Visa Inc. (V) CEO Al Kelly Presents at Bernstein 35th Annual Strategic Decisions Conference (Transcript)

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Visa Inc. (NYSE:V) Bernstein 35th Annual Strategic Decisions Conference Call May 29, 2019 1:30 PM ET

Company Participants

Al Kelly - CEO

Conference Call Participants

Harshita Rawat - Bernstein

Harshita Rawat

[Call Starts Abruptly] Senior analyst covering payments and IT services. I am delighted to be joined today by Al Kelly, the CEO of Visa. In keeping up with the conference theme, the focus of our fireside chat today will be in Visa's strategic growth opportunities and risks. As always, questions from the audience are welcome. Please write them on the note cards and pass them to an usher at the end of your raw.

So Al, at your first Investor Day as the CEO of Visa, you've noted that the Visa's overarching goal is to exponentially grow. Your payment credentials and acceptance points globally and as you reflect in the last 2.5 years. Can you talk about where are we in that journey? And how has Visa evolved in that process?

Al Kelly

Well, thank you, Harshita, and good to be with you and be at the conference. Look, I think in the payment space some as a story of transformation and a story of accelerating transformation. Then, and I think that's because of a combination of technology and the opportunity in payments that's attracted a lot of people to the space. If we look at the last 18 months since our Investor Day, we've gone from a little less than $3 billion to over $3.3 billion payment credentials. So 10% increase. If you look at the other side of the market, the supplier, seller side of the market, we've moved from 44 million merchants to 54 million merchants, so a 20% increase.

And I think it's important to remind everybody that PayPal wear and Stripe discount once in that 54 million and obviously they each of them on their own has enabled an also lot of acceptance well beyond that. So, there's 54 million is quite understated number. As I look out over the landscape, I think there continues to be a lot of opportunity and maybe I'll cite some of the reasons why I think so. One is that again more into more payment flows. We're looking at the B2B, the P2P space, the B2B space, the P2C disbursement space. And in all those cases, we see great opportunities.

Acceptance around the world is being made to happen more easily because actually low tech solutions in many ways, the idea that QR codes and mobile-based solutions and things like dongles are allowing a merchant to get up and running much faster than in the past. In the past, where you had to have a telephony based infrastructure with electricity and telecom et cetera and smart POS terminals and to get up and running, that change is a sea change and allowing in less developed countries, developing countries, emerging countries to be able to start to see.

The ability to bring on an on-board merchant more quickly in ways that you would never been able to do 3 or 4 years ago. The industry is spending a lot more time thinking about the user experience, the actual time that you go to use your payment credential. And I think we're both in the face-to-face world, where there's a lot more emphasis now on Tap and Pay. And in the e-comm world where there's a lot of attention, although we're not haven't really gotten into market yet with this concept to secure remote commerce, where it's kind of a single tokenized buttons is going to be in my opinion, a big change for the positive in what I think is a pretty crappy experience in e-commerce buying today.

Tokenization is taking off most of the big acquires and gateways around the world support these tokenized solutions. So I'd say earlier innings, but tokenization is critical to having the infrastructure be more secure. It's a critical aspect as we head towards the Internet of Things world downstream. And our view of partnerships has changed and traditional partners of merchants and acquirers and financial institutions have evolved as there are new players that have entered the markets, new ages, new age issuers.

And we've got relationships with issuers or wallets like Paytm and LINE in Japan and we've got relationships with POS financing company like PAYD. We've got relationships with loans-based providers like Branch and OnDeck and with money transfer providers like MoneyGram and EMQ and Remitly. So, partnerships are changing and the last thing I would say is that we've made a concerted effort to open up our APIs and open up -- and really kind of decompose our infrastructure and make it more transparent by having open APIs.

And we've seen in the last two years the capabilities that are available triple because of making those APIs opened up. So, I think that this transformation that we have, we're in the midst of its going to continue and the pace of the pace of change will continue to accelerate. And I think it's all extremely positive story about the downstream opportunities over the next decade in payments.

