5 ms·

What Visa earnings tell us about the state of the payments industry

76 points by kazanins 2y ago

mym1990 2y ago
Felt really difficult to follow this article into any takeaways about the payments industry, it could be that I am just dumb though. Had to plug it into chatgpt to effectively get "it is challenging to use Visa's overall revenue growth as a straightforward indicator of broader economic health."
- meiraleal 2y ago
  There is no takeaway. It just says it is growing and seem like it will continue to grow, even tho day-by-day reality is clear that Visa (and mastercard) is losing marketshare in many places to national payment services and fintechs.
  - hn_throwaway_99 2y ago
    > even tho day-by-day reality is clear that Visa (and mastercard) is losing marketshare in many places to fintechs. Do you have any evidence for that at all? The majority of fintechs I can think of (at least the ones that provide cards, either debit or credit) do so on the Visa or MC payment rails.
    - marcosdumay 2y ago
      > The majority of fintechs I can think of I imagine you live in the US.
      - hn_throwaway_99 2y ago
        Fair enough, yes. I know the payment situation is very different worldwide, especially in 2nd/3rd world countries (Brazil, India, Southeast Asia, Africa, etc.). But if you look at some of the top fintechs in both the US and Europe (e.g. Chime, Revolut, Brex, Robinhood, SoFi, etc.) all help extend Visa and MC's reach.
        marcosdumay 2y ago
        > especially in 2nd/3rd world countries I'd suggest you read around the threads here to see all the comments about the EU and Japan.
    - tossandthrow 2y ago
      Many countries have alternative networks that does not rely on the card (metaphor). Stuff like Indias UPI etc. Keep in mind that payments are broader than cards.
    - dublinben 2y ago
      Buy Now Pay Later is growing very quickly and taking market share from credit cards, especially for younger consumers. The introduction of FedNow is going to make it even more convenient to use these apps to make purchases and avoid the credit card infrastructure entirely.
      - Dalewyn 2y ago
        >Buy Now Pay Later is growing very quickly and taking market share from credit cards, especially for younger consumers. One of our greatest failings as a society is our abject failure to teach people finances. It's as critical to our lives as breathing, eating, and crapping, yet the vast majority of people can't even count change let alone understand credit. Incidentally, anyone telling you BNPL is good for you is trying to milk you. Please just don't and stick to cash/debit or good old credit cards, for your friends' and family's sake if not yourself.
        anonym29 2y ago
        This, like so many other issues, is an issue that a small but powerful contingent of moneyed interests (e.g. the debt industry, also known as the financial industry) works very hard and spends lots of money lobbying on, in order to ensure we're not solving the problem. This is not much different from Microsoft fighting open source, Apple fighting right to repair, or Google fighting the CCPA. As always: Cui Bono? Follow the money.
        kardos 2y ago
        BNPL is often free to the customer [1], to whom it amounts to a free loan. The merchant, however, is soaked for the interest/fees. So merchant prices will rise slightly, for everyone, to cover those costs..... much like credit cards do now. Cash and debit users subsidize this scheme without getting the free loan. The downside for the customer is that it promotes overspending, which could be argued as a net negative on the whole. A careful consumer could make use of the free loan, investing the cash elsewhere during the loan period. [1] https://www.bitsaboutmoney.com/archive/buy-now-pay-later/ https://www.bitsaboutmoney.com/archive/buy-now-pay-later/
    - meiraleal 2y ago
      I can only talk about my country, Brazil. It took 2 years for the national payment system PIX to surpass both visa and mastercard and become the most used mean of payment
  - mort96 2y ago
    So eh what does Visa earnings tell us about the state of the payments industry?
