Alfred F. Kelly Jr. may be planning to run Visa his own way, but he will still face the same challenges his predecessor did. Here are a few of Visa's most immediate issues.
Visa's reunification with Visa Europe gives the card network a major boost to its global reach, but it's not the only payment company targeting this market. Mastercard is making Europe the first stop of its global rollout of Identity Check Mobile — aka "selfie pay" — and many of the most successful mobile payment companies got their start in the U.K. and other parts of Europe. London in particular is a well-established tech hub.
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Visa began an aggressive rollout of tokenization security in 2014, and some banks have considered that too aggressive. “Visa’s attempt to ‘own’ tokenization and its release of services such as the Visa Digital Commerce Application and Visa Commerce Network have raised many eyebrows in the C-suites of large issuers,” said Jordan McKee, a senior analyst with 451 Research.
Visa set the U.S. on its path toward EMV migration by being the first card network to set a deadline for shifting fraud liability for non-EMV card payments. But once that deadline came and went, many merchants found themselves frustrated by delays out of their control, and some started to wonder if EMV security was even worth the investment. Visa responded to those concerns through changes to its policy and offering faster-processing technology, but there is still a lot of negative sentiment over the way the migration was handled.
Visa seems to have the upper hand in its new deal with PayPal, which gives Visa better visibility as a funding option for PayPal accounts. But the companies still have years of conflict to put behind them, and Visa's new CEO will have to decide whether this partnership really is working out in Visa's favor.
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Visa also has strained relationships with the merchant community — particularly Walmart, which has taken Visa to court more than once and has outright banned the use of Visa cards in some of its Canadian stores. “The balance of power is shifting toward the merchants, and that Visa needs to continue to pivot its focus to become more merchant-centric,” said Aaron McPherson, an independent payments analyst.
Visa's "win" of the Costco cobrand card business was not applauded by all of its investors. The card network was criticized for its concessions on fees, particularly since its rival and former Costoc partner American Express chose to walk away from the table rather than agree to Costco's terms. Outgoing CEO Charles Scharf defended the deal: "What we and issuers were willing to do for Costco is very specific to a unique opportunity to gain credit card acceptance," he said. Scharf's successor will have to evaluate whether these gains were worth the sacrifices.