Visa, which reports its fraud rate is at a historic low of 6 cents for every hundred dollars processed, is positioning itself as a safe haven for payments services.
These risks are very real, [crooks] will go to the weakest link in the system said Visa CEO Charlie Scharf during an Oct. 30 conference call to discuss earnings.
We spend a lot of energy working on security. Our transactions are screened by us and are analyzed by models developed over the past 40 to 50 years, Scharf said. There are more criminals, they are smarter and better funded and becoming more bold.
Scharf touted Visas experience, scale and participation in a card network-driven identity standards project as among the ways in which Visa can secure payments as transactions become more mobile.
Visa, MasterCard and American Express are proposing an identity management standard in which traditional account numbers would be replaced with a digital payment token for online and mobile transactions. The card networks also want to use data fields to provide richer information about transactions to inform fraud detection and expedite the approval process, consistent methods to identity and verify a consumer, and a common standard to simplify the process for merchants to accept digital transactions.
Its good for security. Removing sensitive information from crossing the payment system is good for every participant in that system, Scharf said.
The timeline for the effort is still developing, and Visa expects that some technology that uses the new standards would be in the market by the second half of 2014. Its the early days, Scharf said.
Visa is working to increase its penetration in international markets, a move that will also aid security, Scharf said. Nearly two-thirds of transactions in emerging markets are still made with cash and checks, and Visas partnerships and programs are designed to consume the paper that still dominates those markets, Scharf said.
Visas activities in developing economies include a partnership with Planet Payment to extend processing in markets such as Myanmar. Visa is also targeting underbanked consumers in Africa, India and other markets with a mobile money program that launched earlier this year.
Scharf has visited more a dozen countries in the past year, met with between 40 and 50 financial institutions, as well as acquirers, merchants and government officials, he said. Governments understand the benefits to electronic methods and are partnering with us to bring about this change, he said.
During the call Visa also discussed its V.me digital wallet, saying it has 150 financial institutions, 60 e-commerce retailers and about 300 merchants in the U.S., Canada and Australia in various stages of deployment.
For the fiscal fourth quarter, which ended Sept. 30, Visa reported net income of $1.19 billion, or $1.85 per share, a decrease of 28% from the prior year, when net income was $1.66 billion, or $2.47 per share. Results for the fiscal fourth quarter of 2012 were boosted by a $627 million tax adjustment. Those results were in line with the average estimate of 31 analysts polled by Bloomberg.
Retail sales in the U.S., which account for more than half of Visas revenue, rose 0.4% in September following a 0.1% increase in August.
For the fiscal full-year 2013, service revenue was $5.4 billion, an increase of 10% over the prior year. Data processing revenue was $4.6 billion, a 17% increase over the prior year. For fiscal 2014, Visa is projecting low double-digit revenue growth, with an expectation of two percentage points of negative impact form foreign currency. For 2013, the strengthening U.S. dollar affected operating revenue by about 1.5% of negative growth for the fourth quarter and 1% for the full fiscal year, Visa said.