Visa : Transcript ( PDF 211 KB )

Corrected Transcript

03-Mar-2022

Visa, Inc. (V)

Evercore Payments & FinTech Innovators Forum

	Total Pages: 12
1-877-FACTSET www.callstreet.com	Copyright © 2001-2022 FactSet CallStreet, LLC

Visa, Inc. (V)	Corrected Transcript
Evercore Payments & FinTech Innovators Forum	03-Mar-2022

CORPORATE PARTICIPANTS

Jack Forestell

Chief Product Officer & Executive Vice President, Visa, Inc.

.....................................................................................................................................................................................................................................................................

OTHER PARTICIPANTS

David Mark Togut

Analyst, Evercore ISI

.....................................................................................................................................................................................................................................................................

MANAGEMENT DISCUSSION SECTION

David Mark Togut

Analyst, Evercore ISI

Welcome back to Evercore ISI's Sixth Annual Payments & FinTech Innovators Forum. I'm David Togut. I lead the Payments, Processors and IT Services research team at Evercore ISI. Delighted to welcome Jack Forestell, Chief Product Officer at Visa.

Jack, thanks so much for being with us here today. We greatly appreciate it.

.....................................................................................................................................................................................................................................................................

Jack Forestell

Chief Product Officer & Executive Vice President, Visa, Inc.

Morning, David, and thanks for having me. Thanks for everyone spending some time with us here today.

	2
1-877-FACTSET www.callstreet.com	Copyright © 2001-2022 FactSet CallStreet, LLC

Visa, Inc. (V)	Corrected Transcript
Evercore Payments & FinTech Innovators Forum	03-Mar-2022

QUESTION AND ANSWER SECTION

David Mark Togut

Analyst, Evercore ISI

What are your top three priorities as Chief Product Officer?

Q

.....................................................................................................................................................................................................................................................................

Jack Forestell

Chief Product Officer & Executive Vice President, Visa, Inc.

A

Yeah. So, David, maybe I'll just give you a little context. And I often get asked about, well, Chief Product Officer at a network, what does that mean? So I'll explain that a little bit and then shoot into the top priorities.

So I lead a team at Visa that really has three accountabilities. First, we manage the design and development of our core products and platforms, think debit, credit, prepaid, VisaNet itself. Second, we manage our growing portfolio of value-added services. We've got four business lines there, services for acceptance, services for issuing, services for risk and identity, and then our advisory services. And then, lastly, we manage the business development and partnerships with our digital platform and fintech clients around the globe.

Top three priorities, it's actually pretty easy. It's pre-aligned with our corporate strategy. Number one, grow our consumer payments business. Now, from our - or my standpoint, that's largely about continuously enhancing our products and services to deliver the very best, very most secure digital user experiences for our clients. Number two is growing our services business, and that's about building and scaling solutions that enable our clients to solve real world user problems. And then the last one is about growing the new flows business by really extending our existing capabilities beyond our consumer payments business and into a whole set of new money movement flows.

.....................................................................................................................................................................................................................................................................

David Mark Togut

Analyst, Evercore ISI

Q

Great. Thanks for that. If you could update us on the situation in Russia and Ukraine from Visa's perspective?

.....................................................................................................................................................................................................................................................................

Jack Forestell

Chief Product Officer & Executive Vice President, Visa, Inc.

A

Yeah. Boy, it's been tough to watch the images coming out of Ukraine for the last week. All I can say is I feel for our Ukrainian colleagues and friends and family. And, look, the invasion is a human tragedy. So, for us, our number one priority has been ensuring the safety and security of our team members and their families, those that are direct in harm's way in Ukraine. And we've had teams working around the clock to get assistance to our people in Ukraine, and we're really trying to take care of them. That's number one.

We've also had teams working 24/7 to make sure that we're compliant with all the applicable global sanctions that have been issued by a whole bunch of different jurisdictions. As part of that compliance, we suspended access to Visa for a number of clients. Some of the sanctions, by the way, are super clear, for example, those regarding what are called SDNs or Specifically Designated Nationals. They're pretty clear. Those sanctions require us to suspend access to the Visa network for companies that are listed.

More specifically in that, that means domestic and cross-border transactions from Visa cards issued by SDNs will no longer be processed over the Visa network or either domestically or internationally, just no access to the Visa

	3
1-877-FACTSET www.callstreet.com	Copyright © 2001-2022 FactSet CallStreet, LLC

Visa, Inc. (V)	Corrected Transcript
Evercore Payments & FinTech Innovators Forum	03-Mar-2022

network. In addition to that, transactions on non-SDN cards that are linked to an SDN, so say, for example, an SDN is an acquirer, those also cannot be processed over the Visa network. So we've been working through everything, getting all of those sanctions in place - or blocks in place.

Just to point out, Russian domestic transactions continue to be processed over Russian national infrastructure via the NSPK. We do not process those transactions domestically. And we will not generate revenue from any of those transactions that are processed in Russia, even if it is a transaction from a card carrying a Visa mark that's processed over the NSPK infrastructure. So, that's kind of the SDN sanctions.

There are other sanctions and we're still working through them. They are less clear for other banks, for SWIFT and for the Russian Central Bank, for example. So we're still working through all those pieces. And it's just - it's very fluid, very, very evolutionary, and we're spending a lot of time on staying on top of it.

