VISA: boost in credit cards spending signals return of assurance

In her new role as group executive, international, Elizabeth Buse oversees VISA's operations in Central Europe, the Middle East and Asia, a geography that already contributes to the majority of revenues of the world's largest payment technology services company. Interview



Globally, we're seeing debit card payment volumes exceeding that of credit cards. Would you say that this increase is happening at the expense of credit cards or would you say cash is the casualty here?



Definitely the latter - people shifting from cash to debit cards. In India, there's $700 billion of personal consumption expenditure, but only 3% is in the electronic payment mode. So, most of this expenditure is in cash. And when people move from cash, they most often move to debit cards.



Because consumers are very clear on how they want to budget and how they want to spend their money. In India, we have 40 issuers of the VISA debit product. And in the past 12 months, the payment volume has grown 28%. That's absolutely been at the expense of cash transactions.



Given the experience that average consumers in developed markets have been through in the past 18-24 months, are you beginning to see some sort of a shift away from credit cards and towards debit cards in those markets?



We haven't seen a shift. But we did, without question, globally, see debit continue to be more resilient throughout the downturn across all economies. And that's again because consumers typically use their debit products for things like fuel, food and bill payments - expenses they will have regardless of the economic cycle.



But what we saw with credit cards was an absolute reduction in spends. But it wasn't a trade-off between debit and credit. What we are seeing now, though, especially in Asia, is a return of consumer confidence and that is being reflected in an increase in spending on credit cards.



VISA has said that future growth for the company is going to come from mobile payments and global markets. Could you explain how?



There will be growth in global markets, without a doubt. India is a prime example of that. We've seen growth in debit, we've seen growth in pre-paid cards. For corporates, consumers as well as the government, there's interest in these products. So, you just see an explosion of growth, because of the cash opportunity in markets like India.



You've said in the past that certain markets have the potential to leap-frog the existing payment infrastructure and adapt to mobile payment technology. But in markets such as India and other emerging markets, wouldn't you agree that the bigger challenge lies in financial literacy?



Yes, without a question. To bring people into the financial mainstream, whether it's mobile technology or more traditional card-based forms of payment, requires investment in financial literacy.



In India, for example, we have a money skills website for financial literacy and that's a place that we're going to continue to invest hand-in-hand with the technology, because without financial literacy, we won't successfully bring people into the mainstream. So, it's going to be both innovation and education.



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