Specialist
Former head at Visa
Agenda
- Visa's (NYSE: V) disputes with Amazon (NASDAQ: AMZN) over network fees and broader outlook on fee trajectory
- Visa's approach to new payment flows
- Implications of A2A (account-to-account) payments across payment flows, including fintechs potentially shifting away from Visa
- Competitive dynamics of buy now, pay later approaches
- Outlook amid regulatory scrutiny of incentivising fintechs to use Visa's rails
Questions
1.
What recent developments have impacted Visa since our last Forum Interview [see Visa – New Payment Flows & B2B Innovation – 13 September 2021]? What should investors pay attention to?
2.
What are your thoughts on the dispute between Visa and Amazon? It seems to be a symptom of a broader issue that larger merchants have with high network fees. Do you expect more fallout from this? How might Visa have to respond?
3.
What more could Amazon do to punish Visa if deciding to take a hard stance and pushing for the interchange fee to be reduced to what it was? You mentioned the upcoming switch for the co-brand card. What else could be a leverage point for Amazon?
4.
How might the effects of Amazon’s dispute with Visa impact issuing banks? Does Visa have all the leverage to force some sort of cost reduction through the card issuers? Is there any threat to the card issuers?
5.
Do you think issuing banks could start moving away from Visa if this dispute continues to be a problem?
6.
Visa cited Brexit as a reason to increase fees from 0.5% to 1.5%, but do you think there is a true increase to compliance and complexity costs after the UK departed the European Union?
7.
What is the longer-term trajectory for Visa’s network and interchange fees? What do you think is the biggest pressure point there?
8.
What could be the longer-term percentage decrease in network fees? How much might Visa have to lower them to compete with lower-cost rails, such as FedNow and A2A [account-to-account] payments?
9.
What evolving technologies might larger merchants use to reduce the cost of their payments? You noted Amazon accepting payments through Venmo. What might be the likeliest scenario to reduce costs, perhaps including FedNow when it launches, A2A or buy now, pay later, and how might this impact Visa?
10.
How would you expect FedNow to compete with C2B [consumer-to-business] volume, given the new rails and FedNow pending to come to market? How might the banks support or impede FedNow penetration?
11.
What are your thoughts on the emergence of A2A payments? The idea of incentivising consumers to use a different payment method is really interesting, especially given A2A payments are cheaper. What are the key friction points keeping A2A adoption from gaining traction?
12.
Do you think Visa will be pushed out by the emergence of A2A payments? This is obviously subject to the use case. The company claims it could still provide value-added services on top of that payment type, but fintechs are also aiming to do payments and could have better relationships with merchants than Visa. Might Visa end up being disintermediated entirely in the rails and value-added services?
13.
What more could Visa do to better insulate itself from potential A2A impacts? Is Visa or Mastercard better positioned for these impacts?
14.
Do you agree that Mastercard’s strategy of owning the infrastructure to these rails will compress margins, longer term? Is there a counterargument that infrastructure ownership helps players provide those other services?
15.
Why does volume stay on Visa and Mastercard rails in countries such as India, Brazil and the UK, which have cheaper local networks? You mentioned some issues with outages and so on, but it is a huge step up from what they’ve traditionally done.
16.
Visa’s management discusses value-added services for rails, such as UPI [Unified Payments Interface] in India, Pix in Brazil and so on. What exactly are those services and what is the actual ability to provide them on top of these rails? Is there any threat to achieving that plan?
17.
How will Visa’s buy now, pay later product work, especially given Amazon and Mastercard’s similar offerings? Might Visa have significant adoption and provide a very strong and positive user experience? Who is better-positioned out of the buy now, pay later pure-players who have direct relationships with merchants vs Visa with its relationship with the issuing bank?
18.
Could you explain Visa and Mastercard’s buy now, pay later strategies and the differences in their instalment APIs [application programme interfaces]?
19.
What might be a best-case scenario partnership for Visa to attach itself to a buy now, pay later player? The worst-case scenario is buy now, pay later players moving to A2A.
20.
Do you think buy now, pay later players moving towards A2A funding is a material threat to Visa?
21.
Is Plaid’s ecosystem with other fintechs to facilitate A2A payments a notable threat? Could Visa play with them to some extent, or might Plaid’s focus be to disintermediate Visa entirely?
22.
What is Visa’s strategy for the B2B account payable flow? How might the longer-term economics trend?
23.
A recent report suggested top fintech companies, including PayPal, Stripe and Square, received financial incentives from Visa to push the majority of their payments across the Visa network. What might be the fallout from this? Is there a significantly increased likelihood fintechs would take advantage of other rails without that incentive? If so, which rail would they most likely move towards?