In terms of impact to our business, I mean, at this stage, we're still early in this. It's impossible to really estimate what the impact can be. All I can tell you is that, in 2021, our net revenues from Russia, including domestic as well as cross-border, were about 4% of total Visa level net revenue and our net revenue from Ukraine were just under 1% of VisaNet revenues. So, look, as this situation shapes up and we get more insight into impact and what might happen with further waves of sanctions, I'm sure our team will let you know. And that's what I've got for now.

.....................................................................................................................................................................................................................................................................

David Mark Togut

Analyst, Evercore ISI

Understood. Certainly a rapidly evolving situation. So, appreciate your going into detail...

Q

.....................................................................................................................................................................................................................................................................

Jack Forestell

Chief Product Officer & Executive Vice President, Visa, Inc.

Sure.

A

.....................................................................................................................................................................................................................................................................

David Mark Togut

Analyst, Evercore ISI

Q

...there. In the past year, Visa Europe has improved its market share in the European continent as part of its growth pivot from being principally UK centric. Notably, Visa has gained market share with Revolut. Which products and services are enabling share gains in continental Europe generally and with key fintechs more specifically?

.....................................................................................................................................................................................................................................................................

Jack Forestell

Chief Product Officer & Executive Vice President, Visa, Inc.

A

Yeah. Look, we're really excited about our progress in Europe. Last three years in Europe, we've increased the number of Visa credentials by almost 20%. But if you break that down and you just look at continental Europe, which is more what you're asking about, that number is actually over 30%. And as we look at it on a forward- looking basis, we think we've got like a really direct line of sight to adding another $30 million-plus additional credentials across a very specific set of clients, about 54 of them to be exact.

So, well, how we're doing that? We're - like, it's a strong, steady investment in all our client relationships and in new and existing client segments. So, a lot of the growth is being driven with established partners, banks like BBVA, CaixaBank of Spain, DKB in Germany, ING in the Netherlands, BPCE in France. So, that's kind of the backbone, a lot of the growth that you're seeing.

	4
1-877-FACTSET www.callstreet.com	Copyright © 2001-2022 FactSet CallStreet, LLC

Visa, Inc. (V)	Corrected Transcript
Evercore Payments & FinTech Innovators Forum	03-Mar-2022

But we're also driving growth with fintechs. You mentioned Revolut, who operate in every major European market. But by the way, they also operate in the US and several markets in Asia. Wise is another great partner, they cover 37 different markets, including every single European market. Crypto.com is another less intuitive player than you might think, but they're issuing Visa cards in 31 European countries right now. So, lots of momentum, lots of moving pieces in continental Europe.

To the question you asked about our products and services and how they're enabling growth, it's hard to give you a single answer because the answer is really that we're - our teams are working with our clients more than they ever have to develop solutions specific to the clients to meet their needs, whether it's in the security domain, products like Visa Secure authentication, which we've seen triple in usage in Europe since the start of 2021. For fintechs, we have a program called Fintech Fast Track, which enables fintechs to onboard with Visa, turnkey access to hundreds of ecosystem partners and players for a brand new fintech. Cloud Connect is another one where we made the ability to connect to Visa once and then operate in many markets. So, for players like Wise that I was just talking about, to be able to connect to us once in the cloud and then operate in their 31 markets, is huge.

Or even just like our tokenization service that's enabling more secure, smarter digital transactions and commerce experiences. We saw tokenization grow by 70% year-on-year last year in Europe, and we're at the point now where about one in five transactions in Europe is now processed on a Visa token. So, lots of stuff coming together to drive growth in a whole bunch of different segments for us in Europe.

.....................................................................................................................................................................................................................................................................

David Mark Togut

Analyst, Evercore ISI

Q

No question. Appreciate all the insights on the growth pivot and what's driving a lot of the increased traction. Can you tell us more about your approach to open banking? And how Visa is going to market with Earthport and Visa Direct to drive your growth, especially for cross-border use cases? And how do value-added services really tie into open banking as well?

.....................................................................................................................................................................................................................................................................

Jack Forestell

Chief Product Officer & Executive Vice President, Visa, Inc.

A

Got it. Thanks, David. There's a few questions packed in there. So, let me start with open banking. Like, we just think open banking represents a ton of opportunity. [ph] Let me tell people, like, (00:09:27) think about the value of a Visa transaction. Like, the real value isn't necessarily about the connectivity through a debit card or a credit card back to a source of funds. It's about the reliability, the ubiquity, the security, the trust, the brand, all those features and services that we bring together to make that a really high value transaction.

Now, think about a world where consumers can access their financial data and initiate money movement transactions through all form and manner of generic platforms. That's open banking. It's just a commodity capability that connects. We think open banking does create a valuable capability for consumers and innovators. But to really gain adoption and trust, it needs someone like Visa to bring standards and new capabilities to bear. That's why we're so excited about it.

Last year, we announced our intent to acquire Tink, which is a European open banking platform. Tink's got phenomenal capability. We think they're a leading platform. Through a single API, Tink can allow its customers to access their financial data, aggregated financial data, use smart financial services like risk insights and account verification, build personal financial management tools. So we think the connectivity and capability services that Tink has already built, along with Visa's capabilities, our services and our reach, is really going to help accelerate

	5
1-877-FACTSET www.callstreet.com	Copyright © 2001-2022 FactSet CallStreet, LLC