The crisis of COVID-19 has fueled the acceptance of digital payments, part of a move by Visa Inc. arguing that it would help knock out opportunities worth many times greater than the market for sales payments.
While Visa V,
Famous for its plastic credit cards and accounts, the company has been pushing into other elements of the payment world, including cryptocurrency services as well as object-oriented distribution technology as on-demand payments to gig economy workers. The company sees new payment streams as a way to access $ 185 trillion worth of cash moving outside the checkout landscape, President Ryan McInerney told MarketWatch , overcoming the existing opportunity in converting the $ 17 trillion of money currently in circulation into cards.
Part of Visa’s strategy to exploit new forms of money transfers was its planned $ 5.3 billion purchase of Plaid, a company that allows users to link their bank account credentials to platforms popular as Venmo PayPal Holding Inc. Visa and Plaid suspended that deal earlier this year after pushing back from the Justice Department, but Visa has insisted it can expand to new payment opportunities without the merger, in part great by taking advantage of its Visa Direct platform.
Visa Direct uses the company’s card rails to defer payments almost in the back as transactions usually take place. Consumers are familiar with using their cards to pay for things, but Visa Direct does it so people can use the company’s infrastructure to pay for themselves, no matter what. whether by employers, friends, government agencies, insurers, or other parties. The growth has been “like a rocket launcher,” McInerney said, with 3.5 billion operations processed in the company’s last fiscal year, up from about 2 billion years earlier.
The pandemic has brought more attention to Visa Direct, including government officials in the Dominican Republic who were looking to get money to citizens faster through the crisis without relying on paper checks or direct investments.
Visa’s work with governments to distribute COVID-19 relief money has led to “discussions about how we can use the Visa platform in an ongoing way to raise money for citizens,” said McInerney, with Visa also offering prepaid cards through which governments can make payments. “This is another example of a shift that has taken place in the pandemic that I think will result in a major shift in cash flow.”
See more: Government partners with big, fintech banks to speed up payments to Americans
Visa Direct will also play into the new ways in which people are tidying up employees during the pandemic. Girls in the U.S. who have received money offers are now increasingly accepting offers through platforms such as PYPL PayPal Holdings Inc.
Venmo, for example, and Visa technology immediately help these employees to transfer these funds to their bank accounts afterwards if they choose.
In Russia, where customers are usually unable to submit offers in addition to card payments because most transactions take place with an unlinked card tap, a popular booking service in the beauty industry using Visa Direct to allow customers to leave suggestions through its platform, McInerney said.
These new practices are expected to continue once the pandemic goes down, in McInerney ‘s view, while slightly older Visa Direct claims like gig economy payments could see a snapback. Gig employees often follow the technology when requesting on-demand access to the salary they earned at the end of a move, and while the equestrian industry has stalled during the COVID-19 crisis, it is likely to pick up again once people feel more of a place to travel and share.
The company argues that Visa Direct enables it to leverage $ 60 trillion to $ 70 trillion in new forms of “money transfer” in total, and MoffettNathanson analyst Lisa Ellis recently peg on Visa Direct’s revenue potential for compensation and payments at $ 60 billion to $ 120 billion. Visas capture perhaps just 1% of that opportunity right now, she said.
Ellis adopted the Visa Direct technology and a similar version from rival Mastercard Inc. MA,
called Mastercard Send as “the worst new capability the networks have installed in the last decade, at least.”
Visa’s adoption of newer payment opportunities will also extend to cryptocurrencies, where the company has been working with crypto wallets to issue Visa cards that allow people to spend their holdings and interface distribute software application program (APIs) for messengers of a financial institution that wants to offer crypto. purchasing services for their customers.
“If you are a Coinbase client and have a handful of bitcoin and want to go out for dinner, you will not want to go through the conversion process until Coinbase offers a card Visa to you and say we handled the version for you, ”McInerney said of Coinbase’s distribution card partnerships and about 35 other cryptocurrency platforms.
Visa recently announced that they will soon begin allowing financial institutions to settle transactions with Visa in stablecoins, a type of digital currency, which the company said would allow its partners to make payments get from Visa in digital currencies and pay the customers that way if they want.
The company did not follow suit with Mastercard, which announced earlier this month that it planned to start allowing buyers to accept certain cryptocurrencies, something PayPal does as well. McInerney declined to share too much about Visa’s future crypto efforts, simply saying “if the crypto space is going to take off,” Visa wants to be “the best crypto partner of choice” for players in the industry.
Visa chief executive Al Kelly said on the company’s employment call last month, “to the extent that unique digital currency is a well-known exchange method, there’s no reason we can’t add to the our network, which already supports over 160 currencies today. ”
Aside from cryptocurrencies, Visa is also trying to attack the huge opportunity it sees in commercial payments that typically occur by check or bank wires and bypass the card networks. .
The company estimates that $ 120 trillion of asset transfers occur between businesses, including $ 10 billion occurring between businesses sending money across borders. For that, Visa runs a platform called B2B Connect that enables transactions between bank accounts in a way that Visa says is faster and clearer.
“There hasn’t been much innovation in that area today,” said McInerney, so it represents one of several “great opportunities to grow new streams on the Visa network. ”