The COVID-19 crisis has accelerated the acceptance of digital payments, part of a transition that, according to Visa Inc. can help seize opportunities that are many times worth more than the retail payments market.
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The company is best known for its plastic credit and debit cards and has made an impression on other elements of the payment universe, including cryptocurrency services, as well as payout technology that enables things like on-demand to workers with a large economy. The president sees new payment flows as a way to make money on $ 185 trillion worth of money moving outside the payment landscape, its president Ryan McInerney told MarketWatch. He distorts the already great opportunity to convert the $ 17 billion in cash currently in circulation into cards.
Part of Visa’s strategy to capitalize on new types of money movements was the planned $ 5.3 billion acquisition of Plaid, a company that enables users to link their bank account credentials to popular platforms such as Venmo of PayPal Holding Inc. Visa and Plaid terminated the agreement earlier this year following a setback by the Justice Department, but Visa insisted it could still expand into new payment options without the merger, mainly using its Visa Direct platform.
Visa Direct uses the company’s card rules to send payments, almost in the opposite direction of how transactions usually take place. Consumers are familiar with the use of their cards to pay for things, but Visa Direct makes it so that people can use the infrastructure of the business to be paid for themselves, whether by employers, friends, government agencies, insurers or other parties. The growth was ‘like a rocket ship’, McInerney said, with 3.5 billion transactions processed by the company during the past financial year, up from about 2 billion a year earlier.
The pandemic brought greater attention to Visa Direct, including by government officials in the Dominican Republic who wanted to get money from citizens faster during the crisis without relying solely on paper checks or direct deposits.
“Visa’s work with governments to distribute COVID-19 emergency relief funds has led to discussions on how we can use the Visa platform on an ongoing basis to raise money for citizens,” McInerney said. Visa also offered prepaid cards through which governments could make payouts. “This is another example of a rotation that took place in the pandemic, which I believe will lead to the digitization of large pieces of money movement.”
Read more: Government works with major banks and fintech to speed up payments to Americans
Visa Direct is also playing into the new ways in which people can characterize workers during the pandemic. Hairdressers in the US who once received cash tips are now taking in more tips via platforms like PayPal Holdings Inc. see PYPL,
Venmo, for example, and Visa’s technology help workers transfer those funds immediately to their bank accounts if they prefer.
In Russia, where customers are usually unable to add tips in addition to card payments, as most contactless card tap transactions take place, a popular booking service in the beauty industry uses Visa Direct to let customers get tips through its platform, McInerney said.
This newer behavior is expected to continue once the pandemic disappears, according to McInerney, while slightly older Visa Direct applications, such as gig-economy payouts, could see a setback. Gig workers often rely on technology when they ask for access to their earnings at the end of a shift, and although the driving industry came to a standstill during the COVID-19 crisis, it will probably pick up again once people feel more comfortable travel and sharing spaces.
The company claims that Visa Direct offers the ability to attack $ 60 billion to $ 500 billion in new forms of ‘money movement’, and Lisa Ellis, analyst at MoffettNathanson, recently set Visa Direct’s revenue potential for overdrafts and payouts at $ 60 billion to $ 120 billion. . She may only get 1% of the chance.
Ellis applauded Visa Direct technology and a similar version of rival Mastercard Inc., MA,
Mastercard Send is referred to as ‘the least disruptive new capability the networks have expanded in the last decade’.
Visa’s embrace of newer payment options also extends to cryptocurrencies, where the company has worked with cryptocurrencies to issue Visa cards that allow people to spend their money and issue software application program interfaces (APIs) for customers who financial institutions want to offer. services for sale to their customers.
‘If you’re a Coinbase customer and have a lot of bitcoin and you want to go out to eat, you do not want to go through the conversion process, so Coinbase gives you a Visa card and says we will handle the conversion. for you, ”McInerney said of the company’s Coinbase partnerships issued by the card and about 35 other cryptocurrency platforms.
Visa recently announced that it will soon begin allowing financial institutions to complete transactions with Visa in stable currencies, a type of digital currency that, according to the company, will enable its partners to receive payments from Visa in digital currencies. and pay their dealer customers as they sought.
The company has yet to follow suit with Mastercard, which announced earlier this month that it plans to allow merchants to directly accept some cryptocurrencies, something PayPal is also doing. McInerney did not want to be too much a part of Visa’s future crypto efforts, only to say that “if the crypto space is going to start,” Visa wants to be ‘the best choice crypto partner’ for players in the industry.
Al Kelly, CEO of Visa, told the company’s revenue service last month that “to the extent that a particular digital currency becomes a recognized medium of exchange, there is no reason why we can not add it to our network, which currently supports more than 160 currencies. “
In addition to cryptocurrencies, Visa is also trying to attack the huge opportunity it sees in commercial payments that usually take place by check or bank wires and bypass the card networks.
The company estimates that there is a $ 120 billion fund movement between businesses, including $ 10 billion between businesses that send money across borders. For that, Visa operates a platform called B2B Connect that enables transactions between bank accounts in a way that, according to Visa, is faster and more transparent.
“There hasn’t been much innovation in space today,” McInerney said. It therefore represents one of the several “great opportunities to grow new flows to the Visa network.”