Visa (V 0.23%) is a massive payments operation with trillions of dollars flowing through its network every quarter. But in this Fool Live video clip, recorded on Sept. 20, Fool.com contributors Matt Frankel, CFP, and Jason Hall discuss why Visa could have more room to grow than you might think.
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Jason Hall: Visa is like the original FinTech. You've got Visa and Mastercard (MA 0.44%) or maybe you could say American Express (AXP 0.34%) in a way. But I think it's a really interesting business. It's one that needs little introduction. As one of the largest payments processors in the world. Everybody has a Visa in their pockets, so it seems at least in the West.
What's the growth opportunity here? A couple of things. Number one, cash is still king globally, it's still really is. Electronic payments cashless transactions are still growing at a very fast clip all over the world. When you're already a world wide recognized brand, you have a secure payments platform, you have this amazing network effects where all three legs of the stool, so you're a shopper, you want to access to the merchants. The merchants want access to the shopper, so there you go. Then you have the financial services companies, the banks who want access to both. Guess what? The three legs of that stool are so supported. Every single new participant and any one of those has access to all of the others. It's just a really powerful network effect.
There's also the security aspect and as a merchant, you know, you're going to get paid. There's a tremendous amount of value to that. One thing that I think the average person doesn't know with Visa and Mastercard both and we'll talk about Mastercard later, is the business-to-business payments opportunity is an enormous opportunity. So much of that is still an invoice gets mailed out and then somebody cuts a check and 30 days later, the check shows up and just transitioning a lot of that stuff, through electronics payment is awesome. Matt, look like you have something you want to add here.
Matt Frankel: Well, I mentioned in the last part that the global payments market is estimated about $185 trillion. The global card payments market is estimated at about $45 trillion.
Frankel: The rest of that, $140 trillion or so, is person-to-person and business-to-business. Areas where Visa really hasn't capitalized on. That's where they're really seeing their next leg of growth coming in from business-to-business and person-to-person.
Jason Hall: Yeah, it really is. Again, we were talking about market cap and talking about just the opportunity for PayPal (PYPL -1.17%) and maybe not seeing as much opportunity from there. I mean, I think that's one of the reasons that even though Visa is a larger company, we see more opportunity for it because it's already so dominant in the merchant side of things. In consumer spending, but that person-to-person and business-to-business is a huge opportunity. I think the business has largely recovered. We're still looking at the cross-borders transactions are down because travel is still down. But just about every other metric that they measure their transactions on has essentially recovered to or even surpassed pre-COVID levels. Right, Matt?
Frankel: Yeah. I actually believe cross-border transactions for card-not-present transactions have rebounded nicely.
Hall: Yes, it has. What's the card present which is the travel stuff.
Frankel: Right. Because no one's going overseas right now. Even with the rebound, international travel's at very small percentage of pre-COVID levels. I mean, they just announced today that they are loosening restrictions on people coming into the U.S. They just announced that today and we're in month 17 of the pandemic right now. That's going to take some time to come back. But on the other hand, the pandemic really accelerated the shift to online payments, especially in international transactions. You've seen that play out. I think overall spending volumes are up from pre-COVID levels with Visa and Mastercard. I think they're actually seeing more volume in some recent months.
Hall: In most markets, yeah. That's one of the things that they said last when they reported second quarter was that they saw an acceleration. That's incredible.