Visa and Mastercard rebound, but travel lags in Q3 2021

Visa and Mastercard rebound, but travel lags in Q3 2021

Visa and Mastercard have both published their calendar Q3 2021 earnings results (which for Visa is Q4 2021) – and while both companies are reporting a near full return to pre-pandemic levels for cross-border volume, travel remains a hindrance. 

Visa and Mastercard Q3 2021 cross-border volume

Mastercard Q3 2021 results

  • Overall cross-border volumes are now at 105% of 2019 levels as a result of improvements in consumer and commercial travel, as well as ongoing cross-border card-not-present (ecommerce). Cross-border volume grew by 52%, while cross-border volume fees grew by 59%. 
  • However there remains “significant room for growth” in cross-border travel. The opening of travel corridors, particularly US inbound, as well as easing restrictions in Asia, is nevertheless helping, with Mastercard’s cross-border travel volumes now at 72% of 2019 levels, compared to 48% in Q2. The company declined to predict when a full return would occur, but CFO Sachin Mehra said they “remain optimistic” and argued that “if people can travel, they will travel”.
  • Elsewhere, the focus continues to be on driving the shift to digital, including through recently announced BNPL offering Mastercard Instalments, which allows BNPL to be offered to consumers without merchant integration.
  • The company has also seen some wins in its Mastercard Send offering, with PayPal using the platform for P2P transactions and wallet cash-outs.
  • In crypto, Mastercard is making continuing efforts to connect crypto players to its network, with several new crypto wallet providers and exchanges announced in Q3, and a crypto program to make it easier for consumers to buy, spend and earn rewards with crypto.
  • Overall quarterly revenue grew 29% year-on-year to $5bn, and Mastercard expects net revenues to grow in the low 20s in Q4.

Visa Q4 2021 results

  • Visa saw record total global payments volume, at $4.8tn, with cross-border now closing in on pre-pandemic levels. 
  • Cross-border volume excluding intra Europe was 86% of 2019 in the quarter and saw a 46% jump year-on-year.  Ecommerce (cross-border card-not-present) remains the strongest, at 43% above 2019. Visa now expects cross-border volumes to fully return over next two years.
  • In consumer payments, the digitisation trend has continued. In FY 21, Visa saw a 23% increase in debit payments volume, compared to 4% increase in cash withdrawals.
  • Visa Direct also grew its global reach, with a 35% increase in transactions in Q4 – a smaller increase than the 50%+ climbs of the past few quarters, but still notable given it compares to a very strong quarter where Visa Direct hit 1 billion+ transactions for the first time. Visa processed over 5 billion transactions across almost 550 enablers in FY 21, with around 120 million cards in the US alone sending or receiving funds using Visa Direct.
  • The company plans to continue growing Visa Direct through a mix of cross-border P2P and other payments, as well as scaling in new markets. This includes adding Paysend in the latest quarter, as well as adding cross-border P2P for US-based Western Union customers sending to key markets. Ultimately the company sees a market opportunity totalling $65tn for Visa Direct.
  • On the crypto side, Visa has continued to expand its crypto APIs and services, and now has almost 60 crypto platform partners with Visa credential issuance capabilities. It captured $3.5bn+ crypto payment volume in FY 21. 
  • In BNPL, meanwhile, Visa acknowledges it only has a “fraction of the industry’s total payment volume” but is focusing on providing a network solution (by adding instalment options to existing cards) and working with BNPL fintech partners to help scale.
  • Overall quarterly revenue grew by 29% year-on-year to $6.6bn in the latest quarter, and 10% to $24.1bn in FY 2021. For FY 2022, Visa expects to see mid-teens growth. 

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