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Assessing Visa’s Growth Drivers

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Jun. 20 2018, Updated 4:23 p.m. ET

What could drive growth?

Visa’s (V) performance is expected to be primarily driven by spending trends, electronic payment adoption, and tapping into areas where many payments are still made in cash, such as Europe. Competitor (IYF) Mastercard (MA) is confident it could see growth in Europe.

In Q3 2018, Visa’s performance could mainly depend on the global economy, which determines its payment volume. In fiscal Q2 2018, the company’s total payment volume rose 11% YoY (year-over-year) in constant dollars. Strong macro numbers in fiscal Q3 2018 could boost Visa’s payment volumes. For the same reason, Discover Financial Services’ (DFS) and Capital One Financial’s (COF) credit card loans are expected to rise in Q2 2018.

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Visa’s revenue in fiscal Q3 2018

In fiscal Q2 2018, Visa’s debit and credit card revenue grew 11% and 10% YoY, respectively, in constant dollars. Its revenue is expected to rise YoY to $5.1 billion in fiscal Q3 2018, driven by higher consumer spending, oil prices, and higher US debit card spending. Visa has been adopting steps to eliminate hurdles faced in online shopping.

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