Visa’s fiscal third quarter results showed continued momentum in new payment flows — and further embrace of contactless payments in brick-and-mortar, face-to-face transactions.
CEO Ryan McInerney said on the conference call with analysts Tuesday (July 23) that tap to pay grew 4 percentage points from last year to 80% of face-to-face transactions globally, excluding the U.S. More than 55 countries are more than 90% contactless penetration, he said, in response to analysts’ questions.
In the U.S., tap to pay has been tied to more than 50% of in-person commerce transactions, and 30 cities have seen more than 60% penetration.
The focus on a simpler, secure checkout experience is gaining momentum. The company’s integration of click to pay and the Visa payment passkey service enable customers to authenticate themselves using biometrics.
“Already, we have hundreds of issuers enabled for passkeys in Europe and a number of issuers who represent more than 50% of our commerce payments volume in Europe piloting the solution,” he said.
The company passed the 10 billion token mark this quarter, according to the CEO’s commentary — where the tokens helped generate an estimated $40 billion in incremental eCommerce revenue and prevented an estimated $600 million in fraud.
Revenues from new payment flows, he said, grew by 18% year over year. Visa Direct transactions grew by 41% over the same time.
“Visa Direct cross-border P2P [person-to-person] transactions have nearly doubled,” said McInerney, as the company saw 2.6 billion transactions overall this past quarter.
Value-added services revenues were up 23% in the fiscal third quarter.
CFO Chris Suh said on the call that, as global payments volumes were 7% higher, card-present volume grew 2% and card-not-present volume grew 7%.
In detailing consumer spending, Suh said that in the U.S., “while growth in the high-spend consumer segment remains stable compared to prior quarters, we saw a slight moderation in constant dollars, and relatively stable with [fiscal] Q2 when adjusted for leap year.”
In the U.S., payments volumes were 4% higher, with debit up 4% and credit up 3% year over year. Deceleration from higher growth rates in prior quarters, Suh said, does not “appear to be from any one factor, but likely a number of smaller factors such as weather, timing of promotional shopping events, and the technology outage among others.” There has been moderation seen in lower spending cohorts, management said on the call.
Cross-border spending growth was 14%, he said, and cross-border travel volume growth was also up in the mid-teens percentage point growth level.
Suh added on the call that value-added services growth clocked in at 23% and at $2.2 billion, and now is about 25% of total revenues. Issuing solutions and acceptance and advisory segments have been seeing momentum, along with Visa Secure and dispute tools including Visa Resolve online.
Asked on the call about ongoing litigation and the possible reduction in interchange rates, McInerney said that the rejection of the $30 billion proposed settlement is one where “we strongly disagree with the judge’s decision. … We believe the settlement provided meaningful relief to all merchants. The second thing I would say is the decision failed to take into consideration a number of things, especially the complex multisided ecosystem that we operate in, and the complicated role that many different players in the ecosystem deliver. Having said that, we’re pursuing a revised settlement. It’s too early to speculate on what that settlement is.”
In the meantime, McInerney said, with regard to consumer payments, “We see more than $20 trillion in cash, checks, ACH, electronic transactions … and we’re capturing that opportunity through a few different ways. One is continuing to expand acceptance and expand the places where people can use cards,” he said, naming rent and eCommerce as key verticals, as Visa’s new products and services “win in the marketplace and help us capture and digitize a big chunk of that opportunity on the Visa network.”
Visa shares were 3% lower in after-market trading on Tuesday.
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