Visa Inc (V): Visa"s Management Presents at UBS Global Technology ...

Question-And-Answer Session

Unidentified Analyst

My name is John, we’re part of the technology research team here at UBS, and I don’t think, I think I missed introducing you, Bill Gajda, he is the Global Head of Strategic Partnership to Visa and just before that he was Head of Visa’s mobile initiatives globally. And very, very deep understanding of the whole of mobile and telecom space that previously [indiscernible] Ericsson and Telus. So a lot of our focus will be about the future and what’s going on in terms of disrupting the industry especially in the mobile space.

And I think in Visa we see a tremendous scale. I think last year you handled about $7 trillion worth of volume, over 2 billion cards, and generated $4 billion in revenues. I guess with that scale, I mean how is your mobile initiative different? Or that let’s say the approach that either MasterCard or American Express card are taking.

Bill Gajda

I think there are a lot of similarities in terms of developed markets and our focus on in supporting NFCs, so you will see all of the major payment networks more with ISIS and other players as NFC rolls out. So I think there are similarities in that regard. I think all of us have got a mobile or e-Commerce wallet strategy. Obviously I think all of us focus on prepaid and digitizing prepaid. I think some of the differences are, because of our global reach relative to American Express and in some cases MasterCard, I think we’ve got probably a heavier focus in the developing markets.

We purchased the fundamental asset two and a half years ago. And I think that gave us a good launch point. They had more than 36 implementations when we bought them. They got more than 55 now active in 25 or 30 markets. So I think that Visa probably has an increased focus in the developing markets. I would also say that, again because of our scale, our card base relative to the other payment networks as things like mobile point of sale roll out, as we roll out our Visa mobile prepaid then we will be able to take advantage of some of the upscale.

Unidentified Analyst

And looking at the deduction pattern given in the developing or emerging market, I mean how would characterize in terms of behavior and people’s affectivity, [indiscernible].

Bill Gajda

Clearly, I mean, Visa talks about all of our strategies to displace cash. And this is particularly true in emerging markets where 90% to 95% of all consumer expenditures are cash based. I mean that being said the model operator is primarily and more recently the banks, as I said has launched these, and in some cases very successful close loops that allow people to digitize currency for the first time, securitize their currency and add not just convenience, for productivity.

So in these markets, I think we take payments a little bit for granted in markets of United States. You know for these people to pay a bill, we’re getting on a bus for two hours, standing in line for an hour, giving the teller cash, and then catching the bus back. So it’s not just about convenience, they have lost half a day, just that they need their lights on. Just send money to a relative, just like giving it to a bus driver, and trusting it to get the other end and paying 20% to 30% of the value to make that transaction.

And so to digitize currency for them and for them to be able to pay their utility bills, or send money across the country in seconds. It’s again not just convenience, it is productivity. So I would say the adoption because of the fact that it makes money more secure, is not just convenient. It’s more productive. It’s the start of savings for them. It starts them on the road towards being more of a traditional banked customer.

So if you think about what happens in markets like Canada and U.S.; we started off as banked customers. I remember when I was, I don’t know, seven or eight years old, a purse of twenty dollars, a passbook, got to visit the bank. You eventually got a debit card. When I became credit worthy five years ago, I got a credit card. And so we went from banking to payments.

In these markets, if the office, they go from payments and then over time his earnings become more sophisticated they go to banking. And so right now we see about probably 250 million to 300 million people that use these very basic mobile money services in markets Sub Saharan Africa, the Middle East, South East Asia. And we see that as a huge potential to connect them to the traditional payment ecosystem to get a Visa card, physical and virtual, to allow them to do more kinds of transactions.

Use an ATM instead of a human agent to do cash-in or cash-out; go to a point of sale and make a transaction using a companion card or for the first time do an e-Commerce transaction. One thing that’s interesting when we look at the Botswana example. We anticipated that almost all the volume would be ATM, just a convenience of going to a machine instead of a physical agent. Well roughly half the volume is point of sale, right. But what’s interesting is 10% or more is e-Commerce; people going to the Avon site or the Amazon site in these markets for the first time.

Unidentified Analyst

The adoption cycle is very much shortening compared to already developed market. I mean there is something quite into that.

