Visa (V) Poised for Growth From Technological Investments

Visa Inc. V is riding high on technological innovations. This need, necessitated by economic and technological progress, rising middle-class population, contactless technology and mobile computing, is shaping commerce globally and accelerating the migration from cash to digital payments.

The shift in form of payments is corroborated by the fact that last year global digital payment volume exceeded cash for the first time in history. Visa, by virtue of its vast and ongoing investments in technological innovations, is well-positioned to continue leading this digital transformation.

This leading network provider and payment processor has come a long way with its technological transformation initiatives, undertaken in 2015.  Most noteworthy was the launch of Visa’s Developer Platform (VDP) in fiscal 2016. The VDP was developed based on demands of consumers and merchants, who increasingly rely on connected devices to shop, pay and get paid.

Visa’s digital products include Visa Checkout, Visa Direct and Visa Token Service.

Visa Checkout offers consumers an expedited and secure payment experience for online and mobile transactions. Visa Direct is its real-time “push” payments platform that allows businesses, governments and consumers to use the network to transfer funds from an originating account to another via a debit, prepaid or credit card number, where Visa Token Service allows transactions using a token. Tokenization helps to protect consumer financial information and lessen the risk of stolen card credentials, particularly when information regarding a financial instrument is stored on a mobile phone or wearable device or is stored on an e-commerce platform.

The company is also partnering with Fintech companies with exciting capabilities, which is expected to add value to the payment system. In this vein, the company has partnered with Klarna, which offers online acceptance and consumer lending in Europe. It also collaborated with Marqeta, a card issuing, processing and program management service that allows businesses to authorize transactions and fund payment cards. The company also signed a pact with PayPal that allows cardholders to choose Visa as a preferred payment method.

Visa is accelerating into Internet-of-Things (IoT) payments. The company is also in the process of using blockchain technology to provide a new way to consumers, businesses and banks to transact. It is the key strategy to provide payment solutions that will meet every need of financial institutions and their end-customers.

Visa’s technological investments have borne fruits by increasing payment volumes led by higher processed transactions. This has driven revenues that witnessed a CAGR of 15% between 2015 and 2017. The company expects annual net revenue growth of high single-digit on a nominal-dollar basis for fiscal 2018.

In a year, the stock gained 39% on par with the industry’s growth.

 

 

Other players in the industry, Total System Services, Inc. TSS, American Express Co. AXP, Mastercard Inc. MA are constantly putting money in technological innovations as well.

Visa carries a Zacks Rank #2 (Buy).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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