Visa CEO Ryan McInerney doesn’t believe the U.S. Justice Department has a case, plain and simple.

The card network did not carve out a monopoly in the debit card industry, as U.S. antitrust regulators contended in a lawsuit against the card network last month, McInerney argued during an earnings webcast Tuesday.

“We believe the lawsuit is meritless and shows a clear lack of understanding of the payment ecosystem in the United States,” McInerney told analysts on the webcast. “We will defend ourselves vigorously and are confident in our ability to demonstrate that Visa competes for every transaction in a thriving debit space that continues to grow and see new entrants.”

When an analyst asked McInerney for his thoughts about the broader regulatory environment for the industry, the CEO acknowledged there is a lot of activity on that front both in the U.S. and the world.

“I think regulators, appropriately, are looking at the payments ecosystem, and want to ensure that there's fair competition, that there's multiple options, both for consumers and merchants,” McInerney said. “That's a process of engagement that we have in the U.S., to your question, but also with regulators, elected officials all around the world.”

With any litigation, settlement discussions between parties are typically happening behind the scenes as proceedings progress in the courtroom. McInerney sought to convey during the webcast that the company wouldn’t be thrown off course by the Justice Department action.

“We feel very good about our ability to manage through that complexity,” he said, referencing the regulatory issues. “We feel very good about the ability to continue to run and grow our business.”

The U.S. lawsuit added another significant piece of litigation to Visa’s legal troubles. The company is also trying to hash out a class action settlement with thousands of merchants who sued it, alongside rival Mastercard, alleging excessive fees were charged when customers swiped their credit cards.

Despite the department’s allegations, Visa continues to face competition on a multiple fronts, from other payments companies seeking to innovate new payment methods, and from a swarm of smaller fintech rivals aiming to do the same.

For instance, McInerney was asked by one analyst about the competitive threat of account-to-account payments, such as retail behemoth Walmart’s use of pay-by-bank services. There has long been industry discussion about pay-by-bank services potentially disintermediating credit and debit cards, largely because they are a lower-cost option for retailers.

“We expect that account-to-account payments will continue to proliferate here and around the world,” McInerney said. “We think there's a lot that we can add in terms of value to account-to-account payments.” 

In the company’s earnings presentation, McInerney noted that Visa is partnering with banks and fintechs to develop its own approach to account-to-account services, with an initial launch in the United Kingdom next year.

“It's a very, very competitive environment in which we operate, but we feel very, very good about our products, our innovation, our ability to provide value to end users,” the CEO said.

In reporting its fiscal fourth-quarter results, Visa said its net income rose 14% to $5.3 billion as revenue climbed 12% to $9.6 billion. For the full year, net income also rose 14% to $19.7 billion as revenue increased 10% to $35.9 billion, according to the earnings release.

“We believe Visa’s strong core business is powered by the secular global electronic payments shift, at-least-constant market share, pricing power, and faster new flows and (value-added services) revenue growth,” William Blair analysts said in a note Tuesday to their clients. The analysts also pointed out Visa’s increasing revenue flow from its newer services, such Visa Direct, the company’s bid to offer cross-border payment services.

By Lynne Marek on Oct 30, 2024
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