    - noisyshart 2y ago
      [flagged]
  - flessner 2y ago
    Maybe if I want to send my friend $5 Paypal or whatever can do that, but what fintech is actually taking market share from them at merchants? Maybe it is because I am in Germany, but merchants here only accept cash, girocard and credit cards - online shops obviously have a wider selection that regularly includes Paypal in Klarna, but I wouldn't expect credit cards to loose a lot of market share to them. So in which geographic regions is this actually the case? Do you have any source I could read on this as I am quite interested.
    - meiraleal 2y ago
      > Maybe if I want to send my friend $5 Paypal or whatever can do that, but what fintech is actually taking market share from them at merchants? UPI, Pix, FedNow and many others make direct payment much easier. In Brazil is now more common to accept Pix and not accept credit card than the opposite, although almost everywhere accepts card. But literally everywhere accepts Pix (and every app that uses it).
      - marcosdumay 2y ago
        > But literally everywhere accepts Pix (and every app that uses it). I just want to clarify, because this phrase looks like a huge understatement. Beggars on the street accept Pix.
- fancytaco 2y ago
  I would've summarized it for you for half the cost.
bediger4000 2y ago
Interesting article, but I got cognitively tripped by the improper use of "deduct". In context, I believe the author wanted "deduce". The big takeaway I got is that it was a mistake to let corporations set up electronic money. The US government let a few corporations set up and conduct electronic money transactions, so not only do we as a society have to pay for our money, we have to do this article's type of kremlinology to understand data we should have open and free access to.
- tantalor 2y ago
  Comes from same origin. Both are "deduction".
  - snarg 2y ago
    So do "fact"/"faction" and "hostel"/"hospital". Mixing these up would be confusing and incorrect. Seems like a silly argument to make.
  - bediger4000 2y ago
    "Deduct" means to subtract, or take away. "Deduce" means to logically follow evidence. Semantically, there's no overlap, whatever etymology might say. This is one of those problems where spell check is correct, but the word is used incorrectly.
    - tantalor 2y ago
      Wrong, "deduce" means to rule out possibilities, literally deduct them from the space of all possible universes. "When you have eliminated the impossible, whatever remains, however improbable, must be the truth."
      - tossandthrow 2y ago
        Curios aside here: when pointing out a grammatical error of this sort, what school of English does it rely on? I mean, English has grown to a point where where the British English dictionary does not hold sole authority.
dgfitz 2y ago
Summary: > Visa’s management expects payment volume to grow at “a similar rate to Fiscal Q3 2024”, and cross-border volume to grow slightly below the Q3 growth rate. > This would mean 5% YoY growth in the U.S. (and a lower growth rate for “card present”, or in-person, volumes and a higher growth rate for e-commerce volumes), and double-digit growth in Europe, Latin America, as well as the CEMEA region. A further slowdown in the cross-border volume growth suggests a headwind for e-commerce growth.
zkid18 2y ago
I wonder how new payment solutions compete with the growth of Visa in emerging markets and what impact they have on the company's strategy overall. Here in Brazil, I usually use PIX for payments, although card payments are still possible. I imagine a similar situation exists in Southeast Asia or even India.
ryandrake 2y ago
As a layman, I always wondered: what do Visa and MasterCard even do? They don't issue cards or actually extend credit. Banks do that. They don't assume any transaction risk. Merchants assume it. They don't actually carry any of the debt that customers produce. They don't accept balance payments from customers. They're just "facilitators" but it's unclear what that even means technically. I assume they have a few datacenter that do trillions of little lookups, but is that all there is to it? It seems like the perfect do-nothing middleman business: Insert yourself into every transaction in the world and siphon a percentage of it. What stops a big bank from doing whatever it is they do?