Bill Gajda

There is, I am talking about for the last two or three years, the leap frog that we are seeing, and a sort of necessity these people are innovating around digital currency. And now we see things like host card emulation and android phones with NFC capabilities being sold in India for $60 or $70. We would be, I think it was two weeks ago, I was in a presentation, I said you know Bangladesh is going to look a lot more like Canada in terms of commerce over five years. And it is because these markets, the cost of technology is coming down. We are seeing continued innovation like host card emulation and we will see these markets kind of leap frog and adopt very sophisticated e-Commerce.

Unidentified Analyst

So, I mean with, I think Visa Mobile Prepaid and some of the other products you’re able to send, I guess, money directly to a cell phone; that may or may not be tied to Visa number but I mean how does that change maybe what’s going on in A to Z market, you know traditional money transfer operators? I mean is that causing minus or how do you see that?

Bill Gajda

I think it does change the game a little bit for them. So one of the reasons we invented Visa Mobile Prepaid is because these close loops are closed loop. So as the example in Botswana, if I am an Orange Money customer and my relative lives in a rural village, is an MTN Money customer; I can’t send money from Orange Money to MTN. So what we have done is, we have taken this Visa Mobile Prepaid and put it on top of their phone numbers, because that’s how they transact.

You don’t need to know your Visa card number expiry date, CVV2. You just need to know your phone number and we do the translation in our network and it allows people to make these transfer of payments across networks because we use the Visa network to provide interoperability. So I think it does change the role for whether it’s traditional money transfer. But in these markets a lot of it is the informal market, the bus drivers, the truck drivers, that are really, it’s kind of the formal transfer market in these countries.

Unidentified Analyst

And finally, do you see that being domestic transfers or is there kind of a cross-border international transfer usage?

Bill Gajda

Yes, what’s interesting is, I think initially it’s going to support national transfers, so in-country transfers. But what’s interesting is, there is already people a lot of people in the send markets as you know there is a phenomena where people leave their countries to get better jobs and are continuingly sending money back to their home countries and we’ve established what these corridors are.

The people who were spending money typically are banked they have a credit card or debit card. And by putting these and mobile prepaid in the receipt markets, we will start facilitating Visa card to Visa card transfers because that was the bottleneck is the receiving person didn’t have a way to accept electronic money with Visa mobile prepaid they do.

Unidentified Analyst

So, I mean let’s say the relationship with company like Western Union I mean is that something you would cooperate with to facilitate that even more or there is going to be some displacement involved?

Bill Gajda

Well, there could be displacement I think but I think what we’re going to see is actually these services become more affordable. Right, one of them barriers in these markets to using some of these traditional money transfer companies is the unusually high or as high as a percentage of these associated with in market transfers.

I think the ability to do it on your mobile phone for literally pennies I think will compress that market and provide a lot of innovation and allow for a greater number of services at a reasonable price. But I think that whether it’s Visa or the mobile network operators or the banks or Western Union, MoneyGram or others, I think they’re all looking and how they use mobile or digital to increase efficiency and bring their cost down.

Unidentified Analyst

Maybe kind of move back to the developed market here I mean obviously there is a lot going on in terms of innovation and funding Visa is going to take basic program. But I think we’ll just go [typewriting] I mean there is obviously the highest profile Square, Intuit has a product, PayPal is a big player there. You also have small guys; the most recent one is Coin, which is still got a very nifty product.

Bill Gajda

We expect to go low point we can come back to that but.

Unidentified Analyst

Would you hear that it costs about $1,000 of manufacturing that [indiscernible]. We’ll have to go and check that. But I mean, so what is Visa’s view in terms of working with these new emerging players I mean do you facilitate that and promote it or?

Bill Gajda

Well, actually that’s why we formed the new rule strategic partnerships because as you know for 50 years Visa has really been focused on the issuing and acquiring banks the ecosystem of networks and obviously supporting our banks and building up these 2.2 billion cards. But over the past five or six years, in particular, we’ve seen new players coming to the space whether it’s the mobile network operators globally and their close loop money systems whether it’s what we call platform providers whether it’s Microsoft of device manufacturers like Samsung, get into the commerce space because of the capabilities of their devices. Payment players like PayPal and Square, Intuit and others, and then just new ecosystem players whose core business isn’t payments but commerce is broadly their business, people like Amazon or Google or Apple.

