Al Kelly, CEO of Visa Inc, talking about how the global company is staying ahead of the region's payments game as e-commerce and blockchain start to build a presence
It’s an interesting time for the likes of Visa. Their position as one of the big players in the payments space, for so long considered impenetrable, has been challenged by the likes of cryptocurrency and blockchain players, as well as online payment platforms.
What that means for Al Kelly, the company’s global CEO, is an even bigger commitment to innovation, better, more secure processes and unearthing opportunities in regions like the Middle East.
How important is the UAE/GCC for Visa?
Very important. The UAE hosts our headquarters for the Central and Eastern Europe, Middle East and Africa (CEMEA) region, which comprises approximately 90 countries.
We have made significant investments here in our people, our capabilities and in new technologies, including our Dubai innovation centre in which we work closely with our partners to co-create the next generation of digital solutions to advance cashless commerce.
In the UAE, both government and businesses have adopted a pro-innovation stance, which has made investing here more attractive.
The UAE government is keenly aware that innovation flourishes in a competitive marketplace and is focused on ensuring that the regulatory framework supports growth and technology advancements.
Has that belief in innovation extended to your partner banks here?
Businesses here rapidly adopt new technologies. For example, Emirates NBD became the first bank in the region, and one of the first globally, to adopt our mobile location confirmation service.
This is a solution designed by Visa that uses mobile geo-location data to match the location of a transaction with the location of the customer’s mobile device. That means technology ensures that we can best protect consumers and reduce unnecessary transaction declines when consumers travel outside of their home area.
How does the UAE/GCC compare to other parts of the world?
Digital payments account for, on average, a little over 10 percent of all consumer payments across the MENA region, so approximately 90 percent of consumer spend is still in cash.
That is a great opportunity for us to convert to digital payments by giving consumers more access to electronic forms of payment. According to some industry sources, mobile penetration in the region is over 60 percent , while banking penetration is around 15 percent.
It is clear mobile payments are a great way to connect more and more people to the formal financial system, and help grow economies across the region.
E-commerce in the region has been growing rapidly. What does this mean for Visa’s business in the region?
I’ve seen data that says that e-commerce is expected to grow to $69bn by 2020 in this region.
We’ve seen e-commerce payments across our network grow by as much as 77 percent in Kuwait, 53 percent in the UAE and 41 percent in Saudi Arabia over the last couple of years.
However, even with this growth, just two percent of retail in this region is e-commerce compared to nearly 15 percent in Asia Pacific. To put this into perspective, China had more e-commerce sales on “Singles’ Day” – one day – than the Middle East and North Africa experienced in a full year.
However, the potential is significant in this region, especially when you see countries like the UAE and the Kingdom of Saudi Arabia, where smartphones have already eclipsed computers for shopping online.
That’s not surprising since approximately half of millennials in these countries are spending six hours per day on their smartphones.
Given the growth opportunities, mobile internet retailing (m-commerce) is extremely important to us as it is expected grow to up to 47 percent of all online retail by 2021.
How can Visa support Dubai’s drive toward becoming a smart city?
I had the great honour to meet with His Highness Sheikh Maktoum Bin Mohammed Bin Rashid Al Maktoum, Deputy Ruler of Dubai, while I was in Dubai.
The Dubai government is forward-looking and recognises the benefits of digital payments and a connected, mobile economy.
Today our Dubai centre serves as Visa’s global Smart Cities centre of excellence – using key learnings from banks, merchants, the fintech community and government across the region, and applying it to the rest of the world.
An example of this is in our Connected Stadia project, which is working to transform sports and entertainment venues into connected and intuitive venues by linking them with the local transport networks, merchants, food and beverage establishments. We hope to share more on this project in the next few months.
In 2017, Visa became one of six strategic partners that collaborated with the Dubai Silicon Oasis Authority to launch the Dubai Smart City Accelerator, which will help drive further investments in start-ups and fintech companies to drive Smart City solutions.
There has been lots of buzz about blockchain. Is Visa exploring this technology?
We have been actively exploring blockchain technology, within both the product development and the technology research teams for many years. In 2016, we announced B2B Connect, which leverages distributed ledger technology to enable commercial transactions.
B2B Connect gives business a faster, more transparent and secure way to exchange high-value international payments across the world in a near real-time transaction system.
Blockchain remains a very interesting technology and we are looking at distributed ledger applications through our research facility in Palo Alto, California.
More data is being produced now than ever before. How has the role data plays in Visa’s business model evolved?
Most consumers will identify with Visa as the logo on the card they have in their wallet and think of us as the provider of that card.
That isn’t actually the case. Visa is, and always has been, the network called VisaNet, which is capable of processing around 65,000 transactions a second, 24 hours, seven days a week, in almost any currency, anywhere in the world, safely and reliably.
At the centre of VisaNet is a set of more than 350 commercial applications that power payments and provide the capabilities for network processing, issuer-facing software, our digital and mobile capabilities, merchant and acquirer applications, and all our data-driven applications.
In running all of these systems, we generate, collect and process several terabytes of transaction data every single day. None of this is personal information. It’s the basic information we need to process a transaction and ensure it’s legitimate – such as purchase amount and merchant location.
We use it to power several data applications like fraud protection and marketing and loyalty services, so consumers get benefits from using their payments cards and our customers, the banks and retailers, can make better decisions about their businesses.
It’s critical that any business, especially financial institutions, maintain their customers’ trust. We do that by protecting people’s financial information and maintaining a safe and secure payment network for customers all over the world.