- _xnmw 2y ago
  Yup. Startups like GoCardless and government initiatives like UPI are all about direct bank to bank transfers to cut out the middleman by becoming the new middleman.
- zacwest 2y ago
  Paze (https://www.paze.com/ https://www.paze.com/) feels to me like the collective banks’ attempt to wrestle back control here. You could imagine a world where it’s a separate side channel for payment for the same credit card accounts but without the rent-seeking intermediaries.
  - nullfield 2y ago
    After looking at it, the “uses a different number” would seem to imply that the side-channel thing is right. Pace-participating entities load your cards to their system, you get access via your email address, Paze acts as an interface whereby issuers associate a new unique ID with your account while still showing you your “Visa” account number or whatever and “validating possession” with CVC. That said, my level of trust in Early Warning Systems, who runs it, is pretty low-Zelle looks like a hot mess with EWS/banks ignoring Reg E as much as they can get away with: https://www.bankingdive.com/news/zelle-scam-reimbursement-wells-fargo-jpmorgan-early-warning-services-blumenthal-senate/722484/ https://www.bankingdive.com/news/zelle-scam-reimbursement-we...
- 2y ago
hnpolicestate 2y ago
Visa and MasterCard get a lot of hate as they are definitely a duopoly. But imagine they never existed and PayPal or some other Fintech was the non-cash payment monopoly. Far less things you'd be permitted to purchase, far more random account closures for violating intentionally nonspecific TOS. Worse customer support than we have now and even less consumer protections. MasterCard and Visa hearken back to a time when KYC was far less aggressive.
- SoftTalker 2y ago
  What sorts of things can you pay for with VISA/MasterCard that you can't pay for with Paypal?
  - Symbiote 2y ago
    Most normal shops. I don't think I've ever seen a physical shop that accepts PayPal.
  - rvnx 2y ago
    Groceries, transport tickets, hotels, restaurants, cash withdrawals
  - izacus 2y ago
    PayPal won't even allow me to pay for most stuff since I moved to another country - they don't support the option for humans moving to another location in the world. So... many things. Also, PayPal regularly block transactions for incorrectly detected "fraud". Visa/MC never did.
  - 5555624 2y ago
    Firearms, ammunition, cigarettes, drug paraphernalia,and more https://www.paypal.com/us/legalhub/acceptableuse-full?locale.x=en_US https://www.paypal.com/us/legalhub/acceptableuse-full?locale...
    - hnpolicestate 2y ago
      I wonder if it's against TOS to pay a sex worker? Then there was that freakout over PayPal potentially closing your account for doing things in your irl that it doesn't approve of. I think they backed down?
_xnmw 2y ago
Only a government has sufficient power to disrupt the Visa/Mastercard duopoly as a payment network, and even then only within its borders. See what India did with UPI to mandate a single interface for bank-to-bank transfers and a single app for payments. The EU also kind of muddled its way through with SEPA and there are country-specific transfer methods like Interac in Canada. I’ve wondered why a network the size of Stripe has not issued its own currency to bypass the Visa/Mastercard middleman. Maybe political pressure? If SaaS vendors used a SaaS specific currency to settle payments for software subscriptions, that would have petrodollar implications for global currencies markets. In countries where even food and transportation is paid for by a software subscription this could finally jump the barrier which crypto failed to cross: being able to actually pay for everyday stuff like bread and milk with internet money.
darkest_ruby 2y ago
Omg, Latvian spelling is just butchering what otherwise would have been a pronounceable name Eugene Kazanin.

