Visa Inc. (V) Autonomous Research Virtual Annual Future of Commerce Symposium (Transcript)

Sep. 15, 2022 4:46 PM ETVisa Inc. (V)
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Visa Inc. (NYSE:V) Autonomous Research Virtual Annual Future of Commerce Symposium September 15, 2022 3:15 PM ET

Company Participants

Ryan McInerney - President

Conference Call Participants

Ken Suchoski - Autonomous Research

Ken Suchoski

I think we're right at 3.15. There’s Ryan. Hey, Ryan, how are you?

Ryan McInerney

Hey, great. Ken, how you’re doing?

Ken Suchoski

Hey. Pretty good. Thanks for joining us. Welcome back, everyone. My name is Ken Suchoski, and I'm the payments and fintech analyst at Autonomous Research. We're excited to have Ryan McInerney, joining us today. Ryan is the President of Visa. His main responsibilities as President include overseeing Visa's market leadership teams, product team, merchant team and client services. He's been with the company since 2013, prior to which he was the CEO of Consumer Banking at JPMorgan Chase.

Ryan, welcome. Thanks for joining us.

Ryan McInerney

Yes. It's a pleasure to be here. Looking forward to chatting.

Ken Suchoski

Yes. Great. If you'd like to ask Ryan a question, feel free to use the Q&A box in the Zoom app, or you can e-mail those questions to me at and we'll do our best to get those answered.

Question-and-Answer Session

Q - KenSuchoski

So with that, Ryan, why don't we get started? The narrative around the consumer and the economy more broadly has changed a lot since the start of the year. It seems like we pivoted pretty quickly from talking about this travel recovery to a potential recession. So to start off, can you give us a sense for what you are seeing in terms of consumer spending habits and any pockets of strength and weakness?

Ryan McInerney

Yes, sure. Happy to, Ken. So I think the best way to describe consumer spending right now is stable, and that's what we see in our numbers. There's been some shifts in the way consumers are spending, what they're buying, where they're spending. But, overall spending has been remarkably stable, both in the United States here and for the most part around the world.

I'll try to give you a couple of examples of the different types of shifts that we're seeing. One shift that we have started to see is a shift from goods and services. Early in the pandemic, spending on goods surpassed services, which was very different than the historic trends. But even as services have rebounded in the last six months or so, the percentage of spending on goods in our payments volume still remains higher than pre-pandemic levels.

So that's one rotation, I guess, that we're starting to see. Another one would be, we've seen a strengthening in discretionary segments. If you look at U.S. travel spend, for example, it was not back to the pre-COVID trend line in Q3, but it was growing. It grew more than 40% versus last year.

I guess, a third example would be, what we're seeing from affluent customers. We continue to see very strong spending from affluent customers. Recently, we've seen especially strong spending in restaurants, travel, like I mentioned a minute ago, entertainment; people are back out, going to concerts, going to feeders, going to see movies.

But at the same time, non-affluent spendings remained relatively resilient. So those are some of the different rotations that we've started to see, but the overall message is, consumer spending is very stable.


Right. Okay. So even though we have some higher inflation numbers – nothing, nothing really impacting the consumer too much. That's good to hear. Ryan, I guess, what surprised you the most in terms of consumer spending habits relative to 2019. And, I guess, if you had to estimate, you know, by how much did the pandemic pull-forward the digitalization of cash?

Ryan McInerney

I think what the pandemic did is it holds -- I guess, the thing that pulled forward more than anything else was the investments that were made all around the world in digital commerce infrastructure. And these were investments that the ecosystem needed, POS terminals and emerging economies, tap to pay enablement here in the U.S. and around the world, moving small businesses online who previously only had face-to-face shops, sellers big and small enabling omni-channel. You had e-commerce delivery services that were sprouting up seemingly overnight all around the world. So there's kind of a massive acceleration of infrastructure is one of the most important things that happened during the pandemic.

