Visa’s OK With Pending Mega-Mergers in the U.S. Payments Industry

The pending acquisitions of two leading merchant processors by two leading core financial-institution processors are a “good thing,” Visa Inc. chief executive Alfred F. Kelly Jr. said Wednesday. 

“We’ve got very good relationships and a lot of history with all four of these players,” according to Kelly. His comments came during Visa’s quarterly earnings conference call when an analyst asked him his thoughts about Fiserv Inc.’s pending deal to acquire First Data Corp. and the planned buyout by Fidelity National Information Services Inc. (FIS) of Worldpay Inc.

“In many ways, them coming together provides a smaller number of high-scale players that will help us be able to distribute our capabilities through their distribution network, and that’s a good thing.” Kelly said. He added that the companies all want to grow globally, and “they’re looking for our help” on that and in achieving their hoped-for revenue and expense goals.

“I’ve spent a significant amount of time talking to the CEOs of these companies over the course of the last three weeks, and they’re extremely anxious to work with Visa,” Kelly said.

Shortly before the call, Visa reported U.S. payment volume of $930 billion for its second quarter of fiscal 2019 ended March 31, up 8% from $862 billion a year earlier. U.S. debit volume grew nearly 10% to $457 billion while credit volume increased 6% to $473 billion.

Visa reported worldwide payment volume of $2.09 trillion, a 3.5% increase from $2.02 trillion in fiscal 2018’s second quarter, but an 8% increase on a constant-currency basis. The Visa network processed 32.5 billion transactions, an 11% increase from 29.3 billion a year earlier.

Among Visa’s recent notable developments was the launch by cryptocurrency services provider Coinbase Inc. of a Visa debit card in the United Kingdom that enables cardholders to spend using cryptocurrency, which Coinbase instantly converts to pounds sterling to complete the purchase. The immediate conversion makes cryptocurrency more useful for both consumers and merchants, Kelly said, “which we find intriguing.”

“We’ll continue to look for those opportunities around the world,” he said. “To what degree this is a jumping-off point that other crypto players will copy, we’ll see.”

Visa reported second-quarter net income of $2.98 billion, a 14% increase from $2.61 billion a year earlier, on net revenues of $5.49 billion, up 8% from $5.07 billion.