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pww.comVisa Inc. Presents at Citi’s Financial Technology Conference 2020, Nov-17-2020 12:00 PM - NYSE:V

NYSE:V

Vasant Prabhu [Executive] 💬

Vasant Prabhu, an executive at Visa Inc., presented at Citi’s Financial Technology Conference on November 17, 2020. Here are the key points he addressed:

  1. Opening Remarks:

    • Thanked the host for the invitation.

  2. Impact of the Pandemic on Visa's Business:

    • Confirmed that Visa had a strong belief in significant growth opportunities ahead, with a potential 10x expansion.
    • Noted that the pandemic accelerated several trends, including the shift to e-commerce.
    • Mentioned that e-commerce transactions have grown significantly faster than pre-pandemic levels, even as overall economic growth has slowed.
    • Observed that e-commerce growth has been sustained even as face-to-face commerce resumed, indicating a lasting behavioral change among consumers.
    • Highlighted the increased activation of cards online and a rise in online transactions per card.

  3. Value-Added Services and E-commerce:

    • Stated that the shift to e-commerce creates opportunities for Visa to sell value-added services such as fraud detection, authentication, and cybersecurity.
    • Cited Visa products like Visa Advanced Authorization, Visa Risk Manager, and tokenization services.
    • Mentioned that Visa had screened over 160 billion online face-to-face transactions, issued over 1.4 billion tokens, and had 15,000 merchants live with its click-to-pay service in 16 markets.

  4. Cashless Transactions:

    • Noted a significant move away from cash due to hygiene concerns, with tap-to-pay becoming increasingly popular.
    • Mentioned that tap-to-pay transactions accounted for 2/3 of transactions outside the U.S. and over 40% globally.
    • Stated that debit transactions, particularly through tap-to-pay, have grown significantly, with debit growing twice as fast as credit.

  5. New Flows Business Growth:

    • Reported massive growth in peer-to-peer (P2P) transactions and disbursements, with Visa Direct continuing to grow at high rates (60-70%) despite the pandemic.
    • Discussed Visa's approach to installment payments through partnerships and investments in companies like Klarna and Paidy.

  6. Managing Uncertainty During the Pandemic:

    • Emphasized the importance of rigorous prioritization, close monitoring of business drivers, flexibility, and agility in response to the unprecedented situation.
    • Explained that Visa scaled back investments and expenses, with a focus on maintaining key areas of growth such as new flows and value-added services.
    • Mentioned the need to monitor trends daily and adjust plans based on changes in the business environment.

  7. Business-to-Business (B2B) Payments:

    • Discussed the three components of Visa's B2B business: traditional card-based B2B, B2B Connect for cross-border payments, and the enterprise accounts receivable/accounts payable (AR/AP) space.
    • Noted that small business B2B spending has recovered, while larger businesses remain sluggish.
    • Highlighted the scaling of B2B Connect and the early stages of the enterprise AR/AP business.

  8. Debit vs. Credit Transactions:

    • Confirmed that debit has become the primary driver of cash conversion during the pandemic.
    • Explained that debit transactions have grown twice as fast as pre-pandemic levels, driven by a preference for digital payments and a move towards using available funds over borrowed funds.
    • Mentioned that the structural shift toward debit is likely to persist post-pandemic.

  9. Cross-Border Transactions:

    • Noted that 2/3 of Visa's cross-border volumes were travel-related pre-pandemic, with the remaining 1/3 attributed to e-commerce.
    • Stressed that the majority of cross-border transactions are consumer-oriented rather than commercial.
    • Highlighted that when borders reopened, there was a significant increase in cross-border travel, indicating strong pent-up demand.
    • Mentioned the growth of cross-border e-commerce, which is expected to continue even after travel restrictions ease.

  10. Cross-Border Business Recovery:

    • Acknowledged the diversified nature of Visa's cross-border business and the lack of reliance on specific corridors.
    • Speculated on potential bilateral travel arrangements and the gradual reopening of borders, emphasizing the need to monitor infection trends.

  11. Incentives and Cross-Border Volumes:

    • Explained that incentives for clients are typically tied to total volumes rather than cross-border volumes, due to the small proportion of cross-border transactions for most clients.
    • Noted that the cross-border business is highly valuable and does not require additional incentives to encourage its use.

  12. Future Discussions with Clients:

    • Suggested that discussions regarding incentives might occur, but did not expect fundamental changes.

  13. Visa Direct Growth:

    • Described Visa Direct as a transformative capability that enables various use cases such as P2C, disbursements, P2P, B2B, and G2C.
    • Reported mid to high 60% growth rates, with 3.5 billion transactions in the previous year.
    • Highlighted use cases such as P2P, remittances, on-demand payroll, gig economy payments, and insurance disbursements.
    • Mentioned the acquisition of Earthport for cross-border disbursements and the role of intermediaries in scaling Visa Direct.

  14. Closing Remarks:

    • Thanked the host and concluded the presentation.

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