I mean, we had literally entire economies that retooled themselves to enable digital commerce. And the speed at which these changes happened, I mean, it was surprising. In hindsight, it became kind of a necessity for these economies to continue to thrive, but the speed of which should happen surprised me. And I think if you look at the timing of it, it's possible that we accelerated these investments in the ecosystem by a decade. I mean who knows, it could have easily taken out of five, 10 or more years to make all of these infrastructure investments that we saw happen around the world.

And now we've got these -- an element like the infrastructure is in place, the investments have been made on the buyer-side of the ecosystem, the seller-side of the ecosystem what it allows us to do is accelerate the digitization of an enormous amount of cash that still remains all around the world. So we look out and we see a ton of opportunity, cash digitization and the shift to different forms of payments is still in the very early innings globally. And given this kind of rapid acceleration of infrastructure investments, we can now move faster to digitize commerce because the groundwork has all been laid.

Ken Suchoski

Yes. No, that's a great point. And that feeds in nicely to our next question, which feels like the shift away from cash is always a bit difficult to handicap, but it certainly seems like that shift has accelerated over the past three years. And obviously, the growth of global e-commerce is, of course, a component of that, even though the more recent growth trends have been somewhat disappointing. But what do you think it will take for e-comm volume growth rates to return to those pre-pandemic double-digit growth rates?

Ryan McInerney

Well, as you said, this shift from cash is happening everywhere. And as you said, e-commerce is absolutely a part of it. There's no question about it. But it's not the only one. You know, we tap to pay, tap to pay each cash in the physical world. You know, buyers and sellers love it. They no longer have to fumble around for paper bills and coins in their pockets to buy a cup of coffee or a packet gum or ice cream cone or what have you. And we're seeing small businesses all over the world shifted digital only in their face-to-face stores, no longer taking cash. Another example would be tap to phone. It's going to be a game changer for the digitization of cash, especially, in emerging markets.

So it is e-commerce, like you said, but it's really the whole ecosystem that's moving in this direction, which is helping to digitize cash all around the world. So if you dive into your question around e-commerce and the growth rates, while the e-commerce growth rate has decelerated recently as people go back to the office and generally get back towards a more normal commuting pattern and those types of things, overall growth in payments has remaining static.

So it's another one of these rotations that's happening as people start to rotate back to a more normal traffic pattern throughout the days and weeks. So we continue to see the same level, if not more of cash digitization. And as you think about the growth rate, the other thing to remember in e-commerce, the other thing to remember is we are running north of 160% of 2019 levels of e-commerce now is, I think, 170% if you exclude travel. So there's way more e-commerce happening than if the pandemic never happened, for example. So we really -- e-commerce is a big part of it, but we're seeing this digitization trend across the whole ecosystem.

Ken Suchoski

Yeah. No, absolutely. That's a great point. And on the topic of e-commerce, we saw your announcement a few weeks ago that Visa has now issued over 4 billion tokens surpassing the number of Visa cards in circulation. Firstly, congrats on that milestone, that's really impressive. But how do you see tokenization evolving over the next three to five years as it relates to powering the future of e-commerce?

Ryan McInerney

Yeah. Thank you. We're quite proud of it. The results to date are a great example of both the power of our network-based business model and the ability to scale our solutions once we've enabled the ecosystem. We issued our first token, I think it was 2015. And we knew that tokens would enable a safer, more secure and improved buying, selling experience.

But to make it happen, there was a lot of work that had to be done. Our teams around the world spent toughest hours with issuers and acquirers and sellers and other ecosystem partners, so that they could do the work to enable their systems, their processes, their fraud models, their authorization models, so on and so forth, so they can consume the tokens and take advantage of the tokens.

And that was a lot of pick and shovel work that happened all around the globe. Once we completed that work, players across the ecosystem began seeing the powerful benefits to tokens, notably higher authorization rates, which leads to more sales for our sellers, lower fraud rates, which is better for everybody in the ecosystem. And like I said earlier, it's just a much better buying and selling experience.

So now that, that work has been done, now that across the ecosystem, people are seeing the benefits, you're seeing significant scale. We've seen rapid adoption around the world. As you said, we now have about 4 billion tokens issued, which is about the same number of physical credentials that we have. The adoption curve is very steep; we nearly doubled the number of tokens in the last year or so. So you're seeing this very steep adoption curve all around the world.

