V Q3 2025: Visa Direct Tops 10B Txns, FX Volatility Expected to Ease
- Visa Direct’s robust growth and market leadership: The Q&A highlights that Visa Direct has now surpassed 10 billion transactions on a rolling twelve‐month basis, underpinning its position as the largest, most scalable money movement platform worldwide with strong momentum in cross border and remittance segments.
- Sustainable pricing power and value-added service expansion: Executives detailed that pricing benefits are back half–loaded, with a growing spread between revenue and volume, driven by improved data processing fee dynamics and continued high renewal/expansion activity, which supports strong net revenue growth and margin expansion.
- Pioneering stablecoin integration for future growth: Leadership emphasized early successes in leveraging stablecoins—both in remittances and emerging market use cases—to accelerate digital adoption and capture a significant cross border payments opportunity, indicating a promising long‐term growth lever.
- Margin Pressure from High OpEx and Incentives: Management noted that Q3 operating expenses were higher due to lower-than-expected FX benefits and rising personnel costs (notably mark‐to‐market deferred compensation), while Q4 incentives are expected to surge because of lapping effects. This could pressure margins if growth doesn’t keep pace.
- Currency Volatility Impacting Cross-Border Trends: The discussion highlighted significant volatility in cross-border volumes—driven by FX fluctuations and variable results in travel corridors—which may lead to unpredictable revenue streams and potential downside risk in key segments.
- Uncertainty Around Stablecoin Adoption: Executives described stablecoins as being in the early stages with ongoing tests in specific corridors. Persistent regulatory uncertainty and the unproven pace of adoption could delay or dampen the expected benefits from these digital initiatives.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Adjusted Net Revenue Growth | Q4 2025 | no prior guidance | high single digits to low double digits; approximately 10% nominal | no prior guidance |
Adjusted Operating Expenses | Q4 2025 | no prior guidance | high single digits to low double digits | no prior guidance |
Non‑Operating Income | Q4 2025 | no prior guidance | minimal | no prior guidance |
Tax Rate | Q4 2025 | no prior guidance | between 18.5% and 19% | no prior guidance |
Adjusted EPS Growth | Q4 2025 | no prior guidance | high single digits | no prior guidance |
Acquisition Impacts | Q4 2025 | no prior guidance | minimal benefit to net revenue growth; 1.5% contribution to operating expense growth; 0.5% headwind to EPS growth | no prior guidance |
Non‑Operating Income | FY 2025 | remains unchanged (full‐year guidance; no numeric value provided) | about $250 million | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Robust Visa Direct Growth and Cross-Border Transaction Expansion | Q2 described growth with 3 billion transactions and healthy cross-border growth ; Q1 reported 34% year‐over‐year growth with strong Latin America momentum ; Q4 showed 38% growth and global partnership expansion | Q3 reported Visa Direct surpassing 10 billion transactions, with cross-border volume growing 11% YoY and enhanced partnerships for cross-border payments | Consistent robust performance with scaling and broadened global partnerships across periods |
Sustainable Pricing Power and Margin Expansion | Q2 highlighted back‐half pricing contributions and cost management ; Q4 emphasized stable “price to value” with consistent pricing cadence ; Q1 did not specifically discuss the topic | Q3 discussed pricing strategies driving revenue growth outpacing volume growth and noted pricing adjustments amid higher operating expenses | Consistent emphasis on pricing strategy with evolving nuances in Q3’s back‐half weighting and revenue focus |
Emerging Stablecoin Integration and Adoption Uncertainty | Q2 mentioned early-stage stablecoin settlement flows ($200 million) with cautious optimism ; Q1 and Q4 did not mention the topic | Q3 provided detailed insights into stablecoin integration via linked cards, cross-border pilots, and the potential for remittance use cases | A new and emerging emphasis in Q3, making the subject more substantive compared to earlier periods |
FX Volatility and Currency Risk Impact on Cross-Border Trends | Q2 focused on FX volatility affecting revenue yields and hedging gains/losses ; Q1 discussed the strong dollar and its impact on travel and volume ; Q4 noted lower volatility levels and lapping effects | Q3 addressed higher currency volatility, hedging losses, and corridor-specific impacts (e.g. Canada-U.S. travel) leading to a step-down in growth in certain months | A recurring topic with evolving sentiment as currency fluctuations continuously impact revenue and growth dynamics |
Incentive and Renewal Pipeline Dynamics Affecting Margins | Q2 noted 15% incentive growth with anticipation of early renewals ; Q1 highlighted a significant renewal cycle affecting over 20% of payment volume and associated margin pressure ; Q4 reported lower incentive growth due to lapping renewals | Q3 observed 13% incentive growth and stressed that a larger renewal pipeline (impacting 20% of PV) is expected to drive sequential increases in incentives | A cyclical trend where renewal activity consistently pressures margins, with Q3 indicating a moderate step-up in renewal effects |
Evolving Regulatory and Litigation Landscape | Q4 discussed active U.S. litigation (DOJ lawsuit, Reg II) and regulatory challenges while Q1 expressed optimism about a new regulatory regime, and Q2 emphasized global engagement | Q3 did not mention any regulatory or litigation topics | Reduced prominence in Q3 relative to previous periods, indicating lower current focus on regulatory and litigation issues [N/A] |
Declining Emphasis on Open Banking Opportunities | Q4 highlighted open banking as an opportunity with favorable CFPB rules and strong brand positioning ; Q2 noted progress via Tink and robust merchant adoption ; Q1 did not mention any decline | Q3 explicitly refuted any declining emphasis on open banking, emphasizing targeted efforts in markets like Brazil through initiatives such as “Visa Connecta” | The narrative has shifted to reaffirm open banking priorities in Q3, maintaining consistent strategic focus despite earlier discussions of market evolution |
Diversification of Revenue Streams through Value-Added Services and Commercial Volume Growth | Q4 underscored 22% YoY growth in VAS revenue and strategic expansion beyond traditional transactions ; Q2 reported robust growth in VAS (22%) and commercial volume up 6% YoY ; Q1 indicated 18% YoY VAS revenue growth with strategic acquisitions enhancing offerings | Q3 highlighted strong performance in value-added services (26% YoY growth reaching $2.8 billion) and commercial growth (7% YoY, with Visa Direct transactions rising 25% YoY) supported by diverse partnerships | Consistently robust performance across periods that reinforce diversification strategies with continued innovation and expanded client engagement |
Operating Expense Growth Impacting Profitability | Q4 reported 11% growth driven by marketing and personnel expenses and acquisition impacts ; Q1 noted 11% growth with additional severance costs yet 14% EPS growth ; Q2 showed only 7% growth due to favorable FX impacts and timing shifts | Q3’s operating expenses increased 13% YoY, attributed to lower-than-expected FX benefits and higher personnel costs, though investments remain strategic and EPS impact neutral | Expense trends are fluctuating with higher-than-expected increases in Q3, yet overall management remains aligned with revenue growth and strategic investment priorities |
Regional Growth Challenges, Particularly in Asia Pacific Markets | Q4 noted AP challenges driven by macroeconomic conditions in China and currency issues ; Q1 described muted AP growth with only 1% YoY increases due to a subdued macroeconomic environment | Q3 mentioned persistent challenges in Asia Pacific due to weak currencies adversely affecting travel and regional cross-border trends | Persistent challenges in Asia Pacific have remained consistent, with currency weakness continuing to hinder growth across all periods |
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Q4 Outlook
Q: Q4 deceleration and gross profit concerns?
A: Management explained that while Q3 delivered strong results, the anticipated Q4 performance reflects a normalization of elevated FX volatility and one‐time incentive benefits. They expect these factors to level out, resulting in a fundamentally strong quarter supported by their consistent operating fundamentals. -
Investment Priorities
Q: Any changes amid higher OpEx, AI, stablecoin focus?
A: The team stressed that their investment roadmap remains unchanged despite higher operating expenses due to deferred compensation adjustments. They continue to focus on innovation in AI and stablecoins while maintaining a balanced approach to growth and cost, ensuring investments align with long‑term strategic priorities. -
Yield Spread
Q: Why is international fee spread below 1 point?
A: Management attributed the narrowing spread to a mix of factors: increased FX volatility offset by deliberate hedging and a shift in transaction mix—particularly a slower U.S. inbound travel segment—that together compress yield differences even as volumes continue robust growth. -
Visa Direct Pricing
Q: What drives Visa Direct pricing and new use cases?
A: Leaders highlighted that Visa Direct’s pricing, generally reflective of debit business yields, is evolving as banks embed it in cross‑border platforms. They emphasized that competitive pricing is set “to value” and varies by region and use case, supporting its integration into emerging payment models. -
Volume Growth
Q: Can we see fiscal ‘26 volume acceleration amid bank trends?
A: Management noted that despite some pullback in bank activity, overall momentum remains strong. They anticipate accelerated volume growth in fiscal 2026 driven by consistent underlying trends and continued client engagement, even if certain segments experience timing variations. -
Stablecoin Remit
Q: How do stablecoins fit into remittance services?
A: The executives indicated that stablecoins present a promising opportunity in remittances by enabling faster and cheaper cross‑border transactions. This benefit, they believe, will create additional value for both end users and clients by streamlining settlement, complementing traditional money movement processes. -
Stablecoin Advisory
Q: Is the stablecoin advisory business boosting revenue?
A: Management explained that their growing crypto advisory practice helps clients navigate stablecoin issuance and strategy. This service not only deepens client relationships but also paves the way for embedding Visa’s technological solutions—adding strategic value, although incentives remain a separate tool to drive mutual revenue growth. -
Incentive Trends
Q: Has incentive growth plateaued compared to historical trends?
A: Management maintained that incentives are simply a mechanism to align mutual goals. While incentive levels can fluctuate due to renewal cycles and deal timing, the focus remains on driving net revenue and volumes rather than a fixed growth rate in incentives, without an imminent upward inflection. -
Cross Border Travel
Q: What’s the outlook on international travel trends?
A: Leaders described cross‑border travel as experiencing month‑to‑month volatility influenced by holiday timing and currency shifts. Despite some softness in June, recent trends in July combined with a stable global environment keep overall travel volume well above pre‑COVID levels, with corridor‐specific impacts being monitored closely. -
Stablecoin TAM
Q: Do stablecoins expand or dilute overall revenue potential?
A: Management is optimistic that stablecoins will add to the total addressable market by accelerating the digitalization of payments—especially in emerging markets and cross‑border remittances—without diluting overall revenue potential. They expect stablecoins to become a material contributor as adoption broadens.
Research analysts covering VISA.