Visa CEO talks future of mobile payments

Saunders Enlarge photo

Saunders

SAN FRANCISCO – From the outside, Visa CEO Joseph Saunders oversees a $9.2 billion business that looks like old-school capitalism.

But the payment card-processing company sees vast potential in the mobile-payment market. Just 150,000 of an estimated 8 million terminals in the United States are equipped to take payments with phones. Visa has a small, undisclosed stake in Square, the payment-processing start-up founded by Twitter inventor Jack Dorsey, which is valued at $3.25 billion.

Visa also knows a thing or two about successful initial public offerings: It raised a record $17.9 billion in 2008. By contrast, the IPOs of social-networking giant Facebook and social-gaming company Zynga faltered. Saunders recently sat down with USA TODAY technology reporter Jon Swartz to discuss IPOs, the shift toward a cashless society and Visa’s future growth. Answers are edited for length and clarity.

Q: Are we headed to a cashless society, where the end of money is fast approaching?

A: Our primary competition has always been cash and checks. “There is a ton of impact that has been made. Being able to use a mobile phone to effect a transaction instead of a card, well, it’s simpler to use.”

Q: How large a role do smartphones and tablets play in a cashless society/mobile payments?

A: What you’ve got is a whole younger generation that has been weaned on electronics, and they understand PCs. They understand iPads. They understand mobile technology. They have nimble fingers; I mean, they learn how to touch a keyboard instead of playing the piano. They’re very comfortable with it. That’s what’s really, really going to push it. What you need to make sure of is that the technology is as flawless as it can be, and it’s reliable. You know? If you’ve got something sitting in a phone and somehow the phone runs out of juice, or it doesn’t work or something like that, you’re kind of up a creek.

Q: How do you assess the IPO market? Visa had such a successful initial public offering in 2008, during an economic crisis.

A: We were conservative, and we always looked at the IPO as being a starting point, not an ending point. We didn’t create an IPO to enrich venture capitalists. We did it to put the company on the market. The first day in the history of being a public company, and all the days after it, make the most difference. Starting at the right place is important.

I can’t really comment on Facebook or what they’ve done. “I think there are certain climates into which you ought to be very careful about doing an IPO, period, but yeah, you can do it in a difficult climate if you’ve done it.

“These things are all multiples of very, very little revenue, so it carries the expectation that you’re going to have all the revenue. There was an Internet bubble once before, and when it burst, everybody said it’ll never happen again. We’ve learned our lesson. We’re not going to wildly just invest in companies.”

Q: What do you anticipate as breakthrough technology in your market (retail, banking) in the next few years?

A: If you had asked me 10 years ago where we would be today, I can’t fathom how I could have answered you because to me, it’s been an explosion.

When you think of the opportunity for Visa in the long run, a lot is going to come from what’s going on in Africa, or what’s going on in India, or what’s going on in other economies that are less mature.

It’s going to be as individuals move up into middle classes. Are they going to be using electronic money or aren’t they going to be using electronic money?

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