Visa Finishes Strong, Even With the DoJ Taking It to Court

Despite the dark cloud the U.S. Department of Justice’s recent lawsuit over Visa Inc.’s debit business has cast over the network, Visa finished its fiscal year 2024 on a strong note.

Among the highlights during Visa’s earnings call late Tuesday were growth in credentials, tokens, and merchant locations, along with renewed agreements with business partners. Visa ended its fiscal year Sept. 30.

Visa-issued credentials totaled 4.6 billion during by the end of the fiscal fourth quarter, a 7% year-over-year increase, while the number of tokens issued totaled 11.5 billion, up 30% from the same period a year ago. More than 30% of all global transactions are now tokenized, Visa chief executive Ryan McInerney told analysts during the call. Tokens shield sensitive cardholder information from fraudsters.

Merchant locations in the Visa network increased to more than 150 million globally. The Olympic and Paralympic games in Paris this summer helped add 130,000 merchants in Europe, while Visa issuers put more than 7 million “Paris 2024” branded cards in the hands of consumers, the network said.

In addition, Visa renewed its contract with Cantaloupe Inc., a provider of payment technology for vending machines and other self-service technology. Cantaloupe has more than 1 million active devices globally and handles more than 1 billion transactions annually.

Visa also renewed its contract with AppFolio, a real-estate management solutions provider, to enable rent payments through its platform. AppFolio services more than 8 million rental units for more than 20,000 clients.

Other highlights singled out by management include the planned launch of Visa’s account-to-account payments solution in the United Kingdom in 2025. Visa’s move into A2A payments will bring the “power of the Visa brand and rules” to A2A transactions, as well as provide “consumer protections that allow safer, simpler, more secure A2A payments,” McInerney told analysts.

The move will allow U.K. consumers to pay bills directly from their bank account, as opposed to paying by check, cash, or card. “A2A payments are not new, but we expect [them] to proliferate, and there is a lot we can add to those transactions,” McInerney says.

Visa plans to expand the availability of Visa Protect for A2A Payments next year. The service uses artificial intelligence to detect fraud on instant-payment networks. Visa will pilot the service with 10 real-time networks in 2025 and enable flexible new credentials that allow multiple payment options from a single credential.

“We have hundreds of issuers in the pipeline and several launches planned in 2025,” including in the United States, Europe, and Asia, McInerney added.

Meanwhile, Tap to Pay continues to be a big driver of network volume for Visa, with transit playing a key role. Visa added more than 110 new transit systems to its merchant base in fiscal 2024, including systems in Boston, Las Vegas, Athens, and Beijing. More than 870 transit systems globally accept Visa cards, while more than 40% of the systems added in fiscal 2024 use Visa’s value-added-service acceptance solutions, according to McInerney.

Overall, Tap to Pay penetration at the point of sale, excluding the U.S., totaled 82% of Visa points of sale for the fiscal year, up six percentage points year-over-year. In the U.S. market, Tap to Pay penetration was 54% for the fiscal year, up 13 percentage points. Among the top 30 U.S. merchants, 29 accept Tap to Pay at checkout, Visa says.

During its fiscal fourth quarter, Visa’s payments volume increased 8% over the prior year, and 8% year-over-year for fiscal 2024. For the quarter, Visa processed 61.5 billion transactions, a 10% increase over the same period the prior year. Cross-border volume on a constant-dollar basis increased 13% during the quarter.

McInerney near the end of the call addressed the DoJ’s most recent lawsuit, calling it “meritless” and saying that the complaint “shows a clear lack of understanding of the payments ecosystem” in the U.S. Visa will defend itself “vigorously” and the network is confident in its “ability to demonstrate Visa competes for every transaction in a thriving debit space that continues to grow and sees new entrants.”