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Millions of Visa Customers Are Trying E-Commerce for First Time

By Bram Berkowitz - May 14, 2020 at 7:09PM

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The card company is seeing a huge shift to e-commerce, some of which could be permanent following the pandemic.

While the coronavirus pandemic has hampered spending across the world, it's helping more people adopt digital habits and boosting e-commerce sales. 

Visa's (V 0.12%) Chief Product Officer Jack Forestell told MarketWatch recently that 13 million Visa cardholders in Latin America made e-commerce transactions for the first time ever in March. "We're seeing a massive acceleration toward e-commerce adoption," said Forestell, adding that the pandemic has helped accelerate trends that were already starting to form in the payments industry.

Two credit cards, one on top of another that says Visa.

Image Source: Getty Images.

U.S. e-commerce sales have reportedly jumped 49% in April, compared to the baseline period in early March before stay-at-home orders went into effect, according to data collected by Adobe. Online grocery helped drive the increase in sales, with a 110% boost in daily sales between March and April, while electronic sales grew 58%.

International-payments volume in Visa's most recent fiscal quarter grew 4% in constant dollars year over year, including 14% growth in Latin America. Payment volume in the Central Europe, Middle East, and Africa region grew 19%.

Overall, Visa reported net income in the second fiscal quarter of the year of roughly $3.1 billion, up 4% year over year on a GAAP basis.

Visa CFO Vasant Prabhu said on the recent earnings call that while the company's short-term performance will likely struggle, it remains confident in long-term growth prospects. He said the pandemic is speeding up tap-to-pay adoption and possibly creating permanent changes, such as using digital-payment methods to obtain food and drug items, which previously were completed more heavily through face-to-face transactions.

"There is certainly a growing tendency to not want to use cash," he added. "And also, of course, not even just a tap your card, the aversion to cash could be persistent, which means that even face-to-face transactions or penetration of digital forms of payment could be growing in a permanent and structural way faster than it might have prior to the crisis."

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Visa. The Motley Fool has a disclosure policy.

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