Question-and-Answer Session

Q - Harshita Rawat

Great. And you've mentioned expansion into new payment flows and something that you have increasingly focused on over the last couple of years. Now, clearly, the opportunity is huge, but historically, the payment flows such as disbursements fee, they have been very hard to address by traditional solutions. So can you talk about what's different now that makes it easier for Visa to address it over the next 5 to 10 years, time horizon?

Al Kelly

Well, I think one of the big changes has been the fact that we have introduced a capability, whereby the Visa rails can work both ways and instead of just traditional pulling money from a bank account to facilitate the purchase of goods and services, people can now push money to bank accounts and that's that capability is huge. We have started to think about other networks. So for example, in Canada, in partnership with TD Bank, we're actually using our Plus network as a vehicle for facilitating Visa Direct transactions.

And then, we've recently taken control of Earthport, which is a very strategic and important acquisition for us because it will now allow us in 88 countries, which includes our top 50 markets around the world, to have direct connections to ACH and real time payment systems, and allow us to reach bank accounts that we couldn't normally reach. So, I mentioned earlier a 3.3 billion payment credentials, 2 billion of those are debit, which allow us to get reach right to somebody's bank account. And that's huge, but not that everything.

And the Earthport acquisition in our top 50 markets is going to allow us to take our reach from about 50% on average to 99%. And it does a couple other things. It takes us beyond a card. Now, we have an ability to move money to people who we don't have a card relationship with. And it facilitates and begins to allow us to an essence build a network of networks. So transactions could happen on VisaNet, they could happen on our ATM network plus, they could operate -- they could be facilitated by any number of the ACH or real time payment networks that are that we now can reach through the Earthport acquisition.

So, I think the capabilities, the ability to now begin to get beyond card and the ability to kind of connect to other networks, all I think enable us and help us get into new payment flows.

Harshita Rawat

And let's drill in on B2B for a second. So you've recently mentioned that you've created, the last 18 months, you created a separate business units for B2B and you clearly have a number of products and initiatives out in the market today. So which one of those are you most excited about in terms of having the financial impact over the next 2 to 3 years, but also having a more long-term 5 to 10 years impact for Visa?

Al Kelly

Well, this speed of -- the whole industry has been late to really be focused on B2B, and we still don't have enough players focused on B2B. Over the course of the last three weeks, I've had the occasion to speak in front of large numbers of our clients in the Americas and last week in Dublin, through 700 clients throughout Europe. And one of my messages to them is I need more of them to step up and recognize the opportunity in the B2B space. And to recognize that it's a different segment that requires a different approach and it's not the simple as to just decide to take your consumer products and put a different label on them and decide there now B2B product because that's not being customer sensitive and that's not going to work.

Look at the B2B space is two segments. It's a traditional carded segment, which we think is about still a $20 trillion opportunity. We're the market leader in that segment. It's 12% of our charge volume or our purchase volume. It is growing of the last three years faster than our consumer volume has grown. It's about $1 trillion on an annualized basis of EVs. And in most countries where we have a business and in B2B, we are the market leader in that that business, and we have a lot of the tools necessary whether it's travel cards or corporate cards or procurement cards, virtual cards, which we've gotten, we had announced the deal with Wax earlier in the year, we more recently announced deals with Sabre and Ixaris in Europe. They get deeper into the virtual card business.

So I would look at the carded opportunity where as I said, we have about $1 trillion, it's a $20 trillion opportunity as a ready now opportunity. And it's really about making sure that we are getting more and more financial institutions to recognize the importance of this segment and get behind it. The other segments is the kind of AR, AP integration segment where we think it's about $80 trillion of funds flow that go today goes through check and wire and ACH systems tend to be high ticket, lower volume, higher ticket types of transactions, that space is tougher. It's not homogeneous. It can be different by segment. And it's also tricking because it's not just about the payment flow.

