Visa Looks for Brighter Skies in 2021 As It Emerges From a Year Darkened by Covid’s Impact

Visa Inc. may be bidding good riddance to a Covid-haunted fiscal 2020, but the giant payments network made it plain Wednesday afternoon it is looking forward to a very different fiscal 2021. “The pandemic is still with us,” noted Vasant Prabhu, the company’s chief financial officer, but “fiscal year 2021 will be a year of two different halves.”

While the first half will continue to be burdened by Covid, the latter half will show rapid improvement as vaccines enter the market and mitigating measures around he world become less stringent, Prabhu told equity analysts during a conference call to discuss Visa’s fiscal fourth-quarter results. For Visa, fiscal years run from Oct. 1 until Sept. 30 of the next calendar year.

Clearly, the pandemic isn’t dampening Visa’s appetite for acquisitions that are likely to benefit from an improving economy next year. The company announced earlier in the day it had agreed to acquire Miami-based YellowPepper USA Inc., whose technology supports card issuing and other financial services for banks in the Caribbean and Latin America. “We’re excited about the deal, and expect it to close in the next few weeks,” Visa chief executive Alfred Kelly said during the call.

Nor does Kelly expect to retreat from deals that make sense, with or without Covid effects. “We have too many attractive growth opportunities to pull back,” he added.

One deal Visa announced last January, though, has run into static. The Wall Street Journal reported Wednesday that the U.S. Department of Justice may decide “soon” whether to file suit to block Visa’s $5.3-billion deal to acquire data aggregator Plaid Inc. The department’s thinking is that the deal, which Visa announced in January, might restrict competition in the payments business, the Journal reported, citing people familiar with the matter. Neither Visa nor Plaid would comment for the Journal’s story, and Kelly did not address the matter during the earnings call.

Within the existing business, a mix shift is going on. Over the course of the months since February, when Covid-19 began to make itself felt globally, spending has skewed toward debit, Prabhu reported. “There has been a shift away from cash, and most of it has gone to debit,” he said. Also, amid the uncertainties of the new environment, “people would rather spend money they have than borrow,” said Kelly.

That factor could be evident among consumers as they shop online rather than in physical stores, as well. Kelly said that while Visa accounts for 15 cents out of each dollar spent in face-to-face transactions, its share of card-not-present transactions is 43 cents.

U.S. debit volume for Visa totaled $762 billion for the latest quarter, up fully 22.7%, while credit card volume dropped 8.7% to $500 billion. But all in all, Visa reported an 8% increase in credit and debit volume combined, compared to a 6.4% drop in the fiscal third quarter, which ended June 30.

Net revenue for the latest quarter came to $5.1 billion, down fully a billion from $6.14 billion a year ago.