The demonetization effect in India has created the need for digital payments, and payment technology giant Visa (V) has seen a substantial rise in transactions as a result. The company sees India as a good opportunity.
However, it seems like Mastercard (MA) and Visa are now losing their market shares in India as a result of the advent of UPI (Unified Payments Interface) technology.
In order to increase the adoption of digital tools in India, Visa is currently working with its partners, which include financial institutions. A dilution in its market share, especially in a market in which Visa sees such huge potential for digital transactions, is a major concern for the company.
Increased use of UPI
According to Fidelity National Information Services (FIS), UPI technology is being supported by many Indian businesses and is being rapidly adopted by consumers as well. The integration of UPI in apps could substantially help develop the payments market in India in the coming years. However, the country is still reliant on cash, which is a major barrier for digital transactions.
Increased government support could prompt customers to adopt digital methods. The ease with which the transactions can be executed digitally could also be a major contributor to digital adoption.
While Visa has a total debt-to-enterprise value of 0.06x on a trailing-12-month basis, peers (XLF) Fiserv (FISV), Mastercard, and Synchrony Financial (SYF) have debt-to-enterprise values of 0.26x, 0.03x, and 0.60x, respectively, on a trailing-12-month basis.