If you're going to be successful in that space, you've got to bring other value added. And make sure that you're packing enough information. You're providing the right analytics, you've got compliance reporting, you've got usage reporting and other things that's going to be useful to the client. So I would say that in that space over the next couple years, we'll be doing more experimentation and trying to figure out where and how we can add value in ways that provides attractive economics both to the corporate client as well as to us into our investors.

The one place that we are pushing on there very proactively is a product called B2B Connect, where we're trying to help our clients to get out of the business of managing or complex correspondent banking environment where they can ride B2B Connect rides on Visa's rails uses our capabilities we're using -- which we've built it on a distributed ledger platform, so that it allows more data to be sent with the transaction and the transaction is streamlined and it provides great transparency in terms of where the transaction is in transit -- when it's in transit, where is it? When the transaction arrives, and it's very transparent settlement? Where you can see, what was sent or the FX for facts? What were the fees? What was the net settled amount?

It's going to take quarters for us to see what the pickup is on this, but it's the one area that, I wouldn't say we're taking it back. But we're certainly jumping in the middle of the poll to see if that the capability that will add value for corporate clients.

Harshita Rawat

And you've mentioned Visa Direct earlier. Can you talk about some of the current use cases you're most excited about? And what should investors be watching out over the coming years in terms of the traction of that capability?

Al Kelly

Well, I mentioned Visa Direct, it's not a product. It's the capability that I was describing earlier that allows funds to be pushed to bank accounts. It's grown a 100%, it's becoming -- it's moving from being a concept to a pilot, to a real contributing part of our business. There are a number of use cases. P2P is the first one that really started going. Visa is powering most of the big P2P systems in the United States, Zelle, Square Cash, Venmo, Apple's New P2P capability with Apple Cash are all powered by our rail.

So when you move money to me over any one of those system, so that money is moving on Visa's rails and we're being paid for it. We also have a pretty big P2P presence in Russia, believe it or not. Beyond Russia and United States, there's a tremendous amount of opportunity to power P2P systems and a lot of countries certainly don't even have P2P yet. Cross border remittances is a big opportunity. I mentioned earlier that we've done deals with MoneyGram, which is the second largest money transfer company in the world.

Remitly which is a big money transfer company in Europe and in South America, and in Africa, and EMQ, which is a big money transfer market as big money transfer presents in Asia. So, we see this kind of cross border movement of funds much of that is P2P as well as an important use case. B2C disbursements and we previously talked about things like paying insurance claims, by sending the money directly to somebody's bank account and other application is returning for big rental property management companies, returning deposits that people put down on apartments returning that money through Visa Direct.

Payroll is changing. We're trying to introduce the Visa Direct capability in the whole gig economy. The payroll world of kind of working and getting paid every two months, twice a month or every 2 weeks is changing and companies like pay active are facilitating people being able to get access to their money as frequently as they want to get access to it. We have built paid use cases. In India, you can read a QR code on your bill for cable TV or utilities and immediately pay through these address capabilities.

And we're experimenting with every day with new concepts, one of the things that I'm always frustrated by as a guy who travels 85% of the time, and I'm in different countries, different currencies, et cetera, is the application of tipping the bellman or tipping the waiter. And so one of the things that we're in our lab working out is whether there are answers with Visa Direct to accommodate these frequent tipping situations around the world.

Another area that we're thinking about is the movement of funds in and out of brokerage accounts when you move money in anticipating a trade or moving money out of after it's a transaction that can run on Visa Direct as well. So, here, again, similar to B2b we have stood up a business unit, headed by a very senior person who have a team that just focuses on Visa Direct. And we're actually, we just assigned somebody from our London office who's been with the Company a long time, who's going to be the Chief Operating Officer of Earthport, once we take full control of it, and close the deal and that person will report to the head of Visa Direct, and we think our Earthport will have other uses beyond their, but right now, that's where we're going to put the emphasis.

Harshita Rawat

And you were talking about it earlier, but can you talk about how the monetization models for some of these, new payment flows may or may not differ from your core products?

