commercial payments overview visa, inc. naep april 2012
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Commercial Payments Overview Visa, Inc. NAEP April 2012. Agenda. Commercial Payments VisaNet Commercial Payments Industry Trends Payables Automation Economic Factors RPMG Review. 2. VisaNet. 16,600 Financial Institutions. - PowerPoint PPT PresentationTRANSCRIPT
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Commercial Payments OverviewVisa, Inc.
NAEP April 2012
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Agenda
• Commercial Payments
VisaNet
Commercial Payments
• Industry Trends
• Payables Automation
Economic Factors
RPMG Review
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
VisaNet
Note: Data for four quarters ended June 30, 2009Source: Visa Inc. for four quarters ended June 30, 2009* As reported by client financial institutions and therefore may be subject to change; includes merchant outlets in Visa Europe territory
Acquirers Issuers
Card ProcessorsMerchant Processors
CardholdersMerchants
$2.7 Trillion in Payments Volume
1.8 Billion Cards
30 Million Merchant Outlets*
64 Billion TransactionsIncludes payments
and cash transactions
16,600 Financial
Institutions
$4.6 Trillion in Total Volume
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Global Commercial Opportunity
U.S. Commercial Opportunity
2009 Global CCE Distribution 100% = $88T
The U.S. accounts for 21% of global CCE
Small Business
19%
U.S.23%
2009 U.S. CCE Segment Distribution100% = $19T
Canada 2%
U.S. 21%
Europe 32%
Asia Pacific29%
CEMEA 9%
LAC6%
Small Business<$25M
Medium Business$25-500M
Large Business>$500M
Government
22.6%
19.0%
51.8%
6.5%
U.S. CCE = $19T
Source: Visa Commercial Consumption Expenditure Index; Economist Intelligence Unit (EIU) modeling and analysis, July 2010. Global CCE index data sources include Bureau of Economic Analysis (BEA), U.S. Census Bureau, Organization for Economic Cooperation and Development (OECD), STructural ANalysis (STAN) Database, EuroStat Database, General Government Accounts from the National Accounts of OECD Countries, United Nations Statistics Division National Accounts Main Aggregates Database, EIU proprietary databases, government data and EIU model estimates where government data was unavailable. Large contracted defense spending not included in CCE index.
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Consumer Cards Still Dominate
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
$17.4 $18.5 $19.5 $20.1$17.5 $18.7 $20.0 $21.2 $22.5 $23.8 $25.3
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
US Commercial OpportunityUS Commercial Opportunity is estimated at $18.7T in 2010 and is forecast to grow at a CAGR of 6.2% during the next 5 years
Source: Visa Commercial Consumption Expenditure Index; Economist Intelligence Unit (EIU) modeling and analysis, September 2011. Results include retail and wholesale intermediate inputs and prior year results reflect revisions in published government data. 2010 results are estimates only - government sources typically publish actuals within two years of estimates. CCE Forecast by EIU
Forecast
5 Year CAGR: 6.2%
$USD Trillions
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Payables Automation TrendsPurchasing Card Spending in North America (in $ billions)
Sustained electronic B2B payments growth is being driven by organizations seeking the achieve great cost savings with
traditionally inefficient functions.
Source: RPMG 2010 Purchasing Card Benchmark Survey Results. (This data does not reflect any forecast, prediction or expectation regarding Visa’s performance or revenues.)
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Payables Automation Adoption
Source: Practical Guide to Accounts Payable Automation, Visa PerformSource 2010.
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
• Cash/treasury management top of mind given recent economy; companies focused on tools that provide spend visibility and control
• Automating the accounts payable process continues to gain momentum, driving deeper penetration of B2B spend
• Middle market companies are receiving increased attention from many issuers given comparative profit dynamics
• Companies increasingly operating globally and issuers partnering to serve them at an accelerating pace
• Public sector drives adoption of payment products and solutions
Global Large/Middle Market Trends
Global Commercial Payment Card Purchase Volume by Type
2005 - 2014 Large and Middle Market Trends
$Billion USD
Source: Packaged Facts, December 2009
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Payment Strategies
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Payment Strategies
Buying Organization Payment Type Decision Factors
Source: NAPCP / First Annapolis, “End-User Perspective on Suppliers’ Acceptance of Card Payments,” June 2010 (n=146).Question: How often does your organization consider the following factors when determining how to pay a supplier willing to take any form of payment?
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Transaction Cost
Source: Aberdeen Group Analysis May 2010. Cited in “E-Payables 2010: The Strategic Value of Accounts Payable Automation” Aberdeen Group August 2010 .
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Payment Strategies
Change in Use of Electronic Payments
Source: PayStream Advisors, “Electronic Payments: Streamline P2P, Reduce Costs,” Q2 2010.
Supplier Types:
Strategic
Catalog
Direct
Indirect
Large Ticket
Small Ticket
On-Going
One-Time
In the context of these considerations, ACH and purchasing cards have been increasing while check payments have declined.
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Payment Strategies
Most common form of B2B payments, but highest cost to process Suppliers will often permit 45 – 60 day payment terms Check payments take 3 – 5 days to settle, increasing a supplier’s DSOs
Most common form of B2B payments, but highest cost to process Suppliers will often permit 45 – 60 day payment terms Check payments take 3 – 5 days to settle, increasing a supplier’s DSOs
Generally offer same day settlement for the buyer and supplier High transaction fees to send and receive Typically reserved for large dollar or international transactions, since for smaller,
reoccurring transaction the high cost can be prohibitive
Generally offer same day settlement for the buyer and supplier High transaction fees to send and receive Typically reserved for large dollar or international transactions, since for smaller,
reoccurring transaction the high cost can be prohibitive
Utilizes an electronic network via a daily batch process with a 1 – 2 day settlement delay
Standardized payment files with limited remittance information Can be easily integrated into AP systems
Utilizes an electronic network via a daily batch process with a 1 – 2 day settlement delay
Standardized payment files with limited remittance information Can be easily integrated into AP systems
Most widely used card payment product for procurement of goods by various channels
Can replace the traditional PO / invoice / approval process May have embedded controls to ensure compliance
Most widely used card payment product for procurement of goods by various channels
Can replace the traditional PO / invoice / approval process May have embedded controls to ensure compliance
Traditional Checks
Wire Transfers
ACH(Automated Clearing
House)
Conventional / Traditional Use of P-
Cards
Source: First Annapolis primary research as of April, 2010.
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Economic Overview
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
General Fund Spending
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
General Fund Expenditure Growth
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
General Fund Spending by Category
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
RPMG Benchmark Survey Review
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Purchasing Card Spending
Source: RPMG Purchasing Card Benchmark Survey 2010
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Average Growth Rates
Source: RPMG Purchasing Card Benchmark Survey 2010
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Type of Change in Spending
Source: RPMG Purchasing Card Benchmark Survey 2010
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Average Growth Rates
Source: RPMG Purchasing Card Benchmark Survey 2010
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Type of Change Expected
Source: RPMG Purchasing Card Benchmark Survey 2010
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Expected Growth Rates
Source: RPMG Purchasing Card Benchmark Survey 2010
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Type of Change Expected
Source: RPMG Purchasing Card Benchmark Survey 2010
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Expected Growth Rates
Source: RPMG Purchasing Card Benchmark Survey 2010
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Payment for All Under $2,500
Source: RPMG Purchasing Card Benchmark Survey 2010
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Payment for All ($2,500 - $10,000)
Source: RPMG Purchasing Card Benchmark Survey 2010
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91st Annual Meeting & ExpositionApril 1 – 4, 2012
Anaheim, California
Unanswered Questions?