Visa Inc. (V) Earnings Call Transcript & Summary

So at this point, we're going to keep the program rolling. I want to hand off to my colleague, David Griner, who is Creative and Innovation Editor at Adweek, who'll have a preview for you about what's to come when it comes to future of commerce. So take it away, David.

Thanks so much. I'm David Griner, the Creative and Innovation Editor at Adweek, hence I oversee our coverage of creative campaigns and of innovation and emerging technology. And today, we're going to be talking about one of the biggest trends, especially one of the topical trends, I would say, in commerce today, which is definitely contactless payment, touchless payment, however you want to think of it. I think all of us don't want to touch anything when you do go out in public right now. Not that any of us, I think, ever really love having to touch anything when we're out in public to make payments or to do things when -- if you travel overseas, you know that just anywhere you go, you have a lot of options for payment, including just tapping your credit card. That's something that's been growing here, and we're going to be talking today to one of the world's top experts on the subject. Bisi Boyle is the VP of Connected Commerce for Visa, and I'm so excited to have her here. So Bisi looking forward to our chat today.

All right. Hello, David. How are you?

I'm good. So good to see you again.

Good to see you.

Well, we have got a lot to talk about today because I have so many questions. The audience is probably going to have a lot of questions. This is a topic that transcends, whether you work in commerce, you work in tech or you're just a human being who likes to buy things like myself. We have a lot of questions for you. So I want to jump into that. First, I'm going to share a data point or 2 because this is a nerdy event. We can nerd out our data real quick, right?

Yes, absolutely.

The growth of contactless transactions, availability, the penetration of the technology, it just feels like it's skyrocketing. Some of the numbers your team sent over, a 150% growth in the U.S. year-over-year for the penetration of contactless tech. It just feels like we are -- it feels like this tech was already booming outside of the quarantine. But with the pandemic, it feels like this is the technology that's finally having its moment in America. What can you tell us about kind of the state of this technology globally and then also where we are in the U.S.?

It's -- contactless took off outside the U.S. a little bit in a faster way because we had other ways to pay in The States. But what we found, especially post pandemic or during this pandemic and with some of the economic disruption that it has led to, is the work that we do in connected commerce has become quite timely for helping our consumers be more resilient in the time when we don't want to touch anything and in a time when you have economic disruption. So the groups that I lead in for Visa in connected commerce include 3 areas: one is IoT, which has been -- the Internet of Things, which has been pretty instrumental in how we can enable those touchless payment experiences for people. And so we have these end-to-end solutions, where we look at various connected devices that people own and use each day. Their car, their TV, their fridge. And how can we bring payment to those devices in a way that they can use voice to enact, so they don't have to touch anything in that particular arena. But then IoT also brings an unattended retail to smart kiosks, to smart mirrors of new ways of I can shop and also not touch anything when I have to pay or go through inventory. And then when we move to another technology that we have called Tap to Phone within Visa, that allows us to work with acquirers to get sellers in emerging countries to use connected devices like phones to now turn that into your cash register when you have to have a second gig or earn money in an economic disruption. So we have software that sort of enables mobile OEMs to basically have payment acceptance on devices like phones and iPads without a dongle. And then thirdly, we have Visa Acceptance Cloud. It takes these connected devices and the payment intelligence that resides on a point-of-sale system that you might see in a grocery store and hosts most of the resources in the cloud and not on the device. So now it allows all these devices to enable people to mitigate the spread of virus because you don't have to touch things, but also enable small business sellers and [ medium economy ] workers to work in an economic disruption with a device that they already own that someone can touchlessly pay them with their Fitbit on to their connected device. So we see the trends that people now want to move to I don't want to touch. And we also want to enable ways for people to grow their business. And so we do this -- we bring these payment solutions to connected devices like cars, TVs and basically devices you own every day. And then from the seller side, unattended retail to enable touchless, to enable small business recovery, as we come out of the economic disruption.

I'm a little almost terrified by the combination of DCC subscriptions with the ability to pay and order things from my mirror is just -- you're going to put me in an endless cycle of trying to fend off the grinding of age, but I'm willing to do what I can. I welcome this new technology. So you touched on this, of course, but tell us what it's been like for you on the inside. As this pandemic has worked its way around the globe and as quarantine has endured in America, what are you seeing in terms of how it has changed the behaviors? And it just feels like there hasn't been all that much fire in America to really adopt this technology. But from the inside, what are you seeing in terms of how that consumer behavior is changing?