Al Kelly

Well, I think at the beginning, we're always trying to your test the concept to make sure it works. And we don't, we don't want price to necessarily get in the way. So when we're in kind of pilot early stages, and we're kind of proof of concept, our objective is to work out the bugs and see if we've got, if we created a tool that's valuable in the payments, ecosystem, or for that matter in the wire just funds movement, infrastructure. And, overtime we will do the right analysis of price versus value and make sure that we feel like we’ve got the economic model, right. But it's not our number one objective when we set out with these new capabilities. We want to try to push to get broad-based adoption first.

Harshita Rawat

And switching gears a little bit, what are the risks to Visa’s business is one of the most common questions we received from investors now arguably a high class problem, but a controversy regardless. So if you don't mind, we'd love to hear your perspective on some of the potential risks to your business, starting with emerging markets, that there appears to be a lot happening on the ground in some of these countries leapfrog traditional ways to say there's also increasing government involvement is new domestic schemes, emerging broker wallets in these markets. So how do you view the evolution of EM as an opportunity or a risk to Visa?

Al Kelly

There's a lot in that question to unpack. So I start by saying, I look at emerging markets as an opportunity not threat in anyway. In fact, the biggest obstacle to getting into emerging markets historically has been the infrastructure challenge. The point I was making earlier about the fact that if I have to have a sophisticated POS device, connected to telecom pipes, that facilitate them that require me to have electricity and all the other things that go along with it, that's a very, very long expensive build out. And the fact that we now have solutions, by way of QR codes and mobile based solutions, I think it makes it -- it breaks down that barrier quite a bit. So I'm excited about emerging markets.

In the last year, we've opened up an office in Costa Rica, we've opened up an office in Panama, we've offered opened up an office in Ghana. And over time, because the business in my mind is so local, where we see an opportunity we'll go open up the market in that offices in that country, as opposed to dealing with that country, by operating it out of more centralized cluster. You mentioned governments, governments cut both ways and if anything, if you asked me about governments as a risk, I would say that it still towards a benefit than a risk right now. The risks, let's deal with the risk equation. First, the risks are the equation is overly zealous regulations and there is certainly example of that around the world and we're used to dealing with regulation.

But as more and more players getting the payments eco space, finance ministers and central bankers around the world are becoming more interested in the space and there's a little bit more of exchanges around the world of actually looking at what's happening in other countries, regulators looking at what's happening our countries, which previously, there wasn't a lot of we, regulators trying to get into, quote unquote best practices in that something we really would love to see happen. But for the most part, many governments are looking at payments as an opportunity. It's an opportunity for the country to become more modern, it's an opportunity for the country to become more transparent.

In terms of what spent, one of the biggest issues a lot of governments around the world have are these gray economies, where we're not sure what's happening. I think that, I've met with in my travels, and I try to meet with central bankers in every country or the finance minister, in a number of cases, I've met with the president, presidents of countries. And, in the last year we met President Sisi in Egypt, and Egypt is a country of almost 100 million people. And they have seven subsidy programs and they've been doing those -- paying them out by vouchers. The President told me you have no idea whether the money, the vouchers are used as they're supposed to be used. There's no transparency into it whatsoever. So, he's talking to us about whether he starts to use prepaid cards or debit cards as a vehicle for distributed the money.

Therefore, for things of the use, the places where people would buy from that become bona fide acceptors of electronic and digital payment, which increases the level of transparency. So what happened in India? We would never be where we are in India. But for Prime Minister, Modi, on November 8th of 2016, decided to take a few largest, almost used form of currency out of circulation. We just wouldn't be there. We have created some chaos, but from where that was 2.5 years ago to where we are today. And we've seen a 4 to 5 fold increase in the number of businesses that accept payment credentials, cards or other form factors. I mean, it's just, it's tremendous and that was generated by act positively activist as government involvements.

