Visa’s Kelly Stresses Stability As He Prepares to Hand Off The Reins of Leadership

Following years of pandemic restrictions that all card companies had to contend with, Visa Inc.’s top executives late Thursday highlighted stable transaction and processing volumes and growing cross-border travel as the United States and other global regions continued to recover. The event also featured an appearance by Visa president Ryan McInerney, who on Feb. 1 will succeed Visa chairman and chief executive Alfred F. Kelly Jr., who in turn will assume the role of executive chairman.

Among the developments highlighted during Visa’s conference call to discuss the card company’s fiscal first-quarter 2023 results was growth in debit volume. That volume in the United States totaled $916 billion during the quarter, which ended Dec. 31, a 6.6% increase from the same period a year earlier.

Many consumers have begun to shift their spending to debit cards, especially as tap-to-pay technology and digital credentials have become more prevalent, said Vasant Prabhu, chief financial officer and vice chairman at Visa. “Consumers are spending the same, but shifting more of that spending to debit,” Prabhu told equity analysts during the earnings call. “Debit has been one of the biggest beneficiaries of digitization the past few years.”

The top brass also pointed to strong growth in cross-border activity, with total volume during the quarter increasing 22% from the same period a year ago as pandemic concerns recede.

Indeed, Kelly is optimistic about prospects for travel by Chinese citizens to other countries. He said Chinese citizens are already traveling within Southeast Asia as China loosens its travel restrictions. “But it will be a while before we see travel to Europe and the United States recover to 2019 levels,” said Kelly. “We expect our cross-border index to improve throughout the year, so a China comeback will be important to that.”

Kelly added Visa does not expect in-bound travel to China from other countries to rapidly recover to 2019 levels due to the lingering effects of Covid-19 in China.

Another area of focus will be the expansion of Visa Direct, Visa’s real-time push-payment network. Kelly said Visa sees opportunities to expand Visa Direct to new geographies and new applications, including cross-border payments. “We think there is a lot of gas left in the tank [for Visa Direct] when it comes to new markets and use cases, as well as opening up cross-border payment outside the U.S.,” Kelly said, without adding specifics.

Kelly said Visa will continue to focus on organic growth as well as growth via mergers and acquisitions. On the M&A front, Kelly acknowledged that lower valuations for fintechs have created a friendlier environment for dealmaking. Still, acquisitions will be based on whether they can provide more value-added growth than Visa can generate organically, he added.

McInerney said he will continue to focus on consumer payments and developing new payment opportunities and value-added services. He also pointed to a new organizational structure for the company in which the heads of Visa’s five operating regions will report to Oliver Jenkyn, Visa’s group president and president for North America. Management for the business unit responsible for new transaction flows, as well as a value-added unit, will report directly to McInerney.

Overall, Visa’s credit and debit volume totaled $1.6 trillion during the quarter, up 8.1% from the same period a year ago. Total processed transactions were 52.5 billion, a 10% increase year-over-year.