The Federal Reserve Board is set to revisit its longstanding limit on debit card interchange on Wednesday, and most observers expect the Fed to lower it. But ask Visa Inc. about the matter—as analysts did Tuesday afternoon during the network’s September-quarter earnings call—and its top executives outwardly at least profess to be unruffled. “We don’t know what [the Fed] will say,” Ryan McInerney, Visa’s chief executive, told equity analysts on the call. “We’ve proven we can be resilient in interchange markets and non-interchange markets.”
His blasé approach to the matter may stem from Visa’s experience so far after the Fed’s move earlier this year to require financial institutions to start offering merchants a choice of unaffiliated networks in online debit routing—a matter that had gone unenforced for years, though required by the same law that mandated the interchange cap at 21 cents plus a penny for fraud prevention and 0.05% for fraud-prevention costs.
The Fed made the routing mandate effective July 1. But McInerney said the banking regulator’s decision has been a non-issue for Visa. “Routing in e-commerce, we haven’t seen any meaningful impact,” McInerney said. “We’re out there talking to our partners about our product, sharing the value of our product.”
Asked about another potentially hot-button topic, McInerney lauded the Consumer Financial Protection Bureau’s recently proposed rule that would enable consumers to share financial data linked to cards, wallets, or other financial products without the fear the data could be misused. “The CFPB rule is good for Americans,” he said. “It’s likely to be a catalyst for open banking in the [United States]. It’s a great opportunity for Americans to put their data to work.” He added it could be a good opportunity as well for a European open-banking firm, Tink, that Visa acquired in 2021. “We look forward to the opportunity to bring Tink outside of Europe,” he said.
McInerney said Visa reached a milestone in tokens, the technology that masks consumer credentials, having surpassed 7.5 billion so far. The technology, he added, results in a 4%-to-5% rise in approval rates and a 30% reduction in fraud. “We love the platform,” he added.
Another milestone, McInerney added, came during the fourth quarter (Visa’s fiscal new year started Oct. 1) when the company became a certified service provider for FedNow, the Federal Reserve’s real-time payments platform, which launched in July. Visa clients have receive capability so far, he said, with send functionality coming. Visa will next add the Real Time Payments Network from The Clearing House Payments Co., he added. RTP, which competes with FedNow, began operation in 2017.
For its fiscal fourth quarter ended Sept. 30, Visa reported total credit and debit network volume worldwide of $3.82 trillion, up 8.1% over the same period in 2022. Of that, payments volume came to $3.2 trillion, up 9%, with $628 billion in cash volume (for example, cash through ATMs), up 3.5%. The company reported a worldwide total of 68.4 billion payments transactions, an 11% rise.
For the full fiscal year, network volume globally totaled $14.8 trillion, up 5%. Payments volume was $12.3 trillion, a 6.2% increase, with $2.47 trillion in cash volume. The company processed 259 billion payments transactions, up 7.5% over fiscal 2022.
Visa’s net revenue for the quarter was $8.6 billion, an 11% year-over-year increase, and for the full fiscal year was $32.7 billion, also up 11%. Non-GAAP net income for the quarter was $4.8 billion, up 18%; for the year, $18.3 billion, up 14%.