Visa FY 2Q16 Earnings Call Notes

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Visa (V) Charles W. Scharf on Q2 2016 Results

Solving the problem of additional time to read chip cards

“One of the main pain points in moving to chip is the additional time it takes to complete a transaction due to the time the card spends in the terminal. Earlier this week, Visa announced the launch of Quick Chip for EMV. The upgrade streamlines the processing of a chip card transaction to enable customers to dip and remove their EMV chip card from the terminal without waiting for the transaction to be finalized, allowing the consumer to put away their card in typically two seconds or less.”

Things haven’t deteriorated, but they haven’t improved

“our assumptions are that in order to make those guidance numbers, there needs to be an improvement. And things haven’t deteriorated, but things haven’t improved, so that’s playing out exactly – not the way we would want, but given what’s happened, the way we would expect. And so obviously, if things got better, then that would change as well. But we just don’t see that. And so it’s not something at this point, given that we’re already in the third quarter, we think is prudent to think about.”

Vasant M. Prabhu – Chief Financial Officer & Executive Vice President

Cross border commerce out of commodity based economies is anemic

“Cross-border business was once again very weak but in line with the first quarter’s growth rate. The deceleration of outbound commerce from China continues. Cross-border commerce out of commodity-based economies remained anemic. ”

Have now lapped sharp gas declines but volumes haven’t picked up

“We have now lapped the sharp gas declines from last year. Last October, we had hoped that this would provide a tailwind for U.S. domestic volumes in the second half of fiscal 2016. This has not happened, as gas prices remain below the lows of last year. Given the recent failure of OPEC to agree on production caps, lower gas prices could persist. As such, we are assuming that U.S. payment volume growth will not improve from current trends in the second half.”

The transactional trends are fine but pricing is deflationary

“the underlying transactional trends are very good. And on the margin, even setting aside gas, a stronger dollar is mildly deflationary, as you know, which plays through into payment volumes.”