Well, I think our behavior is changing in terms of social distancing, right? We want to sort of minimize the distance between shoppers and attendees. We want to -- we are -- many people, I think you brought it up in the beginning, almost don't want to touch those payment terminals as you have to put in your numbers or all those special devices, right? And then there is this desire to how do I just walk in the store, get what I need, really don't have to stop on the line and pay and walk out, but I still pay for everything that I was supposed to. So cashierless retail, so touchless and contactless ways to pay. And so all of that has definitely occurred from necessity as a requirement, as a consequence of the pandemic. But once people get used to that, that will continue going forward. So what we want to do is make sure we have the technology set up in place to sort of enable where you walk in and out of the store, you don't touch anything, where there is minimized interaction, so you mitigate the spread of the virus between the attendee and the shopper. And so the opportunity for this technology to support that is very, very significant.

Let's talk about some of the obstacles that have held up or might be holding up adoption of not just touchless and contactless, but all these frictionless kind of payment methods. This idea of -- this kind of future utopia, where paying is just something you do almost effortlessly, but it remains secure despite that. What are -- are the obstacles in the way of fully adopting that, are they social and behavioral? Are they technological? Are they just a matter of getting the equipment that already exists into enough points of purchase?

Okay. So I'll talk about 3. So one is security, and let's talk about that in a minute. One is the partnerships, right? Because this is an ecosystem to enable the types of environments that I described. And then what I'll do is I'll set up for a very significant connected device like the car, what could be in the future? So you are in your car, your daily commute, once people are traveling again. And maybe you want to be in your car because it's an infection-free zone. And so on your commute, maybe you have to charge it from an EV perspective, you might have to buy fuel, if that's still the case. You might have to pay a toll, you might have to get your Starbucks on the way to work. How do you do this, keep your hands on the wheels until we have autonomous vehicles? So if I set up a vision, we could say, you get in the car. As you get into the car, it scans your eyes, so it knows it's you. So any payment that you voice command after this is now authorized because it can drive and it knows it's you. So you keep your hands on the wheel, the car has APIs to let you know you're low on gas, you say, yes, navigation, lead me to the next gas station. When you get there, the car turns on the pump and pays the pump. We haven't figured out the way for it to pump the gas for you yet, but we'll come to that. And then it automatically sends the token, which represents your digital credit card number, to the various merchants and sellers to pay for things. You go through the toll, and you can use the toll in New York or use the toll in California and you don't have to have fast pass or E-ZPass, it automatically recognizes you, and you go and flash through the toll. And so -- and then it's also, at the same time, giving you rewards when you need them. You want to park, it tells you ahead where parking is available. You go there, it automatically pays the parking for you. And it says, by the way, because of where you are, you get free passes to XYZ. So it can then tell the rewards that you need. Now to bring that all together is, you have the significant IoT connected device, which is the car. You have AI, which is detecting fraud because it notices you don't usually buy from that Starbucks every day at 8:30 and saying should I authorize this charge? You have APIs for tokenization that take that 16-digit credit card number and turns it into a digital identifier that says -- that is called the token. And that is what's issued to pay for the various things you're paying for via voice in the car. And if someone tries to grab that token, they can't use it because the relationship between your credit card number and that token is stored in a Visa token vault. And as you -- from a security standpoint, people think, oh, my God, what's going on with my credit card number? You have the tokenization to protect you. What is going on with -- is there fraud associated with what this purchase is I'm about to make? You have AI to detect fraud. And then with the cybersecurity services that come with a major network like Visa, you also have a way to -- because we have such a large transaction base, we can detect anomalies in the system to prevent an incident before it happens because we can see lots of things that are happening, and that seems to be an anomaly in aggregate to what we usually see. So between the cybersecurity, between the AI detecting fraud, between the tokenization, we are planning in the beginning as we deploy these technologies to make sure security is embedded. So that's one piece of it. The second piece is because this is an ecosystem, there's many people involved to enact this type of technology. So you will have the payment networks, bringing in tokenization in the APIs, like I described, like the Visas of the world. You will have the biometrics identification. Leaders that are looking at ways to iris scan or fingerprint scan or face -- biometric pay, facial scan. You have voice in the car and AI. And bringing in that IoT end-to-end solution can enable this. So the challenges are security. The challenges are bringing in the right partners. You have to bring in acquirers and issuers, the people who process the transactions, the people who authorize the transactions. And being a network of our scale, we can work with these partners to bring a solution that people actually feel safe using and helps them be resilient in things they're concerned about, like mitigating the virus and still participating in the economy even when we're in an economic disruption.