As momentum in the buy now / pay later arena has built over the past few years, Visa has steadily built a group of partners supporting its Visa remittance solution, which it has developed through projects. pilots in various global markets since 2019.
Visa is now gearing up for the next and biggest phase of BNPL’s boom, Al Kelly, chief executive officer of the card network, told investors during Tuesday’s earnings call.
“We think we are currently living BNPL 1.0 with fintechs and companies doing individual transactions, merchant by merchant,” Kelly said, noting that installment loans are currently only a fraction of the $ 100 billion to $ 150 billion. industry total payment volume estimates.
Visa plans to create greater installment loan opportunities over the next two years by becoming the primary connection point for financial institutions, fintechs and merchants to deliver installment loans to the widest range of consumers, Kelly said. .
Visa said on Wednesday that its new partners in the BNPL arena are FIS and Canadian company Moneris. The card network has also expanded its relationship with Klarna to reach new global markets, Visa said.
“We’re bringing scale to disruptors,” Kelly told analysts, adding that through Visa’s two-pronged approach, issuers can extend BNPL loans to existing credit card customers through bank portals while merchants can offer the Visa point-of-sale payment solution.
Several banks and payment companies in the United States, Canada, Malaysia and Russia support the platform. Visa is not alone in its strategy; other payment companies also play the role of intermediary between merchants and BNPL lenders. Just this week Stripe announced a deal with Klarna to offer BNPL loans to Stripe merchants and process its installment payments.
For the quarter ended Sept. 30, Visa reported net income of $ 3.6 billion, or $ 1.65 per share, up 71% from $ 2.1 billion, or 97 cents per share , one year earlier. Revenue increased 27% to $ 6.6 billion.
As a growing number of fintechs embrace virtual card payments, especially to enable BNPL transactions for purchases and loan repayments, Visa sees itself as having a role to play in helping them grow.
Visa has also partnered with more than 60 cryptocurrency players who all have the ability to issue Visa credentials, Kelly said. She recently became an investor in Merit, which launched a cryptocurrency Visa card in July.
Although open banking, which enables fintechs to create new services by leveraging bank data, is still in its early stages in the United States, Kelly said he doesn’t think it poses a significant threat to volume. of Visa payment.
“There are definitely transactions that will lend themselves to account to account, which we know is one of the things people will see as a threat,” he said. Visa will also support instant account payments through its ongoing acquisition of Tink, a European open banking platform.
But even as open banking services become more widely available in the United States, many consumers will continue to use the Visa card network for fraud protection, security and dispute resolution, Kelly said.
“When money is moved instantly, it is fine on a certain level, but once it has been moved it is terribly difficult to get it back, and it [becomes] on things other than speed, ”Kelly said.
Despite a slowdown in travel payment volume in late summer linked to a wave of delta variants of COVID-19, Visa’s credit and debit card payment volume in the United States continued to rebound in the United States. last quarter, said Visa chief financial officer Vasant Prabhu.
“There is pent-up demand for travel as bookings accelerate wherever borders are open,” he said, noting that cross-border travel overall remains slow and Asia is still largely locked.
“We are not back to normal in the world yet,” Prabhu said.