I think last quarter, we had the better part of 8,500 issuers in over 180 markets at more than one point, I think it was 1.8 million merchants with token transactions. And that's led to a 3-point increase in approval rates and a 28 reduction in fraud in the e-commerce card-not-present space. So those types of groups are pretty dramatic.

As you think out, I guess you asked about the next three to five years or so, just think about the future. One is, we see continued scaling of the token story that I just mentioned. But beyond just the network tokens, which is everything that I've been talking about, we're also helping to tokenize credentials across other payment networks. Using our token ID platform, this is a big part of our network of network strategy.

You might have seen, as an example, just recently, the clearing house, who I think most of your audience would know is the one of the two and they'll be the first to market real-time payment network in the U.S. They chose our token ID solution to power their secure token exchange. And this is similar to work that we're doing with real-time payments platforms all around the world and other payment networks as well.

So I think you're going to continue to see scale in network tokens. You're going to continue to see Visa bringing our tokenization solutions, across our network of networks, and all of it leads to better buyer and seller experiences, lower fraud and ultimately, more sales.

Ken Suchoski

No, absolutely. Arguably, tokenization could alleviate many bottlenecks as it currently relates to cross-border e-commerce as well, whether that's through improved authorization rates, as you mentioned, Ryan, or increased customer trust. I believe Visa has mentioned in the past that e-comm accounted for about a-third of that cross-border volume pre-pandemic. We estimate that, this is closer to about 40% today as e-comm has performed well and travel is still recovering. So, how do you see the mix – that mix evolving moving forward? And more broadly, how are you expecting cross-border e-comm trends to evolve over the next few years as the world fully emerges from COVID?

Ryan McInerney

Well, like you said, prior to the pandemic, e-commerce cross-border, excluding travel, represented about a-third of total cross-border volume. And then during the pandemic, we saw a big rotation. The e-commerce proportion of cross-border grew to about two-thirds of our total volume. And most consumers around the world did things like we all did. They went online to shop, especially for things they hadn't typically gone online to shop for, and they were less concerned about where the goods came from. They just wanted – they wanted and they needed what they were looking to buy. In Q2, it was about 50%. And then in Q3, it was about 40% as travel started to recover. So your estimates are pretty good.

About expectations going forward, in Q3, cross-border card-not-present, excluding travel was about 162% three years ago. So, still significantly elevated versus pre-pandemic levels and quarter-to-date through August, it was 157%. So down slightly, but you also got to remember, we're lapping Russia in prior periods and – so you look at where is it today, it's at significantly elevated levels above – far above where it would have been, if the pandemic never would have happened.

And so far, it's been holding in a pretty relatively, I guess, I'd call it, narrow band. And for cross-border CNP ex-travel, we assume it's going to stay stable in the fourth quarter. If you think about those numbers versus 2019, longer term, to your question, it will be a larger proportion, I'll say, than it was historically. It all depends on what happens to travel over the next several years. But I think consumers learned a lot of buying behaviors during the pandemic that they hadn't before. And I think those buying behaviors will stick. So I think, it will remain elevated versus where it certainly otherwise would have been, if we hadn't had the pandemic.

Ken Suchoski

Yeah, absolutely. And it seems like that could actually be a positive for the overall cross-border business because e-comm is growing faster than cross border travel. And so if you just do that math on the mix shift, it does support that faster cross-border growth coming out of the pandemic.

Maybe we can move on. Well, I guess maybe we'd stick with cross-border. There's one more question that I have on cross-border. The biggest question we get is, how much room is there left to recover? And I guess specifically, this is more on the travel side. Are there enough countries that still need to reopen or recover versus 2019 levels that you and the team feel confident that this cross-border recovery will continue throughout 2023 and maybe into 2024? I think that's the biggest question we get is like, what's the sustainability of this cross-border recovery?

Ryan McInerney

Yeah, in short, there are still places around the world we haven't seen a full recovery here in the US as a destination. We haven't seen full recovery in parts of Asia as a destination or an outbound place of travel.

