Visa's (V) Tokens Fetch Benefits to Asia Pacific Merchants
Visa Inc. V recently unveiled that the leveraging of Visa Token Service (“VTS”) has contributed to a substantial boost of more than $2 billion to the digital economy of Asia Pacific in 2023. As of March 2024, the number of tokens issued on Visa systems related with licensed Issuers of the Asia Pacific region attained the 1 billion mark.
At the time of making online or in-store digital payments, Visa’s service produces a unique identifier referred to as a token, accessible only by V. Therefore, consumers are relieved from the task of manually furnishing the 16-digit debit or credit card number during digital transactions. On the expiry or replacement of the card, the use of tokens eliminates the need to provide the new card details on multiple platforms. Also, the tokens can be utilized for payments through a wide array of devices, such as smartphones, wearables and smart appliances.
The ulterior motive of Visa tokens remains to enhance the payment outcomes for both merchants and consumers as well as infuse greater security within the online environments. For each transaction, the tokens protect the payment credential, lead to the seamless transfer of data, exert greater control and boost the processing of payments. A surrogate account number, cryptographic information and other data serve the role of shielding the underlying card information.
This, in turn, paves the way for improved authorization rates and lower incidence of fraud, which otherwise would lead to a breach of confidential data and significant losses on both consumers' and merchants’ part. Merchants, who have utilized VTS in the case of digital payments, have not only witnessed an improved payment success rate but also benefited from a significant decline in payment fraud rates.
Subsequently, such advantages free up a merchant’s time and enable them to intensify focus on product innovation and customer engagement efforts. On the other hand, tokens make the way for an enhanced checkout experience for consumers.
The increased adoption of tokens, that enable enhanced consumer payment flows, is expected to fetch higher revenues for Visa. V primarily relies on technology for deriving revenues from facilitating money movement across consumers, merchants, financial institutions and government entities situated in more than 200 countries and territories.
The popularity of Visa’s tokens continues to be on the rise. At fiscal 2023 end, V provisioned more than 7.5 billion network tokens, which crossed the count of physical cards in circulation.
The recent announcement also indicates one of the most longstanding endeavors of Visa, which remains to encourage worldwide merchants and consumers to go digital in their everyday lives. The component of security is of widespread importance to infuse peace of mind to individuals residing in a rapidly expanding digital economy, wherein online transactions are often accompanied by cyber fraud.
Shares of Visa have gained 22.5% in the past six months compared with the industry’s 20.9% growth. V currently carries a Zacks Rank #3 (Hold).
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks in the Business Services space are SPX Technologies, Inc. SPXC, CompoSecure, Inc. CMPO and Trane Technologies plc TT. While SPX Technologies sports a Zacks Rank #1 (Strong Buy), CompoSecure and Trane Technologies carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The bottom line of SPX Technologies outpaced estimates in three of the last four quarters and matched the mark once, the average surprise being 23.19%. The Zacks Consensus Estimate for SPXC’s 2024 earnings indicates an improvement of 16.7% from the year-ago reported figure. The consensus mark for revenues suggests growth of 13.1% from the prior-year reading. The consensus mark for SPXC’s 2024 earnings has moved 1.8% north in the past 30 days.
CompoSecure’s earnings outpaced estimates in three of the trailing four quarters and matched the mark once, the average surprise being 7.97%. The Zacks Consensus Estimate for CMPO’s 2024 earnings indicates an improvement of 12.4% from the year-ago reported figure. The consensus mark for revenues suggests growth of 6.5% from the prior-year reading. The consensus mark for CMPO’s 2024 earnings has moved 0.9% north in the past 60 days.
The bottom line of Trane Technologies outpaced estimates in each of the last four quarters, the average surprise being 4.47%. The Zacks Consensus Estimate for TT’s 2024 earnings indicates an improvement of 12.6% from the year-ago reported figure. The consensus mark for revenues suggests growth of 7.1% from the year-ago reported number. The consensus mark for TT’s 2024 earnings has moved 2.1% north in the past 60 days.
Shares of SPX Technologies, CompoSecure and Trane Technologies have gained 47.1%, 10.9% and 50.6%, respectively, in the past six months.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Visa Inc. (V) : Free Stock Analysis Report
Trane Technologies plc (TT) : Free Stock Analysis Report
SPX Technologies, Inc. (SPXC) : Free Stock Analysis Report
CompoSecure, Inc. (CMPO) : Free Stock Analysis Report