And so we formed this group so we could actually connect to this new category of companies that we really didn’t have a program or even a technology to connect them. And so that’s really what strategic partnerships are all about. So, and answer to your question, we think that these new players in the business models, the innovation the technology they represent, is kind of fundamentally important to Visa and will expand the ecosystem. You used the Square example from a standing start less than four years ago what is that now you guys know better than I am 4.5 million merchants, I think the number is 16 merchant Visa globally from a standing start four years ago. There are 200 Squares around the world that we track and we’ve licensed or worked directly with more than 16 to them to certify their hardware and software solutions and then to help them with some of their market entry strategies.

Because again if we can double the nodes in the network that’s a good business for Visa. I think Square will probably tell you that between 75% and 80% of their volume is incremental that is that long tail of merchants who only take cash and checks before. I think what you get outside of the United States and Canada, Western Europe when you see mobile point of sale rolled out it’s not the long tail. It’s the way that an un-served merchant is now going to be able to accept electronic payments. I’d like to give the example of India where there are 20 million formal shopkeepers, like not being formal merchants 20 million formal shopkeepers, and around 750,000 places you can use your Visa card.

I talked to one of these mobile point-of-sale companies like week and we’re going to certify their device and he is talking about 75,000 to 100,000 additional points of sale in India in the next 18 months. So as a percentage of what we have there today and there is like 15 companies working in India doing this you can see what happens to the landscape in terms of acceptance. So as I said earlier mobile point of sale is huge for us and then I think one of the ways we work with these new players.

Unidentified Analyst

What about in terms of how that comes-in in terms of monetizing that ecosystem for these I mean is it different dynamics in terms of how it comes in like service fees, transaction fees with the long tail mobile point of sales guys as well as maybe some of the stores value guys or maybe their fewer transactions as you just kind of loaded for a while and never charge it again until you reload?

Bill Gajda

It’s what we think about it all the innovations and the discussions that we have for these new companies it really is about our core business. It is about the next transaction. So when we think about supporting mobile point of sale with our Visa ready program, it’s because we know that another 35 million or 40 million nodes is good for our core business and we don’t have to change anything about our business except the number of place you can use a Visa card. I think there are models others you pointed out where wallets are being used to load your Visa cards being used to load a wallet and then transactions are taking place. I think the best example here in the U.S. is Starbucks and they’re hugely successful with their app, millions of people signed on and used that.

And on the one hand do we see every transaction outside of the load? No, but on the other hand where lot of people using cash to pay their coffee right before the Starbucks app came onboard, yes. Right, so, I would say that the growth in the number of these wallets by enlarge is very positive for our network but again it’s just our core business, it’s just more cash being taken out of these economies, digitize into these wallets and then being use it at a point of sale or being use it remotely to pay for something in app or for a mobile commerce transaction. And so when we think about innovation or the relationships with these new players, by enlarge, it’s just our core business.

Unidentified Analyst

I think you recently talked about on Q4 call even simplified technology to make equity ecosystem to that some of these new technologies. I guess at the very the last piece of the transaction. I mean how do you kind of create preference that consumer when he’s got a mobile wallet and there is 10 things on it goes for the Visa one?

Bill Gajda

Yes, so couple of things there. So I think creating preference for Visa in any channel is that relationship that the issuers have in issuing Visa and the promotions rewards programs all that things they do to incent Visa use and that will continue in a real or virtual environment. I would say for Visa it’s the strength of our acceptance market, it’s our own brand investments somewhere between $700 million and $1 billion that we invest in brand and sponsorships. So, I would say that it’s our own brand building. But one thing that we’re clear about when we talk to these new partners is we actually don’t want them to steer customers one way or the other.