But back up, I guess we saw as you alluded to a massive step change improvement once government started to open borders, they relaxed travel restrictions and you saw the cross border volume follow, traveling to Latin America and Caribbean it's been very, very strong even during the COVID [indiscernible] and in April and May, we saw European countries start to peel back a bunch of the requirements that they had and in Q3, we saw I think it was more than half of travelers coming from North America into Europe and they jumped up 30 points in the quarter.

I mean, it was pretty dramatic. Once the borders open, we've seen big jumps in terms of what happens in terms of cross border travel. Canada is another good example. Canada removed testing requirements, I think it was in April. And inbound the US jumped 16 points in Q3, still not at 100%. I think it was at 86% of 2019 levels. But you get the idea.

And as I mentioned, while some of those countries are kind of on the upslope, we still have parts of Asia that are really hard to travel to and from we still have many countries around the world that haven't turned to pre-pandemic levels of travel into the United States. So, we're watching it closely. We'll have to see where things go from here. But if you just look at – as you said, parts of the world that have not opened yet, there are still big swaths, very big corridors that are still well below pre-pandemic levels.

Ken Suchoski

Right. We'll look forward to seeing those re-openings helping that cross border business. Ryan another topic, I wanted to touch on is real time payments. And Fed now is expected to launch next summer, which has been a concern for some investors that we speak to. We don't necessarily agree with that notion, but can you just give us your latest thoughts around real time payments, how visa brings value to that ecosystem and perhaps maybe touch on what's missing understood by investors as it relates to that topic?

Ryan McInerney

Sure. I guess the first thing I would say is that, modernizing the payments infrastructure in the United States is a smart thing to do. It's a necessary thing to do. It's good for Americans. It's good for our payments ecosystem for the country. So I think it's a very smart and necessary thing to do. And the other thing I would say is any force that is digitizing money movement, whether it's in the US, or Brazil, or India, or Thailand or anywhere around the world is a catalyzing force for all of us that are in the cash digitization business.

And in the US, to your question, I expect that you will see a broader set of pay by bank services emerge in the US, just like we've seen in other countries that have adopted RTP. So that's I think the landscape. With regards to what ultimately happens in the US, we think it's instructive to look around the world. If you look around the world, RTP is a pretty mature thing in many countries, and there's a lot you can learn from looking at how it has or hasn't been adopted there. I'd look to the UK as an example, the faster payment system in the UK has been up and running for more than 10 years.

And if we study the data in the UK, we really haven't seen any cannibalization of Visa Debit, you've seen adoption of faster payments for other services, B2B and P2P and things like that. But we haven't seen any cannibalization of the Visa Debit business in a decade that has been up and running. And if you look at kind of other countries around the world, the data is public, I suspect many of your audience and investors look at it like I do, whether it's Brazil or India or some of the other ones that I mentioned, the trend holds true. The overwhelming majority of the volume is for P2P transactions, B2B transactions.

In general, we haven't seen in most countries around the world, real penetration in the kind of the core point-of-sale C2B spaces. Except for -- I'd call it limited use cases in markets like India, where our network isn't as mature as it is in the US, for example. And there's a number of reasons why, but the biggest reason why is that today, RTP -- today an RTP transaction is fundamentally a simpler, often less attractive type of transaction for point-of-sale consumer-to-business transactions.

As we sit here today, I'd like to use the analogy that comparing an RTP transaction in 2022 to a Visa Debit transaction in 2022, let alone a credit transaction is kind of like comparing a rotary phone, like a landline rotary phone to an iPhone. You can talk in real time to another person on both of them, but the comparisons and there. RTP transaction today is it's instant, it's permanent and its irrevocably.

A Visa Debit transaction is we have a single message we have dual message. We have disputes. We have chargebacks. We have globally accepted and inducted operating regulations and rules. We have global acceptance. We have zero liability in fraud protection. We have tokenization. We have a broad suite of risk management fraud reduction tools. I mean the list goes on and on.

So it is -- it's a very different transaction type. And certainly in a market like the United States, consumers understand all of the value that they get from a Visa Debit transaction. They know they can use it in e-commerce. They know they can use it to rent a car. They know that they can use it in a restaurant and be able to give a tip and so on and so forth.