You talked about domestic schemes as a risk. We've been dealing with domestic schemes around the world for a long time. If you think about Australia, Canada, certain countries throughout Europe, the reality is that they've had strong domestic schemes and we've done pretty well in those countries. The key here Harshita is that, it's an even playing field. When I go and talk to government federal bankers or finance ministers or the presidents of countries. I tell them, we're not afraid of competition. We're not looking to suppress competition, but we do insist that the playing field has to be even.

And if you look at Russia, which put in a scheme and its own processing, after the Obama Administration put the sanctions on Russia back in whatever that was in 2012. The Russians have created an even playing field. And therefore, we've been able to have a good business in Russia, despite the fact that the competition is heated up. So dealing with domestic schemes is not something new for us. And that's something we're not used to. I think the last thing you mentioned was it was wallets. Wallet is developing everywhere. And in many ways, I think that these wallets as, the new age of issuers, the new age of acquires, and a lot of wallets gets developed for us, for different reasons.

So, for example, a number of the rise or share services in Asia have started creating wallets, because they need an answer to been able to accommodate on banks benefits, which is a large percentage of the population. And as a result, they create a wallet. But increasingly, a lot of these people now are coming to us. Because of our scale, our size, our brand or security, et cetera. And looking to us to say, can we become an issue or can we become an acquire. That's what's happened with Paytm in India. Where they were clearly a competitor, when they came in the marketplace, they were going to take debit share from us and have taken some. But the reality is that they now become a partner, they're an issue or an acquirer for us.

In India, that's the case with lines in Japan. So I think we're going to continue to work with these wallets. I look at them as an opportunity and the reality is my view is we should be talking to everybody around the world, who wants to get involved in moving funds. And I'd like to believe we could find a way and way to work together in solutions that allow both us and their companies to do well.

Harshita Rawat

And let's talk about fast bank-to-bank transfers, FAST ACH. We are seeing this new wave of governments and regulators around the world modernizing their ACH infrastructure to be the faster real time. How should we think about the ability of this infrastructure to be a threat to your debit franchise?

Al Kelly

It's a good question. Just because the fast, this fast concept is becoming a big deal, it doesn't mean, it's going to have broad-based adoption. There's been FAST ACH in the UK for 10 years. And to pick up on it has been modest at best. Definitely, I asked myself, why is this good for the consumer? What's good about it? Does the consumer really need the funds that much faster? But the question is, some of these systems are not as reliable, they are not as robust.

And very importantly, don't have the same protections that you have in a payment ecosystem solution, where I said, if I spend my money fast to you it's an irrevocable transaction. If I now have a dispute with you over it, or I have, and there needs to be some element of chargeback, how's that going to work? I think with great difficulty would be the answer. And so, I am not convinced that these are going to take off like crazy.

Now that said, I do think some of these are real time payment systems represent an opportunity for us, because they are really just focused on their price and the speed of the movement of the transaction over those types. Whereas we've got all kinds of value added services that we could potentially go sell and license to these RTP systems. So in fact, help them be a little bit more successful because they've got more tumor protections than they have today where it's simply about moving money quickly.

And I think it's going to -- we'll have to see how this plays out. But again, we're up for talking anybody who's got a RTP system and since whether we could be additive to their offering, again, helping us helping in turn helping our investors and customers and helping them grow.

Harshita Rawat

Let's talk about Europe for a few minutes. Europe for a few minutes, the implementation deadline for PSD2 the open back initiative is this fall. As we get closer to that deadline, how your talk evolving in PSD2 and the opportunity, and risk from opening up a bank account in the region?

Al Kelly

The event of the fall, which is September 14th, by September 14th, you have to be ready to have strong customer authentication, two factor authentication. I think the day is problematic, I think a lot of merchants are not going to be ready. And it could be very harmful to a lot of businesses, if people are not ready because a lot of transactions that end up getting not being authorized.

We are we have been very proactive in trying to work with regulators and our customers to make sure that we're helping with a readiness for PSD2 as much as we can, we help broker a minimum transaction level. So transaction flow certain amounts don't have to go through a strong customer authentication. We're working on other services, kind of trust based services, white label kinds of services, where if consumers trusted by a merchant or vice versa that the two factor authentication isn't required.