So, we don’t promote schemes where we would advantage ourselves through some kind of steering towards Visa, we think that ultimately customers needs to choose. So, it’s like we license the pay way back openly to Isis, we launched — licensed it to the Google Wallet, we licensed at the Samsung and we knew that MasterCard and America Express are going to do the same thing it’s because ultimately consumers are going to decide how they want to pay. I haven’t turned this is on because apparently it’s going to enter [indiscernible] but this is a Samsung Galaxy 4 what I think I’ve got three months ago, maybe four months ago shortly after they came out and as you probably know Isis launched nationally last week. And I downloaded the Isis app, I found out that ATT had actually put the high capacity SIM in this device four months ago, so I didn’t have to swap up the SIM and about a minute and half I’ve loaded the card and I used it I guess half a dozen times over the last three days and its great, it’s a good experience. I think that Isis Wallet in this version of it has a got a stab on it because of what they’ve done to user experience. But if you look at this Wallet, it’s not steering you towards Visa, it’s saying load the card that you have and then you get to decide latterly flipping to your screen what card do you want to use.

And I think we’ll make those choices the same way we do with our physical wallet, bigger purchase, points, do I use credit everyday purchase, cash or use debit. I think that we’ll make those choices in a virtual world the same way we do in physical one.

Unidentified Analyst

One last thing on mobile before I move, it’s kind of broader partnerships, just kind of on lighter note on what do you think of Coin, I mean we touched on it little bit. I know if everyone is familiar with Coin that just came out last week, one of the PayPal employees started — its kind of look like a credit card, we can load up to 10 credit cards on it and look at the magnetic strip it kind of changes like your choice of card (multiple speakers)

Bill Gajda

It sounds like one track two data from Bluetooth down to the card. So, its sounds like it’s got to be used in proximity device and I think that’s where they manage security. First of all I want someone to try; this is kind of my job. I just don’t get the business case. So, I’m going to spend a $100 for a juiced up card so I can load other cards in it but you do have dongle, I’m going to swipe my cards so I can replicate when I have my wallet and I’m going to swipe through what I want at the point of sale, I want to pay $100 for this. I switch between my cards in my wallet fairly quickly but I think one of the issues I don’t get with Coin and I got to see more details about it is when I read the press statements, one of the comments was, we think it’s going to be a runner because it’s a traditional behavior, people know how to swipe their cards and it’s a traditional form factor.

But I think what I’ve seen when I’ve seen NFC work or in that payment work is that people want to use this for everything. And if we didn’t get it right, we can have a compelling consumer experience that provides dial-in services like real time receipts and notifications and dial-in services around coupons in addition to allowing you to just flip and pay; the music industry, the message industry, the gaming industry have all proven that this almost has no bounds in terms of what people want to do with it, I think that’s true for payments. So, I just think that Coin maybe a strategy that’s probably [indiscernible].

Unidentified Analyst

Some run rate follow that because not [indiscernible] Smartphone.

Bill Gajda

I don’t know what users are going to think about it. They spend a lot of time putting it to brand and card art on top of that card I’m not sure how they’re going to like it been reduced to four digits.

Unidentified Analyst

And this is Euro as well and this is the strategic partnerships and that’s kind of your role within, and obviously as I mentioned this has lot of scale, there is data flowing through it and I think some understand that we talk about recently is cloud and big data and how kind of facilitate it a lot more than just profiting that payment. So, are there any initial focused areas that you’re working on in terms around the marking side or maybe more around trust and security?

Bill Gajda

Data is the key thing, let me just talk for a minute about how we structured strategic partnership because I think that will give you insights in terms of how we think about some of these spaces. So, again we developed the new team because we realized we were having right corner conversations about the right kind of technology with some of these new players and so we identified kind of 30 companies around the world that we think will move the needle and we put them into four categories, global network operators and we’re talking about top six to eight, the device and platform providers so that’s the Samsung, Microsoft, AGP, IBM payment ecosystem players, PayPal, Intuit, Square and then new ecosystems players, the Googles, the Facebooks, the Apples and we also have two programs that we put on it one is our Visa ready program where we certify NFC devices and mPOS devices and I’m also starting up the new venture capital program because we don’t really have a consistent restructured way today that we talk to the venture capital community given the pace of innovation.

