Visa Direct Transactions Leap 38%, Tokens Pass 11.5 Billion Milestone

Visa’s fiscal fourth quarter results underscored the payment network’s traction beyond card payments, as new payment flows in particular gained momentum. Commentary from the call and from the earnings supplement and earnings release show that overall payments volume grew 8% year over year.

In the United States, payments volume grew 5%, and international payments volume grew 10%. Cross-border volume, excluding intra Europe, rose 13%. In consumer payments, CEO Ryan McInerney detailed that Visa’s credential count was up 7% year over year, to 4.6 billion, and has issued cumulatively 11.5 billion tokens.

“Our key business drivers were relatively stable compared to Q3,” McInerney told analysts on the call. “More than 30% of our total transactions are tokenized.”

He called out account-to-account payments as an area of particular promise, where the firm is leveraging its “brand infrastructure and rules as well as consumer protections to enable simpler, safer and more secure account to account payments.”

Visa A2A, he said “is open to any eligible bank, and open banking provider, and verified biller. Initially, this is targeted at bill payments, and we plan to launch in 2025 in the U.K.”

Tap-to-Pay Growth

As has been the case with previous quarters, McInerney illustrated the continued embrace of tap-to-pay transactions. “Tap to add card” is now enabled by issuers in more than 15 countries across five regions, he said.

Tap-to-pay penetration globally, excluding the U.S., accounted for 82% of face-to-face transactions, up 6 points from 2023. And in the U.S., he added, it was at 54%, up 13 points from last year.

New flows revenues were up 22%, and Visa Direct transactions grew by 38% in the latest quarter to 2.8 billion. Commercial volumes were up 5%.

“We finished the year with almost 10 billion Visa Direct transactions and $1.7 billion in commercial payments volume,” he said.  Commercial credentials grew at 18% year over year, significantly faster the overall credentials growth rate.

With a nod toward value-added services, he said that Visa’s core banking and issuer processing platform, Pismo “has a good pipeline and its solutions are resonating with clients, with nearly 12 billion API calls a month.”

In his remarks to analysts, McInerney also took note of the Department of Justice suit against the company, alleging a monopoly on debit cards, stating, “We believe the lawsuit is meritless and shows a clear lack of understanding of the payments ecosystem in the United States.  We will defend ourselves vigorously and are confident in our ability to demonstrate that Visa competes for every transaction in a thriving debit space that continues to grow and see new entrants.”

Stable Consumer Spending

Drilling into the payments themselves, CFO Chris Suh said that during the quarter, credit and debit volumes each grew 5%. Card present volume grew 2% and card-not-present volume grew 6%.

“Consumer spend across all segments from low to high spend has remained relatively stable, [compared] to Q3. Our data does not indicate any meaningful behavior change across consumer segments from last quarter,” he said.  The fiscal fourth quarter cross-border eCommerce measured as card-not-present volume, excluding travel and crypto purchases, grew 15%.

The CFO guided to expectations that payments volume and processed transaction growth will “remain strong and generally in line with full year 2024 levels.”  In the current quarter, U.S. payments volume growth stands at around 6%, with debit up 7% and credit up 6% as compared to last year.

Investors sent Visa’s stock higher by about 1.5% in after-hours trading.

Asked on the conference call about account-to-account payments and the competitive environment —and with an analyst’s mention of Walmart having enhanced those offerings — McInerney said, “There’s a lot going on, with account-to-account payments in the U.S. and around the world. … Pay by bank is not a new capability. It’s not a new capability in the United States. It’s not a new capability for Walmart. I think as of today, you can load three different bank accounts into your walmart.com wallet to pay for things. … We expect that account-to-account payments will continue to proliferate here and around the world. We think there’s a lot that we can add in terms of value to account-to-account payments.”

The CFPB’s finalized rule on open banking also came up on the call. McInerney said that the final rule is “largely consistent with the CFPB’s initial proposal. And, you know, we are strong advocates for consumers having more control and more access to their financial data, but ensuring that it’s in a safe and secure way. We’re still evaluating all the details of the potential impacts from the more detailed regulations across the industry. … What we found is that the Visa brand can be a meaningful differentiator, and the Visa brand can give confidence to end users and data providers.”