Visa optimistic on Europe and VAS

Reporting its Q2 results (or Q3 if you’re Visa and weirdly start your financial year in October), the largest global card brand made positive noises about the world economy. International travel, and business travel in particular is recovered from the pandemic and spending on Visa cards exceeded 2019 levels for the first time. “Consumers are back on the road, visiting various corners of the world, resulting in cross-border travel volume surpassing 2019 levels for the first time since the pandemic began in early 2020.”

Payment volume in Europe was up 17% on the same quarter in 2021 despite the impact of Visa losing a large British issuing client. Excluding the UK, European volumes were up a very impressive 37% “reflecting share gains in multiple markets.”

Travel to Europe recovered a sizeable 30 points in the third quarter with more than half of that from North America. Inbound travel to Europe was 21% above 2019 with luxury hotel payments  volume and average ticket size outpacing more modest accommodation.

Worries about a looming recession were brushed aside. Alfred Sloane, Visa’s CEO, said there was “No indication of any slowdown, including in more recent weeks” although the UK may be an outlier. Payment volumes in Britain did not grow in the quarter. 

Visa has been building an impressive roster of Fintech acquisitions and highlighted its success in cross-selling to its issuing and acquiring base:

  • Global Payments and NCR have agreed to market Visa’s Cybersource payment gateway to their merchant customers. This is a good win for Visa as it indicates that even the largest acquirers may be struggling to invest in their own market-leading payment gateways with global delivery capability. Visa mentioned that acquirers are twice as good a distribution channel for Cybersource than direct sales
  • Revolut which already took Visa Direct and Currencycloud has started using Tink for openbanking payments
  • Demand for 3DSv2 as Europe implements SCA >60% increase in transactions at Cardinal Commerce, which authenticates card transaction for gateways, acquirers and larger merchants

Together, Currencycloud and Tink are reported to add c.$35m/quarter of revenues for Visa and c.$70m/quarter of cost. It’s early days but a great deal more cross-selling will be needed to recoup the acquisition costs of $0.9b and $1.9b respectively.