Visa (V) Lends Digital Support to Small and Micro Businesses

In an effort to give some relief to the worse-affected business group, the small and micro business (SMBs), Visa Inc. V has come forward to provide the same with a much-needed digital support in such times of unprecedented crisis.

In April, Visa committed two programs worth $210 million to support small and micro businesses. Pursuant to this commitment, the company will be backing nearly 50 million small and micro businesses worldwide, which are severely hit by the COVID-19 pandemic.

Additionally, another company in the same space, Mastercard Inc. MA, recently committed $250 million for a five-year span to aid small businesses in the United States and other markets where the company operates.

Also, governments across the world are incentivizing SMBs in various forms, such as wage subsidy, defer tax filing, small business loan, debt relief, rent relief and many other measures.

Small and micro businesses form the backbone of the global economy, accounting for more than 90% of worldwide businesses and contributing to 50-60% of global employment. The revival of this business group is of utmost importance to achieve global economic growth, since these generate more than 50% of the global employment.

Even though SMBs are main catalysts for global development, these have limited resources to escape a sticky situation. Following the COVID-19 pandemic, 43% of SMBs complain of fund crunch with insufficient money to last for only six months while less than half of SMBs are involved in online businessesFurther, the coronavirus pandemic, which had necessitated social distancing and shelter-in-place requirements, boosted e-commerce in the process. However, SMBs can’t cash in on this significant business opportunity given the lack of exposure to digital resources. To this end, Visa will be working on the areas that include empowering digital-first businesses, encouraging digital payments, incentivizing neighborhood support, and developing positioning and policy.

These initiatives aim to enhance efficiency and drive sales for SMBs.
Within its digital-first business empowerment initiative, Visa will be providing tools, partner offers and information on the ways to start, run and grow digital-first small businesses. Across the European markets, Visa is investing in increasing the number of digital payment acceptance devices within shops by more than 50%.

Under its encouraging digital payments initiative, the company is coordinating with a range of partners to expand the number of locations where consumers can use their cards or mobile phones for contactless purchases.

Via its neighborhood support, Visa will be motivating consumers to shop in the local marketplace and to this end,is forging an alliance with e-commerce platforms like Shopify and restaurant delivery companies, namely Deliveroo.

In three months’ time,  the stock has surged 43.6% compared with its industry’s growth of 43.2%. The price performance looks a bit subdued when compared with other companies’ stock returns in the same space, such as American Express Co. AXP and Discover Financial Services DFS, which have soared 44% and 102.7%, respectively, over the same time frame.

Visa currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

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