The reality is that people are going to need capabilities like 3D secure 2.0 which we have had through our acquisition two years ago of CardinalCommerce, but there's no way everybody's going to get that in place in sufficient amount of time. So we're talking to regulators and our partners in general to try to see if we can get the European Commission to not just a change the date, although that would be good, but it needs not try to start finding people or punishing people who just aren't yet ready.

Beyond strong customer authentication, the elements of PSD2 having to do with open banking, and you get information for a direct relationship between your accountancy or from merchant accounts is in the very, very early stages and how all that will play out over time, but remains to be seen. I think what I'm seeing and talking to bankers around Europe is that PSD2 has become a rallying cry in some ways for banks to double down on their brand, on their customer service, on their capabilities, on their products.

So that they continue to building and retain the loyalty of their customers so that they that their customers aren't looking to necessarily go someplace else, so how PSD2 actually plays out, I think it's going to take multiple years to really do, really understand it. And we're going to continue to work hard to be there as advisors and capability offer the people to offer capabilities to our clients as they work their way through this PSD2 journey.

Harshita Rawat

And it's been almost three years since these I completed the Visa your acquisition suddenly the most, one of the most memorable events in the Company's history, you've talked about multiple opportunities in Europe around geographic product expansion volumes. Can you give us an update on where we are in terms of acceleration underlying metrics in Europe now that integration is complete?

Al Kelly

Yes, so we've now owned Europe for 33, 34 months. I think 6 to 9 months ago, we really started moving on our front foot and on the offensive. We're past a very robust integration exercise that required position rationalization, expense rationalization, redoing a whole boatload of contracts and moving them from rebates to incentives, a huge technology, migration, a lot of people changes, probably three quarters of our management teams in Europe is different.

And by the way all through that, we performed well, the business performed well. The transaction was more accretive, more quickly than we estimated and told investors that it would be. But the reality is when you, when I look back on it, when we, the amount of hours spent in management attention on Europe, a lot of those hours were spent until six or nine months ago on how are we doing on the transition and what's going on et cetera.

Looking at milestones, now, the business reviews over the last six to nine months have been much more about the business. Where are we investing? How are we doing? What are the challenges where the pockets of opportunity? We have moved more resources into Europe. I think those of you that follow us more closely know that, that in Europe, especially when we bought it and changed a little bit today, but not as much as I want it to change over the next three to five years.

It's been -- it's a heavy, we have a heavy presence in the UK, very heavy and less so on the continent. We've got pockets where we've got decent size, there's this but we have more pockets where we have tremendous amounts of upside. And the reality is now we're putting more resources and taking them out of London, and putting which is the regional headquarters for Visa in Europe, we're probably when we bought the Company 85% to 90% of the resources where in London, which probably explains why we have a very strong position in the UK unless so on the continent.

Now, we're putting a lot more resources into countries on the continent. There's a lot of opportunity there, if you look at a country like Germany, which is less than 12% of their PCE is on any form of digital electronic payments. It's still a heavy cash society, but e-comm and other things are starting to be an impetus for to change and we want to be there right at the beginning of that change and facilitate as much of it as we can.

We're focused on countries like Italy and Spain, Poland, if you look at those three countries together, they add up to more PC than the PCE of Germany. So there's, and they're in, they're all in the 30s somewhere, in terms of percent penetration of PCE and that's carded or less electronic. So I feel really good about Europe. We felt, we're behind. I mean, we've been MasterCard it's a rating when MasterCard that are ahead of us.

Now, their number show that they might their numbers, if you compare their Europe to our Europe might show them being more ahead than you might think they are. Because they are Europe includes Russia, Ukraine, and the Spain country. Whereas for us, Russia, Ukraine and Spain country are part of our Central Europe, Middle East and Africa region, which is growing over 20%.

