Combined scheme payment volume in Europe rose 12% to €1,150bn in Q4 2023 according to latest financial reports from Visa and Mastercard. With nominal GDP growing around 5%, this shows that cards are still taking significant share from cash.
Mastercard and Visa remain neck and neck in Europe. Mastercard’s relative position has been boosted by winning NatWest’s card business, but Visa pulled ahead slightly in Q4. Measured in euros, Mastercard’s volume was up 10% and Visa’s 13%. Combined ATV fell slightly to €33.24.
Mastercard CEO said” Europe has been firing on all cylinders for us,” a sentiment reflected in new client wins, including “flipping” BPER Banca’s debit portfolio in Italy and BNP Paribas Fortis business credit cards in Belgium.
Visa has won Zing, HSBC’s high profile new digital bank. Starting with the UK, Zing will take Visa’s open banking product, Tink, and its cross-border payment service, Currencycloud, as well as issuing Visa cards/credentials to its customers. Visa also renewed issuing agreements with Isbank in Turkey (33m cards), PKO BP in Poland and Piraeus Bank in Greece.
The schemes are taking slightly different approaches to diversifying from their core business of transaction processing, but both strategies seem effective. Mastercard is investing in value added services, mainly for its issuing clients. Global VAS revenues rose 19% driven by cyber and intelligence solutions, fraud tools, security, identity and authentication.
Visa has a stronger capability in services more directly linked to issuing and accepting cards. Its VAS revenues were up 20%. “Cybersource [Visa’s gateway product] continues to have great success around the world, both with their omni-channel services as well as some of the value-added services they have like token management service and the like,” said the CEO. In Q4, Visa acquired Pismo, a next gen banking software / issuing platform based in Mexico but supporting European sales from an office in London.
In product news:
- Visa Direct is beginning to create real value. Total transactions were up 20% globally to 2.2bn and there was a remarkable 65% increase in its use for P2P x-border. Meta uses Visa Direct to credit content creators with payments to their debit card. This service is live in the UK, France and Italy.
- There was little concrete news on Click to Pay, the schemes’ attempt to create digital wallet to rival PayPal and Apple Pay. Mastercard said that transactions grew 60% in 2023 but did not disclose numbers which is never a good sign. Klarna has agreed to activate Click to Pay this year on its European checkout pages.
- Tokens are big business. Globally, Visa manages 8.7bn network tokens, up 55% year on year. Mastercard says tokenisation improves approval rates by 3-6 ppts.
- Contactless marches on. Visa says it accounted for 77% of F2F transactions outside the US. America always adopts payment innovation at a slower pace. The equivalent figure for the US is 45%.