So, that’s broadly speaking but the strategic partnership group does. Under pining all of this is the fact that when these companies come to talk to us they’re not issuers, they’re not Visa license holders, so they’re not going to connect to Visa the traditional way which is literally through a note that’s hard wired to Visa. Every one of them come at us and says where is your web service, where is your API, where is ACPBS (Ph). And so, one of things that we’re doing in the strategic partnerships group is creating this edge of the network, creating a proper developer center with well support of APIs so we can have a web services discussion with all of these companies.

So, whether it’s some of our core capabilities, authentication clearing settlement or some of our new ones the data assets being able to get into that transaction flow and add a coupon or royalty in real time and have all of the deductions or all of the calculations done in real time on the network. These kinds of capabilities we think about. So, I would say the data is the major thing in two respects, one is we are going to see authentication change and obviously we see users its data primary today for that authentication on behalf of our issuers and we’ll see that changes, we can learn more about devices. So, on authentication API and I’ve got a company that does vocation and IMEI and chip ID and thumb print, all I can create a pretty secure authentication right that’s a pretty secured transaction and then the other way we think about data is again more royalty or marketing supported where what we can do to support merchants who want to have that real time kind of royalty experience at the point of sale and that would be another API that we think about as an example.

Unidentified Analyst

Do you see, kind of revenue stream from debt becoming meaningful material at some point, because it’s a fairly new imitative.

Bill Gajda

I would say again we speak mostly about how this supports our core business, about transactions through the network. We think it will certainly add value to the kind of services we provide our merchants today. We think it will make us kind of even more indispensible network for issuers, as we can provide more value around the transaction, we think we can provide more security and to keep more fraud out of the system which benefits everybody, merchants and issuers. But again when we think about it, I think it’s less around entirely new lines of business for Visa as it is kind of growing the value of that network and the value of that next transaction.

Unidentified Analyst

Maybe related to that I mean Visa Europe is separate entity. Does that kind of — does it create any kind of hurdle in terms of leverage in your scale and your data, because you’re not getting — I am assuming you are not getting a full picture of what’s going on.

Bill Gajda

So I mean there is lots of separate discussion about the value of Visa in Europe together, but I would say this that on important clients and important issues we work very closely with Visa Europe every single day. So when we signed a deal with Vodafone which we have done, global operator operates and in these Europe markets and our markets, completely kind of one Vodafone strategy from both Visas. Same thing with Orange, same thing with our large issuing clients, we have groups, think about HSBC and other banks that are in both in European markets and non-European markets, we work very, very closely, around tokenization we’re working very closely.

So both on our network capabilities and initiatives as well as our client interaction we work very closely with — and we’ll continue to do that.

Unidentified Analyst

One more question before we’ll open it up to the audience, I guess very briefly on your venture capital program and what is your approach I mean looking to the direct investments or your core investments with tighter relationships with Visa committee here or…

Bill Gajda

I am going to get over my skis on this one, because I have aspirations that may have not being formal yet. So I would say first of all, I would say today it’s pretty easy for Visa to get an introduction or discussion with the venture capital or company. But to date or more recently it’s been a ad hoc and maybe a bit opportunistic and typically VC comes to Visa, it’s because they want us to buy one of their portfolio companies. I would say the hurdle rate for Visa to this on the time we take, we have made three or four acquisitions in the time that I have been with Visa. We don’t really have a structured way to look at their portfolio companies and assess whether or not we buy one. So that’s one improvement we can make, although I don’t think quite frankly that Visa is going to become an eBay, I think eBay has made something like 35 acquisitions in the last four years or Google made like 52 last year, we’re not that company. And so I think in some cases setting expectations with VC is about what kind of company Visa is and how we view this innovation. The second reason VC has come to us is because they want us to go and invest.

And I would like Visa to that point because I think we can help shape the eco system, we can help guide some of these start ups so they don’t have to encounter the barriers to scale the barriers to security, the barriers to fraud the same way every single time and those significant barriers. So I think we have got something to add as a co-investor. But I think what we can do even outside of co-investing has almost become a regular entrepreneur on residents, where can sit down with these companies and look at their existing portfolios or potential acquisitions or investments.

