Visa CFO Vasant Prabhu joins Yahoo Finance Live to discuss company earnings, trends in the payment space, consumer spending, inflation, and the outlook for the payment industry.
RACHELLE AKUFFO: Visa reported a Q1 beat this earnings season. However, the world's largest credit card network saw its revenue wind back to pre-pandemic levels, as consumer spending slowed. Here to discuss the outlook for the payment industry is Visa's chief financial officer Vasant Prabhu. Thank you for joining me this morning, Vasant. So, a lot of people have been wondering, what are some of the trends, then, that are going to dominate the payments space as we really try and grapple coming off the peak of the pandemic and really trying to figure out how the consumer spends right now?
VASANT PRABHU: Sure, thank you for having me. Well, I guess the best way to describe the consumer is very stable. Consumer spending has been very steady for the entire year of 2022, steady almost day by day, week by week, month by month. It's about 45%, 46% higher than pre-pandemic levels 2019. But it's shifting. Over the year, it's moved more towards services, away from goods. People are doing things, rather than buying things. Restaurants, travel, entertainment are all booming. All in all, consumers have adjusted to inflation. Food and drug is spending. Essentials are quite stable. If you look at spending, it looks like the consumer is still confident and pretty much has stayed confident all the way through 2022 and into January with no real change in trend.
RACHELLE AKUFFO: So then what are some of the specific places that they're spending this money? We know that at first, there was that sort of pandemic build-up to go into travel and leisure. But then as that tapered off, where is the money now going?
VASANT PRABHU: Well, what happened was in 2020, of course, things fell. And then things started to pick up, first in the goods categories. You know, people were at home, and there was a big boom in buying things-- home improvement projects, apparel, retail goods, e-commerce, et cetera. And people bought a lot in 2021. As we got into 2022 and economy started to open up, countries started to open up, we started to see people do things they couldn't do. They had a lot of savings in the bank. And they started to go out, travel more, go to restaurants, more entertainment, more spending on services. And that's what we're seeing now.
So if you look at good spending, I know it's slowed year over year. And you hear that when you listen to everybody. But if you compare it to 2019, it's doing just fine. It's just that they had a big boom in '21, and now it's the time for travel, restaurants, services, et cetera, to catch up. And that's where we're seeing the growth right now.
RACHELLE AKUFFO: And I want to ask you about another trend that we saw really pick up, especially over the last year-- buy now, pay later-- that continues to grow in popularity with consumers. And I know you have Visa installment as an option there. What sort of growth are you seeing among clients in that space?
VASANT PRABHU: Well, buy now, pay later is another option that consumers have to pay for things. They can do it with a credit card. They can do it with a debit card. Or they can try buy now, pay later. And some consumers will, and some consumers are. We help our clients do it. We partner with buy now, pay later providers to also do it.
It'll take a while to develop. It's had something of a setback as things have slowed down, but it will probably grow over time. As far as we're concerned, our job is to enable consumers to pay in whichever way they want. And we will enable buy now, pay later, much as we do all other forms of payment and all of the ways that consumers want to pay. And buy now, pay later will have a role to play in the long run.
RACHELLE AKUFFO: And speaking of the ways that people pay, obviously, still a lot of adults-- I think about 1/3 of the global population perhaps still unbanked at the moment. And I know that Visa has been looking at innovations built on blockchain and things like that. What are some of the innovations and ways that you're planning on really reaching some more of the unbanked?
VASANT PRABHU: Absolutely. This is a major priority for us and has been for a long time. Clearly, we've made a lot of progress through the pandemic. If you look at the amount of credentials or cards out there, they have grown quite a bit in the last couple of years and are growing fast still. A variety of new ways to enable consumers to pay digitally have emerged around the world. Wallets, for example, digital wallets, very popular in emerging markets. We're partnering with most of the digital wallet players. Our credentials are embedded in these wallets.
In many parts of Africa, people use their phones to pay. They work with the telecom companies. We are partners with the telecom companies across Africa. Again, we embed our credentials. This is another way in which people are empowered and brought into the digital economy, the financial economy. Of course, we work with a whole range of other players to enable people to have bank accounts as a way to get access to digital payments and other ways to pay. So there's a whole range of possibilities here.
And in fact, it's growing as technology has improved. And a significant amount of movement into the space has happened in the last two years. And of course, blockchain will have a role to play. We do partner with a variety of people who provide cryptocurrency services. We don't have a point of view on cryptocurrencies, per se. But we do partner with people who allow people to buy and sell cryptocurrencies, which can be helpful to people in countries where the local currency isn't that reliable. So it's a major initiative. It's multipronged, and it will go on for a long time.
RACHELLE AKUFFO: All right, well, I do thank you for taking the time to join us on Yahoo Finance this morning. Visa CFO Vasant Prabhu, and congrats on the past quarter, a bumper quarter, indeed.
VASANT PRABHU: Thank you.