So there's some definitional changes, but MasterCard been a commercial business in Europe for much longer than we have. And we've had to pay some cash up, one of the places we were behind was with FinTech. We were too slow to latch on to the importance and the value added a lot of these FinTech we're bringing to the party. We have completely fixed that FinTech our something we're focused tremendously on in around the world. But in particular, I'm talking about Europe right now.

Going in Europe, we now, as we do around the world, we have actual client people focused on FinTech. So it's not somebody who's covering a bank is now covered a FinTech. I mean, we have people who understand what the FinTech of doing and what the value added. And by the way, understand some of their frustrations. So we need to have a better Fast Track on-boarding for FinTech. We can expect the same amount of collateral hold and things like that, that we just can't burden them with those same things.

And they don't want to wait 6 months to go through a whole rigmarole process to get on-board and onto the Visa network. We need to have to make it happen in weeks, not months. And we've announced in Europe that we're going to spend 100, we're around the world, but we announced in Europe that will spend $100 million investing in FinTech. And we won't invest for investments, we're not investment professionals. We'll only invest, if we have a commercial arrangement with a FinTech that we think is a really interesting arrangement.

And then they said and I say it will be valuable to us, if you had a piece of the action with us. And if that's important to them we'll make it will make an investment in them. So I see Europe now as one of the areas of great opportunity for us. We're, we've done well, but we're still playing a bit of catch up, but we're definitely moved from being integration focus to being forward thinking and forward looking and we're definitely on the offensive.

Harshita Rawat

And you mentioned the competitive landscape versus MasterCard in Europe and more broadly, I think on a global basis, we've been seeing this three to four percentage points of delta in volumetric between you and MasterCard. And I know this, you mentioned some reporting differences at scale geographic differences, but we'd love to hear your thoughts around what's driving that delta relative to biggest competitors?

Al Kelly

Well, there are a lot of it is definitional. So there's the point I made about Europe, what's happening with Maestro conversions, they don't count Maestro volumes its 20% of their cards. And when they bring a Maestro card on, they're getting what would have been that volume plus, -- I am sorry, when they converted Maestro card to MasterCard, native card. And they they're getting an uptick, which they said they get and we know from our own experience, you get, they're getting a big lift that's helping.

In Europe, this presence that we have in the UK, where it's a very big presence in the UK is the biggest economy around the world right now that's under pressure, arguably, much of its self induced, but nevertheless, under pressure. We are presence there and not getting nearly the level of growth bear that MasterCard would get on the continent is certainly an issue. When you look at cross border volumes, they drove off of the into the tumor or issuers currency whereas we use merchant currency and help them a little bit recently.

So, there's a lot of definitional issues. That said, I think two other things, one is that this is a business that doesn't have massive shift. Is not a massive amount of deals in any won or loss, there was somebody if they aren't massive. And secondly, I'd say that, there are places where I give them credit that they've done better place we've done better. But if you put all that together, and then you look at the revenue story, you’ll get it over the last three years. We outperformed them in ‘17. They outperformed us in ‘18. We've been fairly close together in the last four quarters.

Last quarter, they outperformed us. But we said for various reasons that we've articulated that this, our second quarter of the first quarter of the year was going to be our low point in terms of revenue growth for the year. So as I think when you talk about it from a revenue perspective, disconnect is big.

Harshita Rawat

And you really talk about e-commerce of the gathers for digitizing countries, which we have sonically very low on card penetration. So, as growth in e-commerce has been one of the most profound changes in consumer interface and famous globally in the last 5 to 10 years. As you look forward in e-commerce, what are the two or three things that Visa needs to get right must get right as e-commerce continues to grow?

Al Kelly

It's very important right is e-commerce in any given month as I go back and look over the numbers grows between three and four times face to face. So just has a much higher growth rate. And then for us, we pick up two times plus the share of a in the e commerce world that we do in the face to face world because cash is an option. Those two factors will make it really, really attractive. I think to get it right there. I think two things are really important. I could say more I'll say I'll talk about two. One is user experience the other security. I alluded to this earlier the user experience in e-commerce is terrible. There's still way to many people opting out of buying after they've gone through the shopping experience.

