As always, earnings season brings with it a chance to review corporate strategy well beyond the headlines of revenues and earnings.
Big Tech firms, of course, have weighed in — Google (through parent company Alphabet) last night, Apple later this week — and will weigh in, on commerce opportunities that lie within platforms, that tie with digital wallets.
Visa set the stage a bit — and though not a Big Tech player per se, its network status and broadening embrace of artificial intelligence (AI) and machine learning place it at the vanguard of the great digital shift, especially with faster payments.
Setting the Stage
Visa sets the stage with its granular insight into the spending habits and the demands of individuals and businesses across the globe.
For now, at least, the consumer remains resilient, enough so that spending across any number of categories has eclipsed pre-pandemic levels.
As we noted in our own coverage, the company said overall payments volume was up 8% in nominal terms to $2.9 trillion. Drill down a bit and management commentary reflects the potential that exists in the continued shift away from card transactions to card not present activity.
Visa Direct is a notable example here, with its real-time payments functionality. Management said on the call that during the quarter, Visa Direct transactions grew by 35% and the greenfield opportunity grows larger with new pacts in place with the recently struck agreements with Western Union and Remitly. Visa Direct has been seeing P2P expansions with LINE Pay in Japan (where there are already 6 million Visa credentials) for cross-border and domestic use cases.
As we noted, too, as discussed on the call, the Consumer Financial Protection Bureau (CFPB) is investigating fraud in peer-to-peer (P2P) transactions. Visa CEO Al Kelly remarked to analysts that Visa Direct “isn’t running on a different or new platform. It runs on VisaNet and therefore has the same capabilities that we have on VisaNet, including those related to KYC and related to fraud prevention.”
The CFPB has shown up this morning in connection with Apple. That tech behemoth will report later in the week, but the firm’s push into buy now, pay later (BNPL) is of course going to garner some questioning during the earnings call.
As we reported Wednesday morning, the CFPB is taking a close look at the “implications of Big Tech entering this space” and is considering a number of issues, including whether Apple Pay Later could “reduce competition and innovation in the market,” CFPB Director Rohit Chopra said. Part of the concern lies with data — how it will be collected and how it will be used.
The road ahead may be a bit bumpy. In a recent column, Karen Webster noted that the initial $1,000 spending cap may be a bit of headwind. “It could turn off iPhone users who are generally a good credit risk and might be willing to give Apple Pay Later a try. It could also attract those who might not be on such solid financial footing, and for which Apple has little experience underwriting,” she wrote.
Alphabet Spells Out Some Opportunity
The platforms are prime springboards for payments, and in the case of firms like Alphabet, need to push beyond traditional advertising models. To that end, we’ve gotten a bit of glimpse into how payments opportunities can be embedded into a range of use cases.
CEO Sundar Pichai said on the conference call with analysts that “our investments in commerce are another way we deliver helpful experiences. People are shopping across Google more than 1 billion times each day. We see hundreds of millions of shopping searches on Google Images each month.”
Looking ahead, Pichai continued, merchants will soon be able to submit 3D images of their products to appear directly on Google Search.
“Customers can try before they buy,” said Pichai.
Later in the call, Philipp Schindler, senior vice president and chief business officer, said that “we’re excited about what’s next for retail commerce across our services, especially Search and YouTube. And we will remain focused on building helpful great products and experiences for both users and these businesses.”
Separately, and as is tied to logistics and last-mile efforts, Wing recently surpassed 250,000 commercial deliveries and unveiled a series of delivery drone prototypes able to carry different sized packages, management said on the call.
Bit by bit, Big Tech moves beyond the hardware and software, and directly into claiming consumers’ mind and wallet share.