Visa Unveils Major Digital Moves

Fresh off its announcement earlier in the day of Visa Digital Solutions, a solution designed to help facilitate secure payments across a broad range of Internet-connected products, Visa CEO Charlie Scharf laid out the groundwork for Visa’s digital ambitions during a call with analysts to discuss fiscal third quarter earnings.

“There’s a lot of clutter in the market about who’s doing what in the digital payments space. It can be confusing for sure,” he said. “We have a very specific point of view and a set of strategies here. Simply put, we’re keenly focused on achieving the same success in the digital world that we have had in the physical world.”

As such, Visa intends to focus on activities that will accelerate digital commerce with Visa as a platform partner, Scharf said, noting Visa’s card-not-present volumes are growing at three times that of card-present transactions but still represent only a fraction of the opportunity in the mobile and online space.

Visa’s focus is on two different but related things – bringing digital payments to the physical world and enabling digital payments in the connected world. To do that, Visa’s materially changing how it does business, including enabling more than traditional issuers and acquirers access to the network’s platforms so they can build experiences that use Visa’s payment capabilities, Scharf said.

Innovation support

Such new partners would include mobile operators, telcos, technology companies, device manufacturers (hmm, Apple? Scharf wouldn’t discuss those rumors), social networks and the broader application developer community.

“Including these partners means exposing Web services so they can connect to us,” Scharf said, noting a new center Visa opened last week devoted exclusively to building innovative solutions with such partners. “We’re not looking to pick exclusive winners here, but we do want to enable a series of people who we think can help drive payment electronification.”

The network’s creation of Visa Digital Solutions is designed to support those digital activities, Scharf said. “This suite of services extends our support for mobile payments to enable retailers, financial institutions and developers to create new ways to pay via mobile devices,” he said.

Visa is offering specs and software development kits to enable solutions to embed Visa payWave and QR codes as they develop their solutions, Scharf said. And it has enabled merchants and developers to embed Visa’s services into their Web and mobile sites as well as mobile apps to take advantage of Visa Checkout, where consumers can use a username and password to pay using their Visa card to checkout online.

Token support

To protect consumer account information, Visa also is adding token services as part of the overall strategy. Merchants, developers and banks will start offering token-based payments in September, Scharf said.

“We want our clients and their customers to be able to use our products in the digital world as easily as they can in the physical world. This mean we created Visa Checkout to be the Visa card in the digital world,” Scharf said, noting it also preserves the payments industry roles as they exist today.

To promote the service, Visa has launched a significant advertising campaign in social and digital channels and will do so on television later this year, Scharf said. The campaign will feature participating merchants and a broad range of consumer offers and promotions. Partners on the launch include 180 financial institutions and organizations, including Bank of America, Wells Fargo, Chase, Citi and many others. Merchant participants include Neiman Marcus, Staples, Pizza Hut, Petco, United Airlines and others.

Quarterly numbers

Visa reported total operating revenues of $3.16 billion for the fiscal third quarter ended June 30, up 5.3 percent from $3 billion during the same period last year. Net income, however, rose 11.4 percent, to $1.37 billion from $1.23 billion.

Total processed transactions over VisaNet totaled 16.7 billion during the quarter, an 11% increase year over year. Data-processing revenues rose 11%, to $1.3 billion. International transaction revenues grew 1%, to $860 million. Other revenues, which include the Visa Europe licensing fee, were $195 million, an increase of 9% from a year earlier, Visa said.

Total Visa product payments sales volume globally reached $1.19 trillion, up 9.2 percent from $1.09 trillion. Transaction volume globally rose 10.8 percent, to a total of 20.48 billion from 18.49 billion.

For U.S. credit programs, payments volume totaled $303 billion, up  percent from $270 billion during the same period last year. Payments transaction volume totaled 3.57 billion, up 12.2 percent from 3.19 billion. Cash volume rose 8.3 percent, to $13 billion $12 billion, while transaction volume at 16 million was up 6.7 percent from 15 million.

Through March 31, the latest card and account totals Visa has made available across all programs, there were 215 million U.S. credit card accounts, up 4.4 percent from 206 million a year earlier. Total U.S. credit cards were 289 million, up 4 percent from 278 million.

For International credit programs, payments volume totaled $440 billion, up 6.8 percent from $412 billion. Payments transaction volume totaled 5.37 billion, up 9.1 percent from 4.92  billion. Cash volume totaled $47 billion, down 7.8 percent from $51 billion. Cash transaction volume fell 8 percent, to 183 million from 199 million.

Through March 31, there were 474 million non-U.S. credit card accounts, up 2.6 percent from 462 million a year earlier. Total non-U.S. credit cards were 533 million, up 2.1 percent from 522 million.

For U.S. debit programs, payments volume totaled $323 billion, up 7.7 percent from $300 billion. Payments transaction volume totaled 8.65 billion, up 7.7 percent from 8.03 billion. Cash volume totaled $109 billion, up 5.8 percent from $103 billion. Cash transaction volume rose 3.6 percent, to 923 million from 891 million.

Through March 31, there were 353 million credit card accounts, up 7.3 percent from 329 million a year earlier. Total U.S. credit cards were 444 million, up 5.5 percent from 421 million.

For non-U.S. debit programs, payments volume totaled $123 billion, up 15 percent from $107 billion. Payments transaction volume totaled 2.89 billion, up 22.5 percent from 2.36 billion. Cash volume totaled $484 billion, unchanged from a year earlier. Cash transaction volume rose 6.9 percent, to 2.94 billion from 2.75 million.

Through March 31, there were 919 million non-U.S. U.S. debit card accounts, up 11 percent from 828 million a year earlier. Total non-U.S. debit cards were 994 million, up 9.7 percent from 906 million.