Visa: 50% of Global eCommerce Transactions Are Tokenized

Visa’s fiscal second quarter results underscored the continued displacement of cash in face-to-face commerce, the widening embrace of tap-to-pay technologies and rising commercial volumes — and notably, there’s been no consumer spending slowdown, according to management commentary on the earnings call Tuesday (April 29).

Supplemental materials revealed that U.S. payments volume grew 6% and international payments volume grew 9%. Cross-border volume, excluding intra Europe, rose 13% in constant dollars. Within the U.S., debit volumes were up 9% (in constant dollar terms) outpacing credit volumes of 4%.

Ryan McInerney, CEO, said on the conference call with analysts that total credentials were up 7%, and the firm added 1 billion tokens to 13.7 billion. “Nearly 50% of our eCommerce transactions, globally, are tokenized,” he said.

Tap to Everything and Stablecoins

Visa’s “tap to everything” strategy continues to bear fruit, McInerney said, adding that tap to phone added 2 million transacting device terminals since the last quarter. Tap to Pay penetration is at 76% globally, he said, with the U.S. passing 60% for the first time.

McInerney also pointed to stablecoins as an area of promise as “two important capabilities are interoperability and programmability. We have continued to expand our interoperability, including with our first seven day a week stablecoin settlement, recently surpassing $200 million in cumulative stablecoin settlement volume,” he said.

Commercial volumes were up 6% in constant dollars, with Visa Direct transactions up 28% to 3 billion transactions.

“To capture the accounts receivable and accounts payable opportunity, we are utilizing product innovations such as embedded finance solutions to meet payers where they manage their business to drive adoption of cards,” McInerney said. Value-added services revenues were up 22%.

Consumer Resilience

McInerney said that “halfway through our fiscal year, consumer spending has been resilient and strong, but there is much uncertainty. Focusing on the U.S., in Q2 and through April 21, we have not seen any signs of overall consumer spending weakening. While spending growth differs among consumer spend bands, with the most affluent growing the fastest, all spend bands remain resilient and consistent with past quarters.”

He noted that some spending categories such as travel and lodging have seen some deceleration of growth, “but overall discretionary and nondiscretionary spend remains strong.”  Asked later in the call about consumer behavior, CFO Chris Suh said, “Here was some evidence of pull forward in certain categories. Electronics is one of them, and it was mostly in … the first part of April.”

Suh said on the call that in the U.S., eCommerce spending grew faster than face-to-face spend. He added that “restaurant growth remained stable and retail and fuel growth improved with strong and stable total discretionary and nondiscretionary spend growth, reflecting resilience in consumer spending.” In terms of cross-border volumes, eCommerce spending was up 14% and travel spending grew by 12%.

Looking ahead and for guidance, Suh said, “The potential impacts from tariffs have led to higher levels of economic uncertainty. That being said, what we’ve seen thus far in our results is relative resilience in consumer spending.” Cross-border volumes are projected to be in range of the March and April averages, while overall net revenues will be in the low double digits, in line with the fiscal second quarter.

“While we are certainly not immune to macroeconomic impacts, our incredibly diverse business model has proven to be resilient in the face of a variety of environments,” McInerney maintained.

Visa’s shares were up about 0.7% in after-hours trading on Tuesday.