Visa's 2017 Growth to Ride on Emerging Markets and US Spending

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Part 2
Visa's 2017 Growth to Ride on Emerging Markets and US Spending PART 2 OF 9

What Will Drive Visa’s Payment Volumes?

Payment volumes

Visa’s (V) US payment volumes have shown strength over the past few quarters, reflecting relative outperformance when compared with industry peers. Since the Visa Europe addition, the company is aiming for higher global market share, targeting new as well as developed markets. It saw a growth of 38% in the December quarter, or 39% on a constant dollar basis. The higher international payments growth of 70.5% boosted growth. Sequentially, there was a marginal decline in payment volumes mainly due to the exclusion of co-badge volumes in Europe. In fiscal 2Q17, the company saw a higher payments volume due to improved wages, lower unemployment, and global growth.

What Will Drive Visa&#8217;s Payment Volumes?

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Visa’s US payment volume rose 12.4%, and credit grew 20.2% due to the addition of Costco (COST) and USAA. The company saw a growth of 1% in credit and debit payment volumes due to an increase in energy prices. The European payment volumes growth stood at 9% as compared to 7% in the previous quarter.

Visa posted net profits of $6 billion in fiscal 2016, which ended on September 30, 2016. Here’s how the company’s industry peers have performed in terms of their bottom lines in 2016:

  • Fidelity National Information Services (FIS): $568 million
  • American Express (AXP): $5.4 billion
  • MasterCard (MA): $4.1 billion

Together, these companies form 6.1% of the SPDR Dow Jones Industrial Average ETF (DIA).

Rates and dollar

In fiscal 1Q17, Visa posted growth of 12% on a year-over-year basis in cross-border volumes. The numbers excluded the Visa Europe acquisition. The growth is expected to be in double digits for fiscal 2Q17 mainly due to outbound commerce with Canada, the UK, and Mexico. As the Fed raises rates in 2017, the dollar could become stronger and thus negatively impact international payment volumes growth.

In the next part, we’ll study Visa’s transactions growth and expectations in 2017.


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