(6 June 2017 – Australia) In a recent interview, Visa CEO Albert Kelly highlighted a number of opportunities and challenges facing the company, including its European business, China and digital payments.
Speaking to Sanford Bernstein Analyst, Lisa Ellis, Kelly said that Visa is focused on “growing the payments pie; we’re in a unique space in payments where we don’t necessarily have to go out and battle for a fixed share of a pie. The opportunity in payments to just grow the pie is enormous.”
Further, over the next five years, Visa will concentrate in part with growing acceptance points “as eCommerce continues to evolve and the Internet of Things comes along.”
Kelly indicated that the digital space will also be an on-going area of expansion for Visa, evidenced by its “very good relationships with Samsung, with Stride, with Facebook, with PayPal.”
He added that the switch from physical cards to a digital landscape relies heavily on “a high standard” of security, illustrated by Visa’s emphasis on tokenisation and “devalued data in an open environment.”
Kelly said of the Visa Europe buyout: “We are off to a very good start … we have a playbook from moving from an association model to a commercial enterprise model. On the expense side we’ve gone through both the people and profits rationalisation which has resulted in less uplication of efforts, more streamlined processes and a better expense profile, which will help raise our margins in Europe over time.”
Speaking about the continent more generally, Kelly added that amid the regulatory environment, “much of what’s going to play out in Europe is still to be played out. It’s very, very early innings. We just went through the scheme processor division. You know, it’s frankly was culturally disruptive, it’s very difficult that we literally have to make people sit in separate spaces.”
And turning to PSD2, he said, “There are a number of elements to it, the two that get a lot of attention are the two–factor authentication and the need for the financial institutions that have opened up their accounts to outside parties if that’s what consumers request.
“How well that’s going to play out is really early days. We have been working hard with and spending a lot of time with both, the regulators and our clients; we’re trying to make sure that the two-factor authentication doesn’t hurt at the point of sale.”
In regard to China’s largest payment processor, Alipay, Kelly said the Alibaba subsidiary was going largely unchallenged in its home market.
“I personally think they’ve gotten a bit of a free pass in China, in that they are operating in an uneven playing field with their Chinese bank competitors. And let’s make no mistake about it, Alipay is a bank and as they move out of China into other markets, I believe they’re going to be pressed to get a bank license, if that’s the way they are going to compete.
“They are going to be subject to the same rules that their competitive banks are subject to, whether that’s capital — anything from capital requirements to KYC.” India also remains a market with opportunity, said Kelly, and which operates as a relatively open market. There, he said, Visa, has seen a 50 percent gain in merchant locations and also has boosted volume by 100 percent year on year.