Visa’s $1.3 Trillion Quarter

Visa made news a couple of times yesterday (Nov. 2).

The day kicked off with the official announcement that Visa had reached a definitive agreement for Visa Inc. to acquire Visa Europe, creating a single global company. Then, a few hours later, Visa posted its fourth-quarter earnings.

On the Visa Europe news front, as we reported, the deal’s total top value will be €21.2 billion, or $23.4 billion — outstripping the average analyst estimate of $21 billion. That will mean $18.2 billion in upfront considerations and $5.2 billion payable following the fourth anniversary of closing. For a look inside Visa Europe’s operation, click here.

While the Visa Europe news took the spotlight during the Visa earnings call with analysts, there were still some noteworthy figures in Visa’s quarterly report – one that saw them deliver on revenue but miss on earnings expectations. The earnings miss, however, sent Visa’s stock down over 3 percent during midday trading. It closed down 3.09 percent on the day to $75.20.

Overall, Visa’s net income for the quarter hit $1.5 billion, a 12 percent increase from the year prior. Payments volume growth hit $1.3 trillion, an 11 percent increase on the year. Cross-border volume growth, which was called out by Visa CEO Charlie Scharf during the call as a continual strength, grew 5 percent in the quarter. Total processed transactions for Q4 hit 18.4 billion, which was an 8 percent increase YOY. Total processed transactions for the 12-month period ending Sept. 30 hit 71 billion, which is a 9 percent increase from the year prior.

“Visa’s fiscal fourth quarter was a strong finish to an equally strong fiscal full-year 2015 in terms of revenue and earnings per share growth in the face of a continued challenging global economic environment. The underlying growth of our franchise continued as evidenced by our strong payments volumes as well as new and renewed partnerships during the year. Most importantly, we continued to build our capabilities at the physical point-of-sale as well as in the digital space,” Scharf said.

Scharf focused a few of his remarks toward Visa’s headwinds with Visa Checkout, which he noted has more than 7 million registered users and more than 250,000 merchants globally — including 10 of the Top 50 eCommerce merchants.

And of course, keeping in tone with the digital security trends for online payments — as CNP fraud continues to rise — Scharf spoke about Visa Checkout and tokenization.

“We also announced that we now have built the ability for issuers and merchants to tokenize Visa Checkout transactions. We expect this to begin in early 2016, as merchants and some issuers complete the work required to enable token acceptance. Many issuers are ready now, but given the rapid approach of the holiday season, we do not expect merchants to enable token acceptance as they head into their year-end annual system freezes,” Scharf said.

He also spoke toward the positive impact of the Visa Europe deal in regard to the company’s ability to expand Visa Checkout’s reach. He noted that one of the “strategic benefits” of the Visa/Visa Europe transaction will be the company’s ability to “deliver enhanced digital and mobile capabilities in Europe.”

“VE had already announced plans to rollout Visa Checkout and we’re already working with them on that in the context of our existing partnership. We can extend to Europe all that we’re doing to open our technology platform, which will enable collaboration and co-development of innovative payments experience,” Scharf said.

“By combining the two companies, we do expect to get benefits of scale and efficiency, providing access to our infrastructure, products, and corporate services to VE. We will fully integrate the VI and VE systems, which we expect to take three to four years as we work carefully with our clients to do this properly,” he continued.

To check out what else is HOT in the world of payments, click here.