76 points by kazanins 2y ago

mym1990 2y ago

Felt really difficult to follow this article into any takeaways about the payments industry, it could be that I am just dumb though. Had to plug it into chatgpt to effectively get "it is challenging to use Visa's overall revenue growth as a straightforward indicator of broader economic health."

meiraleal 2y ago
There is no takeaway. It just says it is growing and seem like it will continue to grow, even tho day-by-day reality is clear that Visa (and mastercard) is losing marketshare in many places to national payment services and fintechs.
- hn_throwaway_99 2y ago
  > even tho day-by-day reality is clear that Visa (and mastercard) is losing marketshare in many places to fintechs. Do you have any evidence for that at all? The majority of fintechs I can think of (at least the ones that provide cards, either debit or credit) do so on the Visa or MC payment rails.
  - marcosdumay 2y ago
    > The majority of fintechs I can think of I imagine you live in the US.
    - hn_throwaway_99 2y ago
      Fair enough, yes. I know the payment situation is very different worldwide, especially in 2nd/3rd world countries (Brazil, India, Southeast Asia, Africa, etc.). But if you look at some of the top fintechs in both the US and Europe (e.g. Chime, Revolut, Brex, Robinhood, SoFi, etc.) all help extend Visa and MC's reach.
      - marcosdumay 2y ago
        > especially in 2nd/3rd world countries I'd suggest you read around the threads here to see all the comments about the EU and Japan.
  - tossandthrow 2y ago
    Many countries have alternative networks that does not rely on the card (metaphor). Stuff like Indias UPI etc. Keep in mind that payments are broader than cards.
  - dublinben 2y ago
    Buy Now Pay Later is growing very quickly and taking market share from credit cards, especially for younger consumers. The introduction of FedNow is going to make it even more convenient to use these apps to make purchases and avoid the credit card infrastructure entirely.
    - Dalewyn 2y ago
      >Buy Now Pay Later is growing very quickly and taking market share from credit cards, especially for younger consumers. One of our greatest failings as a society is our abject failure to teach people finances. It's as critical to our lives as breathing, eating, and crapping, yet the vast majority of people can't even count change let alone understand credit. Incidentally, anyone telling you BNPL is good for you is trying to milk you. Please just don't and stick to cash/debit or good old credit cards, for your friends' and family's sake if not yourself.
      - anonym29 2y ago
        This, like so many other issues, is an issue that a small but powerful contingent of moneyed interests (e.g. the debt industry, also known as the financial industry) works very hard and spends lots of money lobbying on, in order to ensure we're not solving the problem. This is not much different from Microsoft fighting open source, Apple fighting right to repair, or Google fighting the CCPA. As always: Cui Bono? Follow the money.
      - kardos 2y ago
        BNPL is often free to the customer [1], to whom it amounts to a free loan. The merchant, however, is soaked for the interest/fees. So merchant prices will rise slightly, for everyone, to cover those costs..... much like credit cards do now. Cash and debit users subsidize this scheme without getting the free loan. The downside for the customer is that it promotes overspending, which could be argued as a net negative on the whole. A careful consumer could make use of the free loan, investing the cash elsewhere during the loan period. [1] https://www.bitsaboutmoney.com/archive/buy-now-pay-later/ https://www.bitsaboutmoney.com/archive/buy-now-pay-later/
  - meiraleal 2y ago
    I can only talk about my country, Brazil. It took 2 years for the national payment system PIX to surpass both visa and mastercard and become the most used mean of payment
- mort96 2y ago
  So eh what does Visa earnings tell us about the state of the payments industry?
  - noisyshart 2y ago
    [flagged]
- flessner 2y ago
  Maybe if I want to send my friend $5 Paypal or whatever can do that, but what fintech is actually taking market share from them at merchants? Maybe it is because I am in Germany, but merchants here only accept cash, girocard and credit cards - online shops obviously have a wider selection that regularly includes Paypal in Klarna, but I wouldn't expect credit cards to loose a lot of market share to them. So in which geographic regions is this actually the case? Do you have any source I could read on this as I am quite interested.
  - meiraleal 2y ago
    > Maybe if I want to send my friend $5 Paypal or whatever can do that, but what fintech is actually taking market share from them at merchants? UPI, Pix, FedNow and many others make direct payment much easier. In Brazil is now more common to accept Pix and not accept credit card than the opposite, although almost everywhere accepts card. But literally everywhere accepts Pix (and every app that uses it).
    - marcosdumay 2y ago
      > But literally everywhere accepts Pix (and every app that uses it). I just want to clarify, because this phrase looks like a huge understatement. Beggars on the street accept Pix.
fancytaco 2y ago
I would've summarized it for you for half the cost.

bediger4000 2y ago

Interesting article, but I got cognitively tripped by the improper use of "deduct". In context, I believe the author wanted "deduce". The big takeaway I got is that it was a mistake to let corporations set up electronic money. The US government let a few corporations set up and conduct electronic money transactions, so not only do we as a society have to pay for our money, we have to do this article's type of kremlinology to understand data we should have open and free access to.

tantalor 2y ago
Comes from same origin. Both are "deduction".
- snarg 2y ago
  So do "fact"/"faction" and "hostel"/"hospital". Mixing these up would be confusing and incorrect. Seems like a silly argument to make.
- bediger4000 2y ago
  "Deduct" means to subtract, or take away. "Deduce" means to logically follow evidence. Semantically, there's no overlap, whatever etymology might say. This is one of those problems where spell check is correct, but the word is used incorrectly.
  - tantalor 2y ago
    Wrong, "deduce" means to rule out possibilities, literally deduct them from the space of all possible universes. "When you have eliminated the impossible, whatever remains, however improbable, must be the truth."
    - tossandthrow 2y ago
      Curios aside here: when pointing out a grammatical error of this sort, what school of English does it rely on? I mean, English has grown to a point where where the British English dictionary does not hold sole authority.

dgfitz 2y ago

Summary: > Visa’s management expects payment volume to grow at “a similar rate to Fiscal Q3 2024”, and cross-border volume to grow slightly below the Q3 growth rate. > This would mean 5% YoY growth in the U.S. (and a lower growth rate for “card present”, or in-person, volumes and a higher growth rate for e-commerce volumes), and double-digit growth in Europe, Latin America, as well as the CEMEA region. A further slowdown in the cross-border volume growth suggests a headwind for e-commerce growth.