And then you add to all of that, that banks here in the US even after Durbin still receive pretty attractive interchange revenue when a card is used. Now having said all that, RTP will get better. It will improve. It's a journey. If you look out three, six, nine, 12 years, ecosystem players, ourselves included, are going to invest in the RTP platforms. I expect that RTP transactions are going to get smarter. They're going to get safer. They're going to get more generally usable for some of the transaction types that I mentioned before. And that's -- we view that as competition.

Competition, we get competition from everywhere. Not just from RTP, but BNPL and different types of fintechs, that makes us better. That pushes us on the journey that we're on constantly in the US and around the world to be the best way to pay paid and we welcome that competition.

I guess the last thing I'd say is we view ourselves as a very important player in the evolution of RTP here in the US and around the world. We use all of the live RTP platforms as well as dozens and dozens of ACH platforms around the world to deliver our Visa Direct platform.

Over the last year or so, I think in our Visa Direct platform, we used more than 60 ACH schemes, I think 10 or 11 or 12 RTP systems. We use 16 different payment networks, and all the different gateways that are available to us, so that we could deliver the vast transaction type of the most transparency, the fastest and least expensive transaction possible to our partners and to our clients. So one of the way we're involved in RTP is we use all the RTP systems that are available.

The second way, as I mentioned earlier, as an example with the work that we're doing with the clearing house, we are a preferred provider of value-added services to the TCH and we're working hard to be a provider to many other RTP programs around the world. I mentioned the Token ID product with the clearing house, we also acquired a company called YellowPepper that's got the world's leading alias directory. We acquired a company called Verifi, which offers dispute resolution, which can be put on top of our GP systems, the list goes on and on, I guess, but I'll leave it there.

Ken Suchoski

All right. That was a very detailed and comprehensive answer. So thank you for that. I think we all have a better understanding of kind of where you fit in and what your thoughts are. Maybe just to dig into this topic a little bit, Ryan. I mean how do you and your team think about the impact of Visa from some of these larger domestic account-to-account networks, right, whether it's PIX in Brazil, UPI in India, iDEAL in the Netherlands. Do you guys think about it as eating into the growth opportunity at Visa? Is it taking share from Visa debit? I know your comments on the UK. So I'm assuming the answer is no, but do you view it as a benefit to Visa. I'm just curious to get your thoughts on that.

Ryan McInerney

Well, one thing I said earlier is we do think that in any of those markets, the more people that are going after the digitization of cash is generally a good thing. It creates awareness. It creates new types of behaviors. It allows players across the ecosystem to learn different types of tools to do that. And so far, that's proven to be a positive for us in all the markets, generally that you mentioned.

Excuse me, you mentioned, I think, iDEAL in Netherlands. You know, that’s – iDEAL is a kind of a somewhat unique situation. It's a bank-backed solution in a highly concentrated market, and they got fraction before many of the wallet players took home such as Apple and Google and PayPal and the others. And it's an example of when it started in P2P and gained adoption and then it did venture into C2B.

In many of the markets, it's a mix of both bank-backed and open banking solutions. And they're beginning to enable different types of options, especially in markets where customers are more used to paying for bank accounts, Germany is an example. But, as I said, it's unlikely that a situation like the Netherlands is going to be recreated elsewhere, because you've just got very different market situations and starting points and those types of things.

So, I just again, backing up and, I guess, repeating a little bit of what I was saying earlier, we feel really good about the value proposition that we bring to market. We've got best-in-class security, the most reliable network on the planet, the most at scale network on the planet, the ability to deploy our value-added services such as advanced authorization and fraud reduction capabilities.

Plus you add on top of that the innovation. I mentioned earlier, what we've done with tokenization around the world. We feel really good about our products, our go-to-market, our ability to be the best way to pay and be paid in all of these markets around the world.

So, there's no doubt RTP is a really important trend that's happening in most markets around the world. And as I said, we plan to use these networks to deliver value for our clients, we view that as an opportunity to deliver our value-added services, and we view it as competition for our core products, which pushes us to get better every day.

