and our industry. Apple is the first great example,” he said. “We and our clients can be great enablers of great consumer and merchant experiences. We bring thousands of banks, millions of customers and a convenience security customer service rewards and other great features that consumers like. You’ll see many other enablers evolve that we will partner with and we’re doing this all in support of our existing clients.”
The company’s total payments volume for credit cards came in a 313 million in the U.S. and 457 million, internationally. This is a 10 percent increase, year over year. Visa’s debit payment volume was 319 million in the U.S. and 127 million internationally, which was also a 10 percent increase from last year’s fourth-quarter report.
Total payment volume was $1.2 trillion ($631 million in the U.S. and $584 million internationally), which is a 11 percent increase, year over year. Total Visa transactions for the quarter was 16.9 billion, a 9 percent increase from last year’s $15.5 billion transactions. Of that amount, 38 percent of that is credit and 62 percent was debit. Total processed transactions for all of 2014 increased 11 percent to 64.9 billion. As for specific other earnings figures, Visa recorded $3.23 billion in fourth-quarter revenue, a 9 percent increase, year over year, and adjusted net income came in at $1.4 billion, which was a 17 percent increase from a year ago.
Total cards for visa hit just under 2.3 billion cards in the fourth quarter, which is a 7 percent increase from last year’s 2.14 billion. That’s broken into 831 million credit cards (up 4 percent from last year’s 798 million), and just above 1.47 billion debit cards (up 9 percent from last year’s roughly 1.35 billion).
Service revenue, data processing revenue and international transaction revenue was also up from last year’s fourth quarter. Service revenue was $1.49 billion, an 8 percent increase; data processing revenue was at $1.35 billion, up 14 percent; international transaction revenue was 938 million, up 4 percent.