Secondly, the actual buy experience is so confusing. There's so many options people don't know what to do. And then thirdly, the authorization rates are way too low. All of those things going to get, we have to get fixed. And we have to be part of that. And so one of the big reasons why I'm a huge component of this secure remote commerce and kind of the single button tokenization tokenized solution is because it will allow a much cleaner, streamlined experience for the buyer.

And that'll mean for us sacrificing Visa Checkout, we had our own button and buy and find more falling our buttons in favor of that, because it's a better experience. And by the way, we will start by the fact we had the Visa Checkout merchants out there will, there'll be the right ground to start in terms of putting a secure remote commerce in when we started to convert in the United States later this summer.

The other thing we're doing in user experience is working hard at our innovation centers around the world, with our clients to try to make sure that we're working with them to try to create better user experiences for their customers. And, we're putting a lot of money into that we've increased our in the last two years, we've increased our resources in that cover our innovation centers by 30%. And we've increased the number of tech developers in the Company by 25%. So we're putting a lot into it.

On the security side, so you're getting user experience right is important to e-commerce. The other security, what's happening today is because of shift adoptions, the fraud rate on card present or -to-face transactions, low-single-digits right now. And in fact if a merchant has fully adopted on all their terminals around their network, fully integrated chip, they're seeing fraud rates down to 80%.

So what happens, the bad guys maybe go on vacation or give up, they've migrated over to looking at the card-not-present or e-commerce base. So, we've got to continue to work with our merchant and issuer partners to drive down fraud and improve risk on the -- in the e-commerce space. And we will continue to do that we have a -- we're working with our acquires and our gateway -- acquirers and merchants through our CyberSource gateway products or CyberSource gateway capability where we have a product called Decision Manager where we have all the data we can possibly pull together and it gives incredible ability to track fraud.

We have an operating now 5,500 customers in 68 countries around the world. And last year $200 billion of volume flow through that Decision Manager and we stopped $11 billion of fraud. We're also maniacally focused on cyber security, 5% of the people who work at Visa, work in cyber security. I don't say no to a cyber security investment request. And we spent a lot of money in that area and we'll continue to spend a lot of money in the area.

The reality is, if we expect people to be engaged and happy buyers in the e-commerce space, we've got to make the user experience better. And we have to continue to invest to make sure security is critical and the last element of that is tokenization, which I mentioned earlier. The full out adoption of tokenization is going to be critical to in enabling that security as well.

Harshita Rawat

And my final question for you. Would be, there has been a way of consolidation, which is swept across the themes landscape this year. How do you see that investing Visa?

Al Kelly

Well, the three big ones that with global payments and counting, the global payments pieces is one, yesterday was the day before I've lost track of time. The interesting thing is those have not those have been, I have a unions of different capabilities versus anybody building the scale in anyone aspect of the payment ecosystem. It's been unions have complementary assets and capabilities. And I think in a few ways, that's really a good thing.

Number one, when we try to bring new innovation to the marketplace. We sometimes struggle getting our partners to get out there and make it happen. If we have less partners that are more concentrated, hopefully, that helps the adoption happen quicker. The second thing is a lot of the business thesis of these transactions, as I've understood it, and as I've talked to the CEO. And by the way, we have great relationships with all 6 companies, we've talked to them. Constantly, we've talked to all of them since their announcements.

So our relationships are good and deep and long. But a lot of the thesis is that they want to grow geographically, that's great for the payments ecosystem. There are a lot of countries around the world, where we need more issuing price or processing. We need more acquires in order to help grow the number of financials that are out there and the number of merchants that are out there. So, to the degree that they grow geographically, it's very good for Visa, it's very good for the payments ecosystem.

Harshita Rawat

Great, thank you very much Al joining us today.

Al Kelly

Thanks, Harshita.

Harshita Rawat

Thank you very much for being here.

Al Kelly

Thank you.