Digital Transactions Authoritative, insightful and timely information for payments professionals
By Jim Daly
@DTPaymentNews
As the new chief executive of Visa Inc., a company that is still digesting its former European franchisee, Alfred Kelly has had a busy couple of months. Since taking charge from former CEO Charles W. Scharf in December, Kelly has stopped by 12 Visa offices globally, met with regulators or government officials in nine countries, and visited or talked with more than 50 Visa clients.
“I have to say it’s been exhilarating and enjoyable,” Kelly said Thursday afternoon on his first quarterly earnings conference call with analysts. He assured his listeners that for now, Visa is staying the course.
“I have no big plans to change our strategy in the short term, but as a key player in a dynamic payments ecosystem we certainly have to be prepared as necessary to adapt our thinking as facts and circumstances change,” he said.
Kelly, a former American Express Co. executive who joined Visa’s board of directors three years ago, inherits a company dedicated to electronic payments but is a prolific cash generator. Visa reported net income of $2.07 billion for its first quarter of fiscal 2017 ended Dec. 31, up 7% from $1.94 billion a year earlier. Boosted by its June acquisition of Visa Europe, Visa Inc. saw net operating revenues jump 25% to $4.46 billion from $3.57 billion in fiscal 2016’s first quarter.
Processed transactions on the VisaNet network jumped 44% to 27.3 billion from 19 billion a year earlier. When normalized for the impact of Visa Europe, transaction growth was 13%.
In the U.S., total credit and credit card payment volume grew 12% to $803 billion from $714 billion in the prior-year quarter. Credit card volume grew 20% to $430 billion while debit volume increased at a slower rate, up 4% to $373 billion.
Much of the U.S. growth came from Visa’s new acceptance deal with Costco Wholesale Corp. and the new Costco-Visa cobranded credit card issued by Citigroup Inc., a huge win at the expense of Kelly’s old company. New credit and debit volume from the big issuer USAA, a former Mastercard Inc. stalwart, also lifted Visa.
In response to an analyst’s question about Visa’s late 2016 modification of its EMV debit card transaction-routing policies, Kelly said, “we’ve seen very little impact of any meaningful level on the business whatsoever.” Merchants and PIN-debit networks had complained that Visa was improperly steering chip card debit transactions to its network, prompting a probe by the Federal Trade Commission.
On the digital front, Kelly said the Visa Checkout online and mobile-payment service now has 18 million consumer accounts in 23 countries through more than 1,500 financial institutions, and is accepted by 300,000-plus online merchants.