Ken Suchoski

Ryan, the landline phone versus iPhone comparison made me -- it maybe think of a question just now. And you mentioned ecosystem players investing in the platform. They're going to get smarter, et cetera. Maybe you can give us a sense for how easy or hard it would be for these networks to replicate some of the capabilities of the Visa debit network that could lead to more direct competition. And any sense for how long that would take?

Ryan McInerney

This has taken us a while. I mean these are investments we've been making for years and years and years. And we've invested enormous amounts of capital, resources, intelligence, experience and know-how to create what we think are the best payment products on the planet. So, I can't predict what's going to happen with those networks.

But -- you just go back and take the tokenization example that I mentioned. We do have four billion tokens around the world now. It is scaling. It will continue to grow, but we issued our first token in 2015. And as I was describing, we had to plumb and tool, the ecosystem in 200 countries around the world to start to get that to scale. That's what we do.

We come in to work every day all around the world, and we invest the considerable resources that we have to continue to innovate, continue to deliver great services to our clients to make payments faster and similar, and safer and easier. And we -- I described you earlier where -- how I think about the comparison of a Visa debit transaction to an RTP transaction, and that's where we are today, but we're not stopping.

I mean we -- as I said, we have teams of people coming in every day, innovating on our debt and credit products and new types of products all around the world. So six, 12, 18, 24, 36 months forward, we'll be bringing to market all types of new innovations and products and others.

So, there will continue to be improvements and RTP transactions will get smarter. They will become more valuable. Our job is to continue to make our products even better and make -- do everything we can that to help buyers and sellers around the world prefer what we deliver.

Ken Suchoski

Yes. No, absolutely. And I mean the advantage you have, too, is you already have the volume, right? So, if you already have the volume, the investments there, I think some of these other networks need that volume if you want to attract that investment. So, yes, that makes a ton of sense.

Maybe this is a good point to pivot into another area, Ryan, that I wanted to discuss with you today, which is value-added services. So what's your outlook on the product roadmap for value-added services? Are there any areas that you feel like you need to expand in, or is the focus mainly on driving penetration higher among your existing client base?

Ryan McInerney

Well, certainly, we have a ton of opportunity to penetrate our existing client base all around the world with the services that we have. And I don't want to tip our hat too much on our product roadmap. You can imagine that's something that is pretty proprietary, but let me just -- I'll kind of back up and try to frame it and hit some of the points you asked about.

First of all, our value and service is like what is our strategy here? Our strategy is that they differentiate our network. They help us deepen our client relationships. They -- if we can help our clients be more successful by delivering them the best set of value-added services, they're going to want to do more business with Visa. It's that simple.

One of the things it also does is it helps us accelerate our revenue growth, diversify our revenue growth, those types of things. But at its core, it's about helping our clients.

If I were to maybe pick a couple, take CyberSource as an example, we have made enormous progress with our CyberSource platform over the last several years. We've got just a fantastic team of people that are leading that business for us. We continue to add intent to that platform. In the second quarter of this year, we crossed the milestone of our 1 millionth merchant on the platform.

We're expanding the CyberSource platform to new geographies all around the world. In fact, it surprises people sometimes what I tell them that India is our second largest CyberSource market around the world, if you measure it by number of transactions. That's a market where we've just had tremendous progress over the last three to four years or so.

Another area we're very focused on in the CyberSource platform is partnering with acquirers to enable them to, many cases, either white label or resell the CyberSource platform to their clients so that they don't have to kind of continue to invest in this arms race that's happening to continue to keep up with innovation on the seller side of the ecosystem. So, that's been a huge part of our strategy.

Last year, we added, I think, 28 new acquirer partners who then add 45,000 merchants to the platform. World-class players like SMCC, National Australia Bank, Barclays in Europe, just to name a couple.

I guess just sticking on CyberSource, maybe closing up on it, we're also investing in value-added services on the CyberSource platform. Our proprietary risk solution called Decision Manager helps merchants increase authorizations, reduce fraud. In 2021, I think we grew DM, Decision Manager transactions like 30% or so. So, that's been a big area for growth. CyberSource is just one of many of the different kind of families and business units of value-added services that we have, all focused, as I said, on deepening our relationships with our clients and helping them be more successful.

