Visa CEO: ‘Long Runway’ Ahead as Digital Payments, Credentials Displace Cash and Checks

Visa is seeing continued momentum in Tap to Pay and digital credential issuance, as consumers continue to spend on their debit and credit cards.

CEO Ryan McInerney said on the call that overall payments volume in the second fiscal quarter was up 8% year over year (YoY), while U.S. payments volume was 6% higher YoY. International payment volume grew 11%, while cross-order volume was 16% higher YoY. Processed transactions grew 11%.

The consumer payments opportunity is “enormous,” said the CEO, with an estimated $40 trillion in annual spend across the globe, excluding China and Russia. Displacing cash and check, he said, is half of that addressable opportunity.

“There is a very long runway ahead,” the executive said.

Growth in Credentials

The displacement of those traditional methods comes as Visa, in McInerney’s words, is “making great progress in expanding the number of Visa credentials. We have added over 100 million credentials from September to December,” he said. All told, as of the second fiscal quarter, the company has more than 9.5 billion tokens globally.

Company materials detailed 8% growth in credit card volumes and 9% growth in debit, as measured in constant dollars.

Total cards in force grew by 4% in the quarter YoY for credit cards, and 7% for debit.

Tap to Pay Momentum

McInerney said Tap to Pay grew 5% YoY to 79% of face-to-face transactions, excluding the U.S. In the U.S., that tally’s nearing 50% penetration.

“On the eCommerce front, we continued to see Visa’s U.S. eCommerce payments volume grow several points faster year over year than face-to-face spend. And the same is true in many key countries around the world,” McInerney said.

The “new flows” activity represents a $200 trillion opportunity, McInerney said, and revenue from those flows gained 14%.

Visa Direct transactions were up 31% in the quarter, equating to $2.3 trillion.

Value-added services revenues gained 23% in the second quarter, in constant dollars.

CFO Chris Suh said that card-present spend was up 4%.

“Consumer spend across all segments from low to high spend has remained relatively stable. Our data does not indicate any meaningful behavior change across consumer segments,” Suh said. Cross-border travel volume was up 17%, or 152% indexed to 2019, pre-pandemic levels.

In looking ahead, total payments volume growth will be in the high single digits from the low double-digit percentage points.

Investors sent Visa’s shares 2% higher after hours.