Q2 2024 Visa Inc Earnings Call

Operator: Welcome to FISA's Fiscal Second Quarter 2024 Earnings Conference Call. All participants' lines are in a listen-only mode until the question and answer session. This conference is being recorded. If you object, you may disconnect at this time. I would now like to turn the call over to your host, Ms. Jennifer Como, Senior Vice President and Global Head of Investor Relations. Ms. Como, you may begin.

Welcome to Visa's fiscal second quarter 2024 earnings conference call. All participant lines are in a listen only mode until the question and answer session. Today's conference is being recorded.

If you object you may disconnect at this time.

I would now like to turn the call over to your host Ms. Jennifer Como Senior Vice President and global head of Investor Relations Ms. <unk> you may begin.

Okay.

Jennifer Como: Thanks, Holly. Good afternoon, everyone, and welcome to Visa's fiscal second quarter 2024 earnings call. Joining us today are Ryan McInerney, Visa's Chief Executive Officer, and Chris Suh, Visa's Chief Financial Officer. This call is being webcast on the investor relations section of our website at investor.visa.com. A replay will be archived on our site for 30 days.

Jennifer Como: Thanks Ali good afternoon, everyone and welcome to Visa's fiscal second quarter 2024 earnings call. Joining us today are Ryan Mcinerney, Visa's, Chief Executive Officer, and Chris Sakai visas Chief Financial Officer. This call is being webcast on the Investor Relations section of our website at Investor <unk>.

Jennifer Como: Dot visa dot com, a replay will be archived on our site for 30 days, a slide deck containing financial and statistical highlights has been posted on our IR website. Let me also remind you that this presentation includes forward looking statements. These statements are not guarantees of future performance and are acts.

Jennifer Como: A slide deck containing financial and statistical highlights has been posted on our IR website. Let me also remind you that this presentation includes forward-looking statements. These statements are not guarantees of future performance, and our actual results could differ materially as a result of many factors. Additional information concerning those factors is available in our most recent annual report on Form 10-K and any subsequent reports on Forms 10-Q and 8-K, which you can find on the SEC's website and the Investor Relations section of our website.

Jennifer Como: Results could differ materially as a result of many factors.

Jennifer Como: Additional information concerning those factors is available in our most recent annual report on Form 10-K, and any subsequent reports on forms 10-Q, and 8-K, which you can find on the Sec's website and the Investor Relations section of our website.

Jennifer Como: For non-GAAP financial information disclosed on this call, the related GAAP measures and reconciliation are available in today's earnings release and the related materials available on our IR website.

Jennifer Como: Our non-GAAP financial information disclosed on this call the related GAAP measures and reconciliation are available in today's earnings release and the related materials available on our IR website and with that let me turn the call over to Ryan.

Jennifer Como: Okay.

Ryan Mcinerney: Good afternoon, everyone. Thank you for joining us. We delivered strong second-quarter results with $8.8 billion in net revenue, up 10%; GAAP EPS up 12%, and non-GAAP EPS up 20%. For our key business drivers, we saw relative stability. Overall payments volume grew 8% year-over-year in constant dollars. U.S. payment volume grew 6% year-over-year, and International Payments Volume grew 11%. Cross-border volume excluding intra-Europe rose 16% year-over-year, and process transactions grew 11%.

Ryan Mcinerney: Good afternoon, everyone.

Ryan Mcinerney: Thank you for joining us.

Ryan Mcinerney: We delivered strong second quarter results with $8.8 billion in net revenue up 10%.

Ryan Mcinerney: GAAP EPS up 12% and non-GAAP EPS up 20%.

Ryan Mcinerney: For our key business drivers, we saw relative stability.

Ryan Mcinerney: Overall payments volume grew 8% year over year in constant dollars.

U S payment volume grew 6% year over year.

Ryan Mcinerney: International payments volume grew 11%.

Cross border volume, excluding intra Europe rose, 16% year over year and process transactions grew 11%.

Ryan Mcinerney: Visa's business performance demonstrates our strategy at work in consumer payments, new flows and value added services.

Ryan Mcinerney: Visa's business performance demonstrates our strategy at work in consumer payments, new flows, and value-added services. Furthermore, across all of these growth levers, tremendous opportunity remains. I'll spend a few moments on each growth lever.

Ryan Mcinerney: Furthermore across all of these growth levers tremendous opportunity remains.

Ryan Mcinerney: Spend a few moments on each growth lever.

Ryan Mcinerney: Let's start with consumer payments. The opportunity in consumer payments is enormous. Based on the latest public data from calendar year 2022 and our analysis, we estimate that the total global Purchase Personal Consumption Expenditure, or PPCE, excluding Russia and China, was approximately $40 trillion.

Ryan Mcinerney: Let's start with consumer payments.

Ryan Mcinerney: The opportunity in consumer payments is enormous base.

Ryan Mcinerney: Based on the latest public data from calendar year, 2022, and our analysis, we estimate that the total global purchase personal consumption expenditure or PPE exclude.

Ryan Mcinerney: Excluding Russia, and China was approximately 40 trillion dollars.

Ryan Mcinerney: Within that $40 trillion, our addressable opportunity is more than $20 trillion. This includes three components.

Ryan Mcinerney: Within that 40 trillion dollars, our addressable opportunity is more than 20 trillion.

Ryan Mcinerney: This includes three components.

