Visa is working hard to help get merchants access tools and technologies that enable secure and convenient payment experiences
Visa is undertaking efforts to develop financial inclusion and forge a digital payments culture in Iraq as well as the wider region. Tarek Elhousseiny, Visa general manager for North Africa and the Levant, in an interview with Daily News Egypt, discussed how his company is working to achieve those goals and how Visa is working towards a cashless future in the region. The transcript for the exchange is below, lightly edited for clarity.
How was your recent trip to Iraq and was it related to driving financial inclusion efforts in North Africa and the Levant?
Our visit to the Iraqi market aimed at increasing cooperation with the Central Bank of Iraq and boosting its efforts in driving financial inclusion and a digital payments culture. As part of our cooperation with the central bank, we will be arranging for seminars and workshops covering a variety of topics, especially financial literacy, risk, and digital solutions. We are also keen on helping the Central Bank of Iraq in its endeavours to create the ecosystem conducive to a digital economy and financial inclusion.
The visit was also important to solidify our relationship with our clients and stakeholders and to provide them with the support they expect from Visa and to discuss how innovation and digital solutions can bring benefits to the efforts of reaching the underserved. We believe collaboration is the key to innovation. By collaborating with a broad range of partners that tap into the agility of financial technologies and the scale of big banks and merchants, we enable innovation to flourish so that ultimately, the consumer picks “the winners.”
Very few brands are around for 60 years. What has been the key to your success?
Today, Visa connects more than 3.2bn Visa accounts and 46m merchant locations in 200 countries and territories. Each transaction is enabled by a global network of 16,100 financial institution partners, and VisaNet, one of the world’s most secure, reliable, and interoperable global payments networks, which processes more than 164bn transactions a year. Importantly, every Visa transaction on our network is secured by the industry’s most advanced analytics and fraud detection technology to ensure consumers and businesses can transact with trust and confidence.
Visa has been a catalyst for payments innovation, creating the world’s first digital payments network, VisaNet, and have continued to invest and grow its value by innovating and opening its platform to developers, clients, and fintechs that are innovating and extending its value across industries. VisaNet has helped us deliver market-defining innovations—debit, global travel and tourism, contactless payments, and the rise of secure mobile and IoT payments. Where there is cash, there is friction. In our increasingly digital lives, cash is increasingly out of place. Our obligation and responsibility to electronify payments has never been more important and as innovators and technologists, we are motivated by this challenge.
How will Visa sustain its business momentum in the next 10 years?
We anticipate there will be more change in the payments industry in the next few years than we have seen in the past few decades—with the digitisation of payments paving the way for a cash-free future.
Even with our success to date, there is still tremendous room for growth—with a $17tn opportunity, represented by consumer cash and checks alone, and estimates of over $20tn in business-to-business (B2B) across the world. The majority of our growth comes from PCE penetration, which is the best way for us to create value for shareholders. PCE penetration is the most powerful driver of revenue and the reason why low nominal PCE growth (2-3% over the last several years) converts into double-digit revenue growth. E-commerce transactions are growing four to five times as fast as face-to-face commerce. Any time a transaction moves from F2F to e-commerce, the propensity for it to be a Visa transaction is twice as high because you cannot put cash into a computer.
M-commerce and the proliferation of smart devices enables every smart device to become a point of acceptance. This is all what we have referred to as “growing the pie”, which is why we keep creating value and why growing the pie is what we should be focused on.
Core to our success is Visa’s ability to anticipate the future and evolve. We have transitioned from an association to a public company, proprietary network technology to open platform, physical cards to credentials stored in devices. We have continued to evolve our strategy, business and technology including opening our network, to support the needs of FIs, merchants, developers, fintech partners, and governments. We became one Visa with the acquisition of Visa Europe. This success is also enabled by investing in contactless payments which is the natural evolution following adoption of EMV infrastructure and continuing to invest in security and cybersecurity tools and technologies that form the basis of Visa’s secure, reliable network.
What trends will shape the industry in the next five to 10 years?
There is tremendous room for growth, with more than $17tn in opportunity represented by cash and cheques across the world. We are no longer constrained by wired infrastructure, allowing us to reach the unbanked, the underserved, and entirely new merchant segments. Smartphones, IoT, and omni-channel commerce will further drive digital payments. This will continue to create tremendous economic opportunity and value for societies around the world.
What is Visa doing to help merchants navigate the world of digital payments?
The digital payments revolution presents tremendous opportunity for merchants to build stronger, more profitable relationships with their customers. It is also the biggest threat to those merchants who cannot adapt quickly. We are working hard to help get merchants access tools and technologies that enable secure and convenient payment experiences, regardless of the form factor, and help merchants prepare to operate with the next big thing.
How do you think about the plastic card and its future?
Cards will continue to be relevant for some time to come—especially with older generations who are less likely to switch to new payment form factors. However, through the more than 20bn connected devices expected by 2020, we will see a dramatic increase in the number of form factors where digital payments can take place, like phones, TVs, cars, refrigerators, etc. With the Internet of Things, there is going to be a huge increase in the number of devices where people embed their payment credentials. Payments are increasingly becoming “invisible” and embedded in everyday experiences, like getting a taxi, streaming TV and music, or finding a hotel room. We see Visa’s role as an enabler of secure, simple, and seamless commerce, wherever and whenever people transact. In the midst of this digital revolution, Visa’s founding vision is more relevant today than ever—to be the best way to pay and be paid for everyone, everywhere.
Can you tell us about the financial literacy mobile game you just launched in Egypt?
Visa understands that teaching consumers about money through “edutainment” or “gamification” is an effective means of demystifying a complicated subject by using the compelling and familiar medium of video games to learn while having fun. Games can be powerful teaching tools. It has long been understood that young children learn through play, whether it is with blocks, picture books, or even hide and seek. Learning does not stop as we get older. Teens and even adults can learn while playing games, and there is a wide range of games available to teach a variety of topics, including financial literacy.
City of Dreams is a multi-platform game that teaches players essential financial literacy tips and increases their financial management skills. Players will have a fund to start with and are acquainted with services offered by financial institutions including credit products and loans. Players will start out with a grocery store and other businesses include a pharmacy and a music store. At the start of the game, the business will accept cash only then will receive a POS after initiating a banking relationship. Mobile payment acceptance will also be enabled once the player delves further into the gaming experience. With mobile payments acceptance, players will benefit from analytics to give them a better view of their sales, customer preferences, and products they need to acquire.