Visa Checkout’s Future: Secure in the Short Term, Cloudy in the Long Term

Visa Inc. isn’t about to pull the plug on Visa Checkout, but judging from comments Visa’s top executives made Wednesday, the online and mobile-payment service’s long-term outlook looks quite iffy.

The future of both Visa Checkout and Mastercard Inc.’s Masterpass equivalent was called into question last week when The Wall Street Journal reported they will be phased out in favor of a new, single buy button that the payment networks are developing under newly released specifications from standards body EMVCo. Ever since, however, network spokespersons have refused to confirm that Visa Checkout and Masterpass are on Death Row.

What is clear is that Visa’s leadership is quite enthusiastic about the new buy button. Visa Checkout’s future role, if any, seems likely to be greatly diminished.

“We’ve been committed to Visa Checkout, we remain committed to Visa Checkout, especially in certain geographies and for certain merchants where they see value,” Visa chief executive Alfred F. Kelly Jr. said on a conference call to review Visa’s latest quarterly financials. “But I think the ultimate future … is to move to this EMVCo standard, which creates a single button, which is much more analogous to the situation that you see in the physical world where there’s a single terminal and all products run through that terminal. 

“In essence,” Kelly continued, “we’ve had in the e-commerce world the moral equivalent of multiple terminals, if you will, and I think that’s just terrible. It’s lousy for the merchants, it’s a bad experience for consumers, so we’re excited about this Secure Remote Commerce framework and standard that EMVCo has come up with.”

Chief financial officer Vasant Prabhu said questions about the buy button are “premature” considering all the technical and development work that needs to be done before it goes live. But he echoed Kelly’s remarks that the button will be Visa’s preferred online payment offering.

“In terms of Visa Checkout we remain as focused on it as we were,” Prabhu said on the call. “We will use Visa Checkout in those parts of the world where it clearly is a valuable option for people, especially outside the U.S. In the U.S. there are merchants who would see value in it; we would definitely use Visa Checkout as a solution there. Once this single-button solution is available, then we’ll just have to see how that plays between the Visa Checkout option and the single button.”

Visa’s existing businesses, meanwhile, hummed along in the second quarter of fiscal 2018 ended March 31. Worldwide payment volume hit $1.99 trillion, up 14.9% (10.5% on a constant-currency basis) from $1.74 trillion a year earlier. Processed transactions on Visa’s networks grew nearly 12% to 29.3 billion. 

In the U.S., credit card payment volume rose 10.5% to $446 billion. Debit payments increased 9.8% to $409 billion.

Visa posted net income of $2.61 billion, up 506% from $430 million in fiscal 2017’s second quarter when one-time items reduced profits. Net operating revenues increased 13.3% to $5.07 billion from $4.78 billion a year earlier.