In her new role as group executive, international, Elizabeth Buse oversees VISA's operations in Central Europe, the Middle East and Asia, a geography that already contributes to the majority of revenues of the world's largest payment technology services company. Interview
Globally, we're seeing debit card payment volumes exceeding that of credit cards. Would you say that this increase is happening at the expense of credit cards or would you say cash is the casualty here?
Definitely the latter - people shifting from cash to debit cards. In India, there's $700 billion of personal consumption expenditure, but only 3% is in the electronic payment mode. So, most of this expenditure is in cash. And when people move from cash, they most often move to debit cards.
Because consumers are very clear on how they want to budget and how they want to spend their money. In India, we have 40 issuers of the VISA debit product. And in the past 12 months, the payment volume has grown 28%. That's absolutely been at the expense of cash transactions.
Given the experience that average consumers in developed markets have been through in the past 18-24 months, are you beginning to see some sort of a shift away from credit cards and towards debit cards in those markets?
We haven't seen a shift. But we did, without question, globally, see debit continue to be more resilient throughout the downturn across all economies. And that's again because consumers typically use their debit products for things like fuel, food and bill payments - expenses they will have regardless of the economic cycle.
But what we saw with credit cards was an absolute reduction in spends. But it wasn't a trade-off between debit and credit. What we are seeing now, though, especially in Asia, is a return of consumer confidence and that is being reflected in an increase in spending on credit cards.
VISA has said that future growth for the company is going to come from mobile payments and global markets. Could you explain how?
There will be growth in global markets, without a doubt. India is a prime example of that. We've seen growth in debit, we've seen growth in pre-paid cards. For corporates, consumers as well as the government, there's interest in these products. So, you just see an explosion of growth, because of the cash opportunity in markets like India.
Mobile is going to be important as an access device, regardless of whether the consumer is using a prepaid, debit or credit product. The mobile channel can reach many more consumers than can traditional infrastructure where electricity and other factors may be unreliable.
So, we think that the mobile device as an access device for financial services will be critically important. That's also why we recently announced our joint venture with Monitise, which is a mobile financial services provider here in India, to bring mobile banking and mobile payments more broadly to Indian consumers.
You've said in the past that certain markets have the potential to leap-frog the existing payment infrastructure and adapt to mobile payment technology. But in markets such as India and other emerging markets, wouldn't you agree that the bigger challenge lies in financial literacy?
Yes, without a question. To bring people into the financial mainstream, whether it's mobile technology or more traditional card-based forms of payment, requires investment in financial literacy.
In India, for example, we have a money skills website for financial literacy and that's a place that we're going to continue to invest hand-in-hand with the technology, because without financial literacy, we won't successfully bring people into the mainstream. So, it's going to be both innovation and education.
You've got huge hopes pinned on mobile financial services in the Indian market. But realistically speaking, how long do you believe it will be before you see a meaningful shift towards this mode?
So many people have been wrong in predicting the future of mobile payments that at this point. I'm not going to pick a date, but we are going to continue to invest relentlessly in this market in our joint venture here and in both establishing the standards globally and investing in mobile payment where its appropriate.
Again, I often get questions on either or. Either traditional forms of payment or mobile payment, and we think that they are going to co-exist, because there has to be a solution that's right for the stage of development of the market or even within a market here. Urban areas could persist with traditional payments and rural areas could adopt mobile payments sooner.
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