With the payments industry undergoing dramatic change, Nicolas Huss, the new Chief Executive of Visa Europe, will find the company in a strong position when he takes over from Peter Ayliffe at the end of September.
Across Europe, for every €7 spent, €1 is transacted using a VISA card. This penetration of credit and debit cards continues to grow due to their wide acceptance, ease of use and integration into retail systems. Their management is also big business, currently generating fees to European banks and card issuers of over €10bn p.a.
To maintain this growth in usage, Visa Europe is investing in Near Field Communications systems (NFC), branded Visa PayWave, and already 28m “contactless” cards have been issued in the UK. In Mobile, Visa Europe also has a 7.4% stake in Monitise (Visa US has 6.9%) and a three-year agreement, signed in May 2013 to develop and deploy mobile payments and m-commerce solutions. As we learnt on a visit this week, Visa Europe is also working with mobile handset makers to certify handsets to work with VISA cards and systems. Through these moves, the company can take advantage of the 50%+ annual growth in mobile payments. Visa Europe is also launching the V.me digital wallet to make on-line purchasing easier and more secure.
That said, there are mounting pressures. The EU wants more competition in the payments business and card interchange fees will halve in the medium term. The existing structures of the business are under attack. For example Paypal is making a strong mobile push and Vocalink and its ZAPP subsidiary will offer transactions via the Faster Payments Service. Banks and retailers are also trying to improve their returns. Mr. Huss certainly has some good cards, but he must play them well.