Visa Inc. V has expanded its Visa B2B Connect network from 30 when it launched in June 2019 to 62 now. The company further plans to expand to over 100 countries in 2020.
Visa B2B Connect is based on blockchain architecture, which facilitates secure and transparent transactions for businesses across the globe.
The B2B payments space offers a vast market opportunity for Visa as businesses are recognizing the advantages of digital payments, which include more data, control, and automation. According to Deloitte, B2B digital payments are forecasted to reach $23.1 trillion in 2020, as more and more companies transact purchases online and pay their receivables through digital channels.
A survey by the Association for Financial Professionals points to the fact that more than half of all B2B payments — 51% — are still made by paper check, which carries an element of insecurity and inconvenience. This is one of the foremost reasons why businesses are switching to digital payment options.
With the use of digital payment products, businesses are experiencing substantial reduction in the cost and risk associated with paper processes in general, but the greatest benefits lie in business payment inefficiencies and payments fraud risk.
Sensing this opportunity, Visa has been making concerted efforts to deepen its reach in the B2B payments space. In fiscal 2018 (year ended Sep 30, 2018), Visa’s business-to-business (B2B) payments volume grew to $950 billion, or more than 11% of its total payments volume. While Visa leads this segment in terms of card solutions, it continues to invest in growing its share of the significant B2B payment opportunity.
In this vein, in March, Visa acquired Fraedom, a software-as-a-service company that provides products and services such as expense management and accounts payable to financial institutions and their corporate customers. It also formed a strategic partnership with WEX, a leading provider of corporate payment solutions, in July 2018. The partnership allows WEX and their corporate payment customers to use a Visa virtual card to make global B2B payments.
Year to date, the stock has gained 16.7% compared with the industry's growth of 14.5%.
Visa remains the frontrunner in the payments industry when it comes to innovation and technology, business growth, tie-ups and partnership.
These have driven business volumes for the company with payments volumes of $7.6 trillion achieved in 2018 compared with $3.8 trillion for Mastercard Inc. MA, $1.1 trillion for American Express Co. AXP and $159 billion for Discover Financial Services DFS in the same space.
Visa carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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