Visa Direct Transactions Grow 20%, New Flows a $200T Opportunity

Visa’s fiscal first quarter results pointed to continued growth in consumer spending — particularly on travel — though growth rates are slowing.

Management, however, noted that growth rates in new payments flows and value-added services are outpacing the transaction growth seen in credit and debit conduits.

Investors sent the shares down about 3% after hours.

The company’s latest earnings supplementals and commentary from the Thursday (Jan. 25) conference call show that overall payments volume increased 8% in the first quarter on a constant-dollar basis.

Debit volumes, in constant currency, were up 9%, outpacing credit-related volume growth of 8%.

The company issued 6% more debit cards in the quarter, for a total of 3 billion cards in force, compared to 4% growth in credit cards, to 1.3 billion.

Cross-border volumes were up 16% year over year (YoY), the company said.

During the conference call with analysts, CEO Ryan McInerney said that total credentials were up 6% YoY and said that the company has issued 8.7 billion network tokens through the latest fiscal year, up 55%.

Acceptance points were up 17%, according to the call, to 8.5 billion endpoints globally.

Tap to Pay and Visa Direct

Tap to pay transactions now account for 77% of transactions done face to face outside the U.S., said the CEO, up 5% YoY. In the U.S., the percentage is 45% — and McInerney said that spending per transaction increases when consumers embrace that payment option. Visa has seen, in the U.S., tap to pay use lead to two more transactions per month, and spending increasing several dollars a month for consumers who elect to tap their debit transactions.

New payment flows, according to McInerney, now represent a $200 trillion opportunity across business-to-business, business-to-consumer, peer-to-peer and other money movement activities. Visa Direct, he said, saw 20% growth in the most recent quarter, to about 2.2 billion YoY — and saw 65% growth in cross-border volume as measured through the same time frame. Total commercial payment volumes were up 8% YoY.

CFO Chris Suh said on the call that card-not-present volumes were up 7%, and added that travel-related spending gained 19%. Thus far in the fiscal second quarter, and into late January, in the U.S. credit spending was up 3%, and debit was up around 8%.

Cross-border spending was up 16%, while travel-related cross-border spending has gained 19%.

“Consumer spend across all segments from low to high spend has remained relatively stable,” said the CFO, who added that Visa has not seen “meaningful” changes in consumer behavior across segments.