Ken Suchoski

Great. Ryan, Visa completed two acquisitions fairly recently, Tink and Currencycloud what do these acquisitions bring to the table as it relates to the broader strategy?

Ryan McInerney

Yes, they bring a lot. I mean, I guess, at the highest level, they are critical components in our network of networks strategy. If you just take them one-by-one, Tink, which is the premier open banking platform in Europe, connects to 3,400 banks that reached 250 million customers across Europe.

And our role is to help the Tink team, accelerate the delivery of open banking and their full suite of services to banks and developers and ecosystem players, across Europe and ultimately around the world.

We are -- the Tink team is continuing to expand the number of use cases. They've got both AISP use cases and PISP use cases and use cases that blend both read and right capabilities. They are leading that front in Europe. We're helping them Connect into our vast set of clients across Europe, and as I said, look forward to helping them scale more broadly outside of Europe.

On Currencycloud, which also happens to be a company based in Europe, what we do there is kind of enable and extend Treasury as a Service capabilities to FIS and FinTech's and Partner's. And this is a very important component of our network of networks strategy.

FX and Treasury is a capability that almost every player in the money movement business around the world needs help with. So we're very focused on, helping them deliver those capabilities to our partners and clients and scale them around the world as well, so really excited to welcome the Tink and Currencycloud teams to the broader Visa family.

Ken Suchoski

And it sounds like can really accelerate your movement into open banking, while the capabilities of Currencycloud could really help penetrate maybe some of the newer flows that you're targeting.

So I guess in terms of penetrating the new flows opportunity. What are the top three initiatives that Visa needs to execute on to accelerate the rate of penetration over the next three to five years?

Ryan McInerney

Yeah. I mean we have a lot going on in the new flows space. It's an incredibly important area that we're investing in. It's an incredibly important area of our current growth and our future growth.

As I think your audience knows, because we talked about it a lot to set the stage, we see the new flows opportunity is $185 trillion annual opportunity. And we break it into two primary sub-segments: one is B2B, which is about $120, net trillion. And the remaining is P2P, B2C, beta, what we call little B or small business and Government to Consumer, and that's the other $65 trillion.

So to your question, I guess, if you start on the B2B side, even like just starting the basics of card on B2B, like on the one hand, this is a big business for us. We do $1 trillion, more than $1 trillion of PB every year.

We're the largest player in the world. But Carded B2B is still undeveloped or doesn't even exist in many, if not most countries around the world. So our strategy here is to really focus on getting these products and these capabilities out in new markets while continuing to penetrate in our existing markets like here in the U.S.

Another important part of our Carded B2B strategy virtual cards, we've been making very good progress in the virtual card space. Your audience may have heard of our recently announced partnership with WEX. We reached a significant multiyear agreement with WEX to enable their travel capabilities, their health capabilities, their corporate clients. So we're really excited to expand and deepen significantly our partnership with WEX.

If you move beyond core B2B, I guess I might mention B2B Connect. B2B Connect is multilateral B2B cross-border network that we've built, which is focused on high-value cross-border payments, which we think is a segment that is terribly underserved by the solutions available today.

So, we're up and running in 100 markets around the world. We're adding markets and clients to the network every day, and we look forward to scaling that product. Those are two examples. I think you asked for three.

I guess, a third example I’d give, tackling that $65 trillion that I mentioned is Visa Direct. We are investing significantly in Visa Direct, new use cases, new geographies. If you think about use cases, we just -- our team continues to innovate here and bring new use cases to market. Wage disbursement’s a good example.

Take Grubhub. Grubhub now enables their drivers to quickly send the money that they make to their Visa debit card and we do that via Visa Direct. And we've talked about many other players that we do this for, the DoorDashes, the Ubers of the world. And I can go on and on, but literally dozens and dozens of new use cases that we've expanded to in the Visa Direct space, which we're very excited about. So I think that was three.

Ken Suchoski

Yes. Absolutely. Nice job with that. That was really helpful. Ryan, I think we have five minutes left. So I just wanted to touch on maybe two more questions.