Ryan Mcinerney: One <unk>.

Ryan Mcinerney: Cash and Check, which is about half of the addressable opportunities. CAP2Pay is a great example of how we are converting small-ticket cash transactions to Visa Credentials, to ACH, and other electronic transactions. We have many examples in this space, including the work we are doing to extend Visa as a bill-pay method in acceptance categories like rent, education, and loan repayment. And three, cards that run primarily on domestic networks. We have been focused on converting these domestic-based cards to Visa credentials in countries around the world, and I'll share a good example from Europe in a moment.

Ryan Mcinerney: Cash and check.

Ryan Mcinerney: Which is about half of the addressable opportunity.

Ryan Mcinerney: Cap to pay is a great example of how we are converting small ticket cash transactions to visa credentials.

Ryan Mcinerney: Two acha other electronic transactions, we have many examples in this space, including the work we are doing to extend visa as a bill pay method and acceptance categories like rent education and loan repayments.

Ryan Mcinerney: And three <unk>.

Ryan Mcinerney: Cards that run primarily on domestic networks, we've been focused on converting these domestic based cards to visa credentials in countries around the world and I'll share a good example from Europe in a moment.

Ryan Mcinerney: There is a very long runway ahead, and I remain excited about <unk> future growth opportunity in consumer payments.

Ryan Mcinerney: There is a very long runway ahead, and I remain excited about Visa's future growth opportunities in consumer payments. We continue to capture that growth by delivering innovative and secure payment solutions for buyers and sellers, including new credentials and issuance. Tap2Pay and eCommerce. I'll briefly talk about... First, we're making great progress in expanding the number of Visa credentials. We have added over 100 million credentials from September to December for a year-over-year growth rate of 6%. One area of focus is in Europe.

Ryan Mcinerney: We continue to capture that growth by delivering innovative and secure payment solutions for buyers and sellers.

Ryan Mcinerney: Including new credentials and issuance.

Ryan Mcinerney: Tap to pay and E Commerce I'll briefly talk about each.

Ryan Mcinerney: First we're making great progress in expanding the number of visa credentials.

Ryan Mcinerney: We have added over 100 million credentials from September to December for a year over year growth rate of 6%.

Ryan Mcinerney: One area of focus is in Europe.

Ryan Mcinerney: With the UK growing credentials at its fastest rate since 2016, driven in part by strong growth from fintech clients. In addition, from 2018 to 2023, we converted more than 20 million credentials in Europe that primarily ran on domestic networks to Visa debit credentials, with millions more in the process of being migrated. This is a great example of the opportunity I mentioned a moment ago. We're particularly excited as we prepare for the Paris Olympics, which are less than 100 days away.

Ryan Mcinerney: With the UK growing credentials at its fastest rate since 2016, driven in part by strong growth from Fintech clients.

Ryan Mcinerney: In addition from 2018 to 2023, we converted more than 20 million credentials in Europe that primarily ran on domestic networks to visa debit credentials with millions more in the process of being migrated.

Ryan Mcinerney: This is a great example of the opportunity I mentioned a moment ago.

Ryan Mcinerney: We're particularly excited as we prepare for the Paris Olympics, which are less than 100 days away.

Ryan Mcinerney: We have close to 300 clients across 85 countries globally working with Visa to activate our Olympic sponsorship for marketing campaigns and cardholder engagement, such as credential issuance and on-site cardholder events. And in Europe alone, we expect our clients to have issued over 5 million Olympic and Paralympic branded visa credentials before the start of the year. Also this quarter in Europe, we renewed our relationship with Kaisha Gerrard de Depositos in Portugal across consumer credit, debit, and prepaid and commercial credit and debit as well as a suite of value-added services including risk solutions and analytics. Another area of strength is our co-brand issue.

Ryan Mcinerney: We have close to 300 clients across 85 countries globally, working with visa to activate our Olympic sponsorship for marketing campaigns, and cardholder engagements, such as credential issuance and onsite cardholder events.

Ryan Mcinerney: And in Europe alone, we expect our clients to have issued over 5 million of Olympic and Paralympic branded visa credentials before the start of the games.

Also this quarter in Europe, we renewed our relationship with Chi Ishares, you're all day deposit <unk> in Portugal across consumer credit debit and prepaid.

Ryan Mcinerney: And commercial credit and debit as well as a suite of value added services, including risk solutions and analytics.

Ryan Mcinerney: Another area of strength is our co brand issuance.

Ryan Mcinerney: Visa is the primary network partner for 8 of the top 10 co-brand partnerships in the U.S. today, and we are pleased that Visa has finalized a multi-year extension of our successful credit co-branded partnership with Alaska Airlines, a portfolio that benefits from a loyal customer base and high cross-border. We have also had significant co-brand momentum in CEMEA. First, we launched a new co-brand card in partnership with Qatar Airways, British Airways, and the National Bank of Kuwait. Second, we expanded our strong global Marriott relationship to launch Qatar's first hospitality co-branded card with Qatar Islamic Bank across the United Arab Emirates. We now have exclusive agreements with all the leading airlines, marked by a recent agreement with Emirates Skywalk, and we also signed an inaugural airline co-brand agreement in Morocco with Royal Air Maroc.

Ryan Mcinerney: Visa as the primary network partner for eight of the top 10 co brand partnerships in the U S. Today, and we are pleased