Visa’s Kelly Touts Visa Direct to Attack P2P Fraud As the Network Reports a Strong Quarter

Visa Inc. late Tuesday reported a continued recovery in cross-border payments, double-digit increases in U.S. payments volume, and no let-up in the industry’s general shift to contactless payment. It also faced a question regarding Visa Direct and its links to instant peer-to-peer payments services that the Consumer Financial Protection Bureau has targeted because of allegedly high rates of fraud.

The CFPB is reportedly preparing a probe of the matter following letters sent by a group of U.S. Senators to the seven big banks that own Early Warning Services Inc., the operator of the popular Zelle P2P payments network. The letters expressed concerns about so-called friendly fraud, incidents where consumers are tricked into authorizing transfers.

Addressing the matter in an earnings call Tuesday, Visa chief executive Al Kelly said, “We’ll just have to make sure that we’re working closely with Zelle and other partners to make sure that we’re contributing as much as we can to make sure that that service is secure as can be,” according to a Motley Fool transcript of the call with analysts to discuss the company’s fiscal third-quarter 2022 results. Visa’s third quarter ended June 30.

Kelly added that the use of Visa Direct, Visa’s real-time transfer system, can be a bulwark against fraud in P2P payments. “One of the terrific things about Visa Direct is that it isn’t running on a different new platform,” he said, according to the transcript. “It runs on VisaNet and therefore has the ability to utilize all of the same capabilities that we have on VisaNet, including those related to [know-your-customer] and those related to fraud prevention.”

In other matters, Kelly expressed satisfaction with a strong rebound in volume related to travel abroad by cardholders. “Cross-border travel has come back very, very strongly and quicker than what we thought,” he told analysts on the call, according to the transcript. Chief financial officer Vasant Prabhu added that cross-border volume, indexed to 2019 volume, increased from 94 in March to 112 in June. “This was helped by much of Asia opening up at the beginning of the quarter,” he said, according to the transcript.

The top brass at Visa were also pleased with the continued progress of contactless payments, also known as tap to pay. The technique accounted for 24% of face-to-face transactions in the third quarter, Kelly said. “In 2021, the average contactless active debit cardholder had two more transactions and $65 in additional spend each month. We expect this trend to continue,” he added, according to the transcript.

Overall, for the quarter, all credit and debit volume in the U.S. market, by far Visa’s largest, totaled $1.645 trillion, up 9.7% year-over-year. For the 12 months ended June 30, that volume totaled $6.18 trillion, a 15.3% increase year-over-year. Visa reported net revenue of $7.3 billion for the quarter, a 19% increase from the same period last year.