Ryan McInerney


Ken Suchoski

The first is, you've been at the company for nine-plus years now. When you think back at your time at Visa, what have been the biggest changes you've witnessed over that time? And what do you think will be the biggest changes five to 10 years from now?

Ryan McInerney

Yes. I mean, a lot's changed. No question about it. This is a very dynamic and competitive business, and we continue to see a lot that's changed. I guess, as -- well, first of all, just the scale of the business has changed. When I joined the company, we had in the neighborhood of 2 billion credentials.

We now have -- and tokens didn't even exist. We haven't invented them yet. Now we have 4 billion credentials, like, physical credentials. And as we talked about earlier, another 4 billion tokenized credentials. That's a massive expansion of the platform.

When I joined the company, we had about 25 million seller locations. Today, we have about 100 million seller locations. So a 4x increase on the seller side of the ecosystem. It's just -- it's a lot of change in terms of the competitors that we have around the world, the speed and the velocity of what's going on in the payments space.

But if I were to think going forward, what is the biggest change for Visa? I think, I would describe it as -- if I maybe give one headline, which would be diversity. As you look at Visa, I think, you said maybe five years from now or even further out, I think, you'll see our revenue will be a lot more diverse than it is today, driven by new flows and value-added services.

Our footprint will be more diverse. We're going to have -- we're going to continue to have success in markets like Europe and India and the US and also made great progress in more emerging places like Africa and Southeast Asia. I think our partnerships will be more diverse, both with traditional and nontraditional players. The tools that we use to enable money movement will be more diverse. The networks that we use will be more diverse as we continue to push forward with our network and network strategy.

Ken Suchoski

Last question, Ryan, I think many of us were saddened by the passing of Dee Hock, Visa's Founder. And I'm sure everyone at Visa shares this sentiment, but he was a revolutionary thinker and clearly influenced our world for the better. So in closing, the last couple of minutes, and it's not an easy question, but what was the most important lesson that you learned from him over the years?

Ryan McInerney

Dee Hock was amazing. Dee Hock should be credited as one of the most important innovators of the 20th century. I mean, he really -- he was an inspiration to all of us at Visa, we all studied Dee. We're all very familiar with the contributions that Dee made to the world by what is the modern day Visa. So we're all just extraordinarily proud to follow in his footsteps. The four billion Visa cards that get used every day around the world own enormous amount of gratitude and debt to Dee’s creativity, his innovation and spirit, his willing, his willingness to think radically differently than anybody was thinking at the time.

Having said all of that, when Dee passed away, a colleague of mine and David Kramer sent me a page, which I've never seen, and I carry it while I have it on my laptop, and I carry it virtually with me everywhere. And it was -- and Dee Hock -- management, we had, I think there were like eight different lessons that he had in management that I kind of pull out and refer to, but one of them, I won't get it exactly right out paraphrase, but one of the eight was and we called it as PhD in leadership-the short course, which is to make a careful list of all the things that have been done to you that you aboard and he said, don't do them to others ever.

So learn from the terrible leadership things that you've seen. And he said make another list of all the things that have been done for you that you loved and do them for others and do them always. And when David said that to me, it really hit home and I started doing it. And hopefully, that will help me be a better leader and we'll have yet another debt of gratitude to Dee.

End of Q&A

Ken Suchoski

Yeah. No, that's great lesson. And I think we could all maybe take something from that. So thanks for sharing that, Ryan. Really appreciate it. And I think we're out of time. So we're going to have to leave it there. Really appreciate it, the conversation and spending the time with us today, Ryan, it's great to hear your insights as always and look forward to doing this again maybe next year.

Ryan McInerney

Yeah. Can’t wait. Thanks to you. Thanks to your audience. Hopefully see you again soon.

Ken Suchoski

Great. All right, thanks Ryan. Stage safe. We’ll chat soon.

Ryan McInerney


Ken Suchoski

All right, great. And our next speaker is Greg Lisiewski, VP of Shopping and Global Pay Later at PayPal, and we'll start that session in about four minutes at five past the hour Eastern Time. Thanks, everyone.

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