The four global U.S.-based payment card networks unveiled their joint e-commerce buy button this week, which means merchants, merchant acquirers, and processors can look forward to—or dread—implementing it. Visa Inc. chairman and chief executive Alfred F. Kelly Jr. predicted Thursday they shouldn’t have too many problems.
The button is based on the Secure Remote Commerce standard developed by the network-owned EMVCo standards body. Kelly expects relatively few online merchants will implement it ahead of the upcoming holiday season because most don’t want to tinker with their operational systems at such a critical time. A few merchants will, however, and they’ll give networks and processors an opportunity to identify problems.
“We’ll work out the kinks with those merchants, and then after the holiday season I expect to see a major pickup in the adoption of the SRC,” Kelly said during a conference call with analysts to review results from the company’s fiscal 2019 fourth quarter ended Sept. 30.
One reason Kelly is optimistic is Visa’s predecessor e-commerce service that SRC will replace, Visa Checkout, has 52 million users and 350,000 accepting merchants. “We would expect the conversion of those 350,000 merchants will be relatively easy; there’s a little bit of work, but relatively easy,” he said. He added that SRC “is a better user experience, a better merchant experience, and we’ve plumbed a lot of the capability to get this SRC button up by … the work we did for Visa Checkout.”
In addition to replacing Visa Checkout, the common buy button is expected to supersede online checkout systems such as Mastercard Inc.’s Masterpass and American Express Co.’s expresspay. “The reality is that we, the various network players, really have not heretofore done a good job in terms of the e-commerce checkout experience,” Kelly said, calling the services “difficult for merchants, confusing for consumers … all of us are going to abandon our proprietary offerings.”
The coming of SRC was just one of many tech-related acquisitions and partnerships Visa announced over the past quarter and year that Kelly and chief financial officer Vasant Prabhu reviewed for the analysts. But one topic they didn’t bring up, and no analyst inquired about, was Visa’s recent withdrawal from Facebook Inc.’s Libra cryptocurrency project. Several other payments firms that were early Libra backers, including Mastercard and PayPal Holdings Inc., also have withdrawn in the wake of heavy criticism of the project by banking regulators and legislators in the U.S. and abroad.
Whether the payment companies will miss out on a new opportunity remains to be seen. What’s clear today is Visa’s current business is generating huge payment volumes—and profits. The company reported $1.02 trillion in U.S. payments volume for the fourth quarter—$533 billion from credit cards and $490 from debit cards, up 7% and 10%, respectively, year-over-year.
Quarterly worldwide payment volume increased nearly 9% on a constant-dollar basis to $2.27 trillion. Processed transactions grew 11% to 36.4 billion.
For all of fiscal 2019, Visa posted U.S. payments volume of $3.95 trillion, up 9%. Worldwide payment volume also grew 9% on a constant-dollar basis to $8.78 trillion. The transaction count increased 11% to 138.3 billion.
Visa reported fourth-quarter net income of $3.03 billion, up 6% from a year earlier, on operating revenues of $6.14 billion, up 13%. Full-year net income jumped 17% to $12.1 billion; revenues increased 12% to $23 billion.