And again to provide that guidance around the things that we know about the eco-systems of all our partners banks merchants acquirers, they can help those investments either accelerate or just be better timed or improve the solution itself. So we’re going to set up the VC program obviously we’re in faster cities, so we’re really close to the valley. We have got offices in other pockets where there is concentrations of VCs But I think the first step is just to formalize the discussions, be very clear about our attention in this space, start building our credibility for that kind the of entrepreneur residents approach and then I would like over time for Visa to become a strategic investor where it makes sense. And we have done it. I mean we’re a minority investor in Square, we have invested in other companies as well; I think we just need a more formal approach.

Unidentified Analyst

So opening up to the audience if there are any questions, there are couple of mics around.

Unidentified Analyst

[Indiscernible] from UBS. Your new CEO has a CTO background and you talk about digitalization.

Bill Gajda

Our new CEO?

Unidentified Analyst

You mentioned earlier you are bringing in a CTO.

Bill Gajda

Yes we’re bringing in new CTO.

Unidentified Analyst

Sorry apologies for that. I was just wondering what is it do you think from an IT perspective you need to do within Visa going forward given the digitalization. Thank you.

Bill Gajda

It’s a good question. It really is I think around creating the edge of that network. I mean our network is six or seven, nine, because it’s achieved a massive scale but it’s also been a result of direct connections between our issuers our acquirers and the merchants through physical notes, standards that we have created, PCI standards that we have created, the EMV standards that we have created an eco-system that Visa and the issuing banks have all controlled for the past 50 years. We designed the ATMs, we design the magnetic strip, we design the EMV, we provide specifications for hardware and software and so there really wasn’t an edge of the network there is just a big scale of network.

What’s happening with these new players is that they are not going to be Visa license holders, they are not merchants in a traditional sense, they are not going to enjoy a physical node that connects to our network in a traditional way, we have got to create what I would say is a secure edge of the network that allows these players to interact with this in the way they think about it, which is through API, through m services and provide different level of scale. So I would say the number one kind of an opportunity and challenge for the new CTO is how we formally create the edge of the network. A developer center that supported by documentations, standard [indiscernible], APIs, the internal and external developers can understand the kind of ongoing and real support that we can provide them as they interact with Visa.

So I would say creating that edge is really important. I would say the second thing though is what are the capabilities if you want to expose on the edge. There is only four to five things that the Visa network does. We’re not going to have 100 APIs, I can think about four or five and it really is around authentication, what we call inline adjustments the opportunity to get inside a transaction and add some kind of value to it while it’s in the flow.

Think about some of our edge technologies like the Visa payWave app, which is already an API, we’re developing a reference architecture on mobile point of sale, we’re going to license that for free because we just want these solutions to be secure, we don’t think that the way our heads works on a mobile POS device is competitively differentiating. So we just wanted to scale, so you can really think there is really only kind of a handful of things that we would expose, but they’re going to be hopefully overtime billions of API cost on those core capabilities and so it’s got be a very focus and very robust edge of the network these new player to play with. So I think that’s probably a primary focus.

Unidentified Analyst

I am just curious, what’s your view of virtual currencies like bitcoin in the context of how you see the global payment ecosystem evolving?

Bill Gajda

So a friend of my visiting from South African, I brought some things to take back to South Africa and he picked them up and three days ago, four days ago I’ve got a – five days ago, I’ve got a bitcoin. I sell my first bitcoin about $70 with the bitcoin which is interestingly worth about $95 today. So it’s the wildest investment ever made that I have actually never made as I watched kind of the volatility in bitcoins, and then I’ll come to that. So anyway I’ve got these bitcoins. I have signed up so now I can link my bank account to bitcoin, so I can transfer them in cash. But I’ve got so interest in it I started looking at bitcoin mining machines and whether or not I can use Visa electricity to run this run and actually my bitcoin because depending on where it goes it can be an interesting business.

I would say it’s too early to tell because of the volatility and the regulatory uncertainty of where these virtual currencies are going, but it speaks volumes about the globalization that happens when currency does become digital. So in our network, we can understand someone with foreign money get to be able to send money to someone 10,000 miles away and the fact is they are as currency becomes digital, it becomes incredibly movable at very fast paces. So, I think that we’re going to see and bitcoin will take the lead – I think we’re going to see these global digital currencies continue to evolve.

