Visa Where It Wants To Be With PayPal, Earnings

Payments giant Visa, having closed its gargantuan deal to acquire Visa Europe, made a major strategic agreement Thursday and also bested the Street’s bottom line estimates.

The firm reported adjusted earnings of 69 cents a share, with that bottom line beating the Street by three pennies. The revenues fell just slightly short at $3.63 billion reported. The payments volume rose at an impressive 10 percent, as measured in constant currency, with $1.3 trillion processed, and the total number of transactions was also up the same amount on a percentage basis to 19.8 billion.

The engine to all that growth, not surprisingly: the resilient consumer. Of interest to the international scope the company has set in its sights: Cross-border transactions grew by 5 percent year over year as measured on a constant dollar basis.

Of course much focus stood on the newly unveiled agreement with PayPal, focused on digital payments and using the PayPal service with Visa cards.

The PayPal deal, said CEO Charlie Scharf, will feature data sharing, bringing the two companies into real cooperation and where Scharf said “PayPal will ensure that the data provided to issuers and their cardholders for Visa-funded transactions will be consistent with the information that is received with traditional Visa card transactions.

“This will ensure better consumer experience, reduced cardholder confusion, ensure proper application of rewards, and reduce costly and time-consuming disputes.”  The executive also said Visa will aid PayPal’s POS acceptance, as the latter will join the Visa Digital Enablement Program.

And in remarks that centered on the recent reversal of the multibillion dollar settlement between Visa, MasterCard and millions of retailers that was thrown out last month, the CEO relayed his disappointment in the ruling but also noted the firm is still maintaining its own internal rule change “permitting U.S. merchants to surcharge credit transactions,” and also noted that “the funds that Visa paid pursuant to the class settlement remain in court supervised escrow accounts.” The CEO did say that the individual opt out settlements with retailers remain in effect, with the exception of Walmart, which is still contingent on the class action settlement status.

Speaking broadly, Scharf said that the firm was “pleased with [Visa’s] continued consistent and predictable results in the face of an unchanged economic environment and increased geopolitical risks.”

Management said on the earnings call that U.S. payments volume growth stood at 10 percent, a little below the 11 percent growth seen internationally. And with the Brexit vote in the rearview mirror, Scharf said on the call Thursday that the U.K.’s bow from the E.U., or no bow “it does not change our long-term view that the strategic rationale for putting these two companies together makes extraordinary sense. Also, I want to remind people that they had a put [on the transaction].”  Closer to home, in the U.S., Visa is moving to open a new facility in Palo Alto that will focus on data and innovation, research and business intelligence.

Scharf also said that EMV, after the initial rollout last year, has spurred more than 325 million Visa chip cards out in the field as of June of this year.

In addition, in tech initiatives, Visa said its Checkout experience and rollout are proceeding apace, though offered no numbers on that platform thus far.  In terms of broader initiatives, though the CEO stated that Visa had introduced an interactive Checkout button, “allowing customers to enter their password right into the Checkout button and confirm Checkout with a single tap,” he also added that “most of these features will be automatically available, which means merchants do not have to make any adjustments to their existing online Checkout processes or payment systems.”