Advertisement

Visa (V) Business Sees Revival With Relaxing Restrictions

Visa Inc. V has announced that its business started to improve on the back of a spurred spending due to relaxation of shelter-in-place restrictions, which were in effect to limit the spread of the COVID-19 sickness.

For Visa in May, total U.S. payments volume declined 5% year over year, reflecting a 13% improvement over April-level. Debit payments grew 12% while credit payments fell 21% year over year in May, translating to a respective 17% and 9% improvement from the levels registered in April.

The continued distribution of Economic Impact Payments (EIP) and the easing of shelter-in-place rules across a number of states are driving the above-mentioned trends.

The Treasury-sponsored EIP Card is a method to provide money efficiently and securely to eligible recipients and their families. The card contains the money received by Americans, courtesy of the Coronavirus Aid, Relief and Economic Security Act (CARES Act). It is sponsored by the Treasury Department’s Bureau of the Fiscal Service as part of the US Debit Card Program.

More than 140 million of Economic Impact Payments worth $239 billion is already delivered to Americans by direct deposits to accounts at financial institutions, Direct Express card accounts and also through checks. These EIP cards can be utilized for shopping in places where Visa Debit Cards are accepted: in-store, online or over the phone including bill payments..
Reopening of International Markets

Resumption of Economic Activity in Global Markets

International markets are in various phases of reopening and recovery. Visa reported that a rebound in the international markets in which the company carries out its majority transactions lagged the recovery in United States in May.

The spending trends across most parts of Europe as well as Australia, Canada and Japan are comparable to those in the United States. India and Singapore are also gradually limping back to business activities. A few specific markets, such as New Zealand, Denmark and Chile witness constant year-over-year dollar growth in May. Therefore, global processed transactions declined 12% in May, accounting for a 12% improvement over April-levels.

Visa’s cross-border volumes excluding intra-Europe transactions (which perks up its international transaction revenues) plunged 45% in May, bettering 6% from the level recorded in April. Travel-related cross-border volumes (card present and card not present) slumped 78% in May while cross-border e-commerce (excluding travel) volumes made a consistent surge, reflecting a solid upside of 18%.

Progress in Varied Spheres

Spending levels were distinct across different categories. Segments of food, drugstores, home improvement, retail services, automotive retail goods, and telecom and utilities saw a spike in spending.

Meanwhile, spending in business supplies, department stores, education, government healthcare, restaurant and QSR, entertainment fuel and travel remained drab.

Visa Poised to Grow in Contactless Payment Space

The shift to online, cards and mobile mode of payments gained momentum in recent years due to the rapid advancement of technology, which simplifies the task of making payments just at the click of a button. Other companies in the same space including Mastercard Inc. MA, American Express Co. AXP, Discover Financial Services DFS are also poised to gain from the fast-evolving payments market.

Visa is poised to cash in on the thriving payments space, given its vast international reach, superior brand value, solid capital position and hefty capital infusion in technology. Recently, the company acquired Plaid, a fintech entity, for a deal value of $5.3 billion. The takeover expands Visa’s addressable market in banking, lending, payments, PFM and business services.

Year to date, this currently Zacks Rank #3 (Hold) stock has gained 4.8% compared with its industry’s growth of 1.84%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>




Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
American Express Company (AXP) : Free Stock Analysis Report
 
Mastercard Incorporated (MA) : Free Stock Analysis Report
 
Visa Inc. (V) : Free Stock Analysis Report
 
Discover Financial Services (DFS) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research