Innovation and investments
The payment processing industry is witnessing major changes globally due to regulatory changes, increased competition, and a demand for continual innovation. Visa (V) is investing in new areas like the Internet of Things, mobile payments, data security, and digital e-commerce. The company is operating innovation centers in Miami, London, San Francisco, Singapore, Dubai, and Bangalore to come up with innovative offerings and services.
Visa is targeting new partnerships in the areas of payment medias like mobile platforms to garner more market share. The company is in talks with major tech giants such as Apple (AAPL), Google (GOOGL), and others.
On the business front, the company has inked agreements with Lloyds Banking Group, RBS, Nationwide, and Barclays. It has also seen growth in the rollout of Visa Checkout. The program has seen involvement from 1,500 financial institutions with $173 billion in volumes. Visa ended the December quarter with 18 million customers in 23 countries.
Emerging market prospects
Visa saw a record growth of 75% in payment volumes for India mainly due to demonetization and the central government’s measures to push for a cashless economy. The company is expecting continued higher volumes as spending power as well as a shift towards electronic payments push the economy towards formal systems.
However, in China, Visa is waiting for further clarification on regulatory aspects from the government. The company is yet to file for its business application in China. In fiscal 2Q17, Visa acquired CardinalCommerce to help clients and merchants improve online payment security.
Among Visa’s major peers, Discover Financial Services (DFS), American Express (AXP), and MasterCard (MA) are pushing for more partnerships in and outside of the US. Together, these companies account for 5.9% of the SPDR Dow Jones Industrial Average ETF (DIA).
In the next part, we’ll study Visa’s valuations and dividends in 2017.