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Why Visa Declined 11.6% in January

By Royston Yang - Feb 4, 2021 at 9:13AM

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The financial services company continues to come up with new initiatives to prepare itself for a post-pandemic future.

What happened

Shares of Visa (V -0.95%) declined by 11.6% in January, according to data provided by S&P Global Market Intelligence.

The financial services company's shares have hovered around the same level as a year ago, as the pandemic crimped cross-border and overall spending.

Woman smiling while holding mobile phone and credit card with box of groceries nearby

Image source: Getty images.

So what

Visa recently released its fiscal 2021 first-quarter earnings report. Net revenue declined by 6% year over year to $5.7 billion, while net income dropped by 4% year over year. The pandemic continues to exert pressure on the business as cross-border volumes remain around 20% lower year on year from October 2020 through January 2021. 

With the majority of borders remaining closed due to a resurgence in the number of cases worldwide, there is no indication as to when business conditions may revert to normal. However, Alfred Kelly, CEO of Visa, remarked that the company witnessed sustained debit and e-commerce volumes due to domestic spending and that he is confident the business can remain resilient during this crisis and continue to post long-term growth. 

Now what

Visa isn't standing still, though. The company has been recently introduced a suite of services powered by artificial intelligence (AI) that enable faster and more transparent payments. By harnessing the power of AI, Visa can now offer seamless, nearly real-time updates for transactions that may take time to finalize, providing customers with better insight into their finances.

For corporate clients, AI makes use of predictive modeling to help them to better manage their cash inflows and outflows. These forecasts can improve the clients' ability to manage their liquidity requirements by optimizing resource allocation.

With the surging popularity of cryptocurrencies, Visa is also advancing its digital currency strategy by partnering with First Boulevard, a digital bank, to trial a new suite of cryptocurrency application programming interfaces (APIs). The APIs will allow customers to purchase and trade digital assets, with the eventual aim of helping Visa merchants integrate cryptocurrency features into their product offerings. A launch is expected later this year.

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