Visa’s commercial payments traverse trillion-dollar mark

by Manpreet Singh & Ben Poole

Created: November 26th 2019

Visa’s latest annual SEC filings show that in the past financial year the global payments company broke through the US$1 trillion dollar mark in its commercial payments volume. This represents the first time that Visa or any of its rivals have crossed this threshold in commercial payments volume.

Visa’s overall growth of commercial payments was up 9% in the 12 months to 30 June 2019. The was particularly driven by US commercial payments volumes, which jumped from US$564 billion in 2018 to US$633 billion in the latest results, an increase of 12%. The company’s International commercial card volumes were also up, albeit more modestly, from US$364 billion last year to US$381 billion in 2019, an increase of 5% year-on-year.

Addressing to investors in an earnings call to discuss the 2019 annual report, Al Kelly, Visa’s chairman and CEO commented: “This growth was fuelled by the expansion of our issuer processing and network services, an increase in our acquirer and merchant offerings including CyberSource, greater adoption of our risk and authentication tools and consulting project work”.

Two platforms have been key in Visa in supporting its commercial payment growth. The more established platform Visa Direct, which supports a mix of B2B, P2P and P2C payments, handled over two billion transactions in the past year. On the B2B side of this in the past quarter, Intuit announced Instant Deposit, a feature that enables real-time disbursements for small business owners using QuickBooks Payments directly to their eligible debit cards using Visa Direct. Visa has also announced that Oracle ERP customers will be able to make Visa Direct payments directly from their accounts payable system.

The second platform, the Visa B2B Connect network, was launched in June 2019. It is designed to provide financial institutions with an ability to process high-value corporate cross-border payments globally. The new network currently has approvals to operate in 60 countries. There are three different ways to connect to B2B Connect. One is through coding to Visa APIs through its Developer Platform. Alternatively connection can be made through a technology provider that Visa has a relationship with, which includes FIS, Bottomline Technologies and Infosys. Finally, connection can be achieved using a host-to-host secure file protocol infrastructure.

“Our focus right now in B2B Connect is actually building out the nodes in the 60 countries” Kelly said. “We try to grow the 60 countries and within the countries where we have the capability and the permissions and approvals to operate, we want to be growing the nodes”.

Visa is not the only commercial payments provider to demonstrate B2B payments growth in its latest financials. American Express also reported 5% growth for its Q3 proprietary billed business year-on-year in its SEC 10-Q filings this month. The total commercial payments volume posted by the company was US$127.3 billion, up from US$121.6 billion for the same quarter in 2018. In the nine-month period ended September 30, the total commercial payments volume for AmEx was US$380.3 billion, an increase of 6% on the US$359.3 billion reported in 2018.

In 2019 Q3 specifically, AmEx showed a split between large and global corporates versus SME billed business. For large and global corporate cards, there was a 1% decline in billed business on an FX-adjusted basis between Q2 and Q3. On the earnings call to discuss the Q3 results, AmEx CFO Jeffrey Campbell noted that this was largely due to two corporate customers: “Adjusting for the reduction in spending from just two large customers, where we saw some client-specific decreases, the growth rate would have been a bit above 1% this quarter”.

In contrast, spending from the company’s US small and mid-sized enterprise card members (SMEs) grew by 6% in the third quarter with relatively stable growth throughout the three months of the quarter.

In October, AmEx announced a refresh of its Corporate Card programme, which included a number of new features, including benefits with Uber, Hilton, and CLEAR, a biometric identification system that expedites the airport security process.

“As part of that announcement, we introduced an extension of our Corporate Card program designed to meet the needs of start-ups with features that include corporate liability and dynamic spending capacity” Amex chairman and CEO, Stephen Squeri, explained on the earnings call.