Visa (V) Q1 2016 Earnings Call

posted in: Earnings Call, Notes | 0
Visa (V) CEO Charles Scharf said the company is fighting against a number of headwinds
“And our growth continues to be subdued by the strength of the dollar on both translation and cross-border business volumes, continued low oil prices, and weakness in China, oil-based economies, and Brazil. ¬†We’ve not seen improvement in the global economic environment.”
Visa (V) CFO Vasant Prabhu said the strong dollar hurt results
“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. This has added to the negative effects of the strong dollar, especially on our large inbound U.S. business. However, currency volatilities were higher than the first quarter, offsetting some cross-border weakness.”
Cross border purchases originating from China dropped precipitously
“Cross-border commerce outbound from China has dropped from growth rates above 40% a year ago to single-digit levels in the second quarter. Commodity-based economies across Latin America, the Middle East, and Africa have also experienced sharp declines. This has hit our large U.S. cross-border acquiring business hard.”
Provided an updated on the credit card’s transition to embedded chips
“I’ll move on and talk about EMV for a second. Six months out from the official kickoff to chip in the U.S., we continue on the journey of moving from mag stripe to chip. More than 265 million Visa chip cards were issued as of March of 2016, making the U.S. the largest chip card market in the world and larger than the UK and Brazil combined. 47% of credit cards and 30% of debit cards have a chip on them today. More than 1 million merchants now have chip-enabled terminals, or roughly 20% of all merchants. Based on client surveys, we expect 50% of merchant locations will be enabled with EMV by the end of calendar year 2016.”