““There’s no obvious difference between high-end consumers and lower-end consumers. They may be buying different things, but nominal levels of spending have stayed quite stable, and that’s largely true around the world.””
— Visa CFO Vasant Prabhu
Visa Inc. continues to see signals that consumer spending is holding up well despite economic pressures, its chief financial officer said at a conference Monday.
Surely, there’s “a lot to worry about” in the current economy, Visa
Chief Financial Officer Vasant Prabhu told investors at a Goldman Sachs conference. “Consumer confidence has been severely damaged in the U.S.,” he said, and the Ukraine war brings further geopolitical uncertainty.
“Despite all that, consumer spending has been remarkably stable,” Prabhu noted, consistent with Visa’s take when the company last reported earnings in late July.
While Visa continues to see a shift in category preferences, at the end of the day, consumers are still opening their wallets.
“As you might expect, people have switched from, as they say, buying things to doing things,” Prabhu said. “Travel is booming,” and hotels, airlines, entertainment sources, and restaurants are all “doing well.”
Visa’s business is not only tied to the health of consumer spending, but also to the status of electronic payments. The company has been able to capitalize in recent years from a move toward cards and away from cash, particularly amid a pandemic-driven wave of digital-payment adoption.
The company’s payment volumes in Latin America, the Middle East and Africa doubled in the past three years, as Visa made further headway in markets where more than half of people were used to getting cash from ATMs, according to Prabhu.
“That tells you how much cash there is to digitize,” he said, noting that there’s “a long runway ahead” of Visa as it looks to make further inroads.
Prabhu’s Monday commentary came as fellow card company Mastercard Inc.
shared some insights of its own about the state of consumer spending.
Mastercard put out its monthly SpendingPulse data, indicating a 11.7% rise in August total retail sales relative to a year earlier, when excluding the automotive category. Such sales were up 20.4% relative to 2019, with the comparison aiming to show performance relative to pre-pandemic times.
Mastercard’s SpendingPulse also contained a holiday-season forecast for 7.1% growth in total retail sales excluding autos on a year-over-year basis, with e-commerce sales expected to climb 4.2% and in-store sales expected in increase 7.9%.