zkid18 2y ago

I wonder how new payment solutions compete with the growth of Visa in emerging markets and what impact they have on the company's strategy overall. Here in Brazil, I usually use PIX for payments, although card payments are still possible. I imagine a similar situation exists in Southeast Asia or even India.

ryandrake 2y ago

As a layman, I always wondered: what do Visa and MasterCard even do? They don't issue cards or actually extend credit. Banks do that. They don't assume any transaction risk. Merchants assume it. They don't actually carry any of the debt that customers produce. They don't accept balance payments from customers. They're just "facilitators" but it's unclear what that even means technically. I assume they have a few datacenter that do trillions of little lookups, but is that all there is to it? It seems like the perfect do-nothing middleman business: Insert yourself into every transaction in the world and siphon a percentage of it. What stops a big bank from doing whatever it is they do?

_xnmw 2y ago
Yup. Startups like GoCardless and government initiatives like UPI are all about direct bank to bank transfers to cut out the middleman by becoming the new middleman.
zacwest 2y ago
Paze (https://www.paze.com/ https://www.paze.com/) feels to me like the collective banks’ attempt to wrestle back control here. You could imagine a world where it’s a separate side channel for payment for the same credit card accounts but without the rent-seeking intermediaries.
- nullfield 2y ago
  After looking at it, the “uses a different number” would seem to imply that the side-channel thing is right. Pace-participating entities load your cards to their system, you get access via your email address, Paze acts as an interface whereby issuers associate a new unique ID with your account while still showing you your “Visa” account number or whatever and “validating possession” with CVC. That said, my level of trust in Early Warning Systems, who runs it, is pretty low-Zelle looks like a hot mess with EWS/banks ignoring Reg E as much as they can get away with: https://www.bankingdive.com/news/zelle-scam-reimbursement-wells-fargo-jpmorgan-early-warning-services-blumenthal-senate/722484/ https://www.bankingdive.com/news/zelle-scam-reimbursement-we...
2y ago

hnpolicestate 2y ago

Visa and MasterCard get a lot of hate as they are definitely a duopoly. But imagine they never existed and PayPal or some other Fintech was the non-cash payment monopoly. Far less things you'd be permitted to purchase, far more random account closures for violating intentionally nonspecific TOS. Worse customer support than we have now and even less consumer protections. MasterCard and Visa hearken back to a time when KYC was far less aggressive.

SoftTalker 2y ago
What sorts of things can you pay for with VISA/MasterCard that you can't pay for with Paypal?
- Symbiote 2y ago
  Most normal shops. I don't think I've ever seen a physical shop that accepts PayPal.
- rvnx 2y ago
  Groceries, transport tickets, hotels, restaurants, cash withdrawals
- izacus 2y ago
  PayPal won't even allow me to pay for most stuff since I moved to another country - they don't support the option for humans moving to another location in the world. So... many things. Also, PayPal regularly block transactions for incorrectly detected "fraud". Visa/MC never did.
- 5555624 2y ago
  Firearms, ammunition, cigarettes, drug paraphernalia,and more https://www.paypal.com/us/legalhub/acceptableuse-full?locale.x=en_US https://www.paypal.com/us/legalhub/acceptableuse-full?locale...
  - hnpolicestate 2y ago
    I wonder if it's against TOS to pay a sex worker? Then there was that freakout over PayPal potentially closing your account for doing things in your irl that it doesn't approve of. I think they backed down?

_xnmw 2y ago

Only a government has sufficient power to disrupt the Visa/Mastercard duopoly as a payment network, and even then only within its borders. See what India did with UPI to mandate a single interface for bank-to-bank transfers and a single app for payments. The EU also kind of muddled its way through with SEPA and there are country-specific transfer methods like Interac in Canada. I’ve wondered why a network the size of Stripe has not issued its own currency to bypass the Visa/Mastercard middleman. Maybe political pressure? If SaaS vendors used a SaaS specific currency to settle payments for software subscriptions, that would have petrodollar implications for global currencies markets. In countries where even food and transportation is paid for by a software subscription this could finally jump the barrier which crypto failed to cross: being able to actually pay for everyday stuff like bread and milk with internet money.

darkest_ruby 2y ago

Omg, Latvian spelling is just butchering what otherwise would have been a pronounceable name Eugene Kazanin.