I think that there is a long way to go because for some of that volatility is driven out of it. I think that the regulators as we know in the United States just today and around the world are starting to look at these currencies because by definition they’re unregulated. Right, so again I am now a bitcoin owner and I don’t plan the cash a note because I kind of like the front of it. I am not planning my retirement around bitcoin appreciation yet.

Unidentified Analyst

I think, the merchants like Wal-Mart, Targus they don’t like you and going to lawsuit with you. They have MCX, their own plan right, what they’re literally interested and if that they apply labor cost to get know customers queue what they’re buying which that usual math and to pick it out what you offer them in stores shield fencing (Ph) all these tax things what they really pick data working with firms like Alliance Data System for example to get to use this data to EPI and figure out their customer better, so how do you deal with that?

Bill Gajda

It’s funny, I mean it’s not the first time I’ve heard that Wal-Mart doesn’t like visa, but last week the executive team about hundred of us, we were in Half Moon Bay for our annual meeting, and we had Mike Cook from Wal-Mart and one of the founders of MCX, they come talk to us. And I would say that our relationship with these large merchants is complicated cause even Mike would say, I don’t hate Visa. Because they one of our largest merchants, our largest merchants. I mean, they depend on Visa because that’s what a lot of customers want to use, right.

So, on the one hand we’re working with Wal-Mart in terms of how we can kind of make that these experiences how less Friction as they look at some of their own digital channels and one on the other hand, the Wal-Mart is purchased against lawsuit and I think the last time is us actually suing Wal-Mart, but it’s just a complicated relationship, right. We also talk a little bit with Mike about MCX and their ambitions and what was interesting is Mike talked more about — I think the main point you’ve talked about which is, deeper customer relationship using mobile in particular to drive the value of their loyalty programs and to take Friction out of their multichannel and to keep more effectively with some of these online merchants were moving the brick and mortar, right.

And so and you talked less about the payment and more about the commerce experience, right. And one of the things we’ve talked about was, we think we actually do have data assets that Mike could benefit from and I am not sure quite frankly that Visa is actively going to pursue its few level data so that we can send it to someone else or compete with them, but I don’t think that’s what we want to do with it, but I do think those are ways given the data that we do have on an aggregated basis to help him target more what he does in the store or online channel.

So we spend as much time talking about the things we can do together supports the things that they may drive its part from time to time. I think the other thing its up in the air for me regarding MCX in particular is they early on said that they were going to do NFC and the reason why is because they said, we don’t see it’s being widely adopted it only seems to add cost to merchants with a providing any kind of scale or we don’t really see the benefits. And again I think Host Card Emulation where not just payment cards but now Wal-Mart to other loyalty cards can be loaded the fact that Wal-Mart, I think is in a process of putting contactless EMV terminals in all its stores, so they have the option of turning it on.

Again, I think that I am hoping that because of some of the things that we can do together that and once MCX becomes clear about its solution what they want to do then we can have very constructive discussions about some of these new capabilities we’re developing tokenization and might adjustments and other with MCX and Wal-Mart particular but it’s a complicated relationships.

Unidentified Analyst

Maybe one last question related to that, NFC and EMV chip [indiscernible] in the U.S. how happy are with the progress, I mean, is that still have momentum?

Bill Gajda

Our focus more in NFC than in EMV, I think there is inevitability to EMV, so I think we’re talking about when not give, it’s right regarding rollouts. I think a number of your issuers particularly with our credit portfolios started to rollout EMV chip cards obviously there is a correlation. People know that NFC is basically at EMV chip in a phone and so as because of Host-Card Emulation and things were happening in cloud we’re going to see EMV like transactions using payWave at the point of sales.

So I think that will support the EMV argument, but there is a challenge clearly around debit and what we do with EMV and that will take some time to resolve. So I would say that the world of payments is moving towards EMV and diagnostic cryptogram is a way to increase security. I think that the U.S. will file lawsuit. There is something we’ve got to work out but I think the process just started.

Unidentified Analyst

Thank you very much.

Bill Gajda

Thank you.

Visa Inc (V): Visa"s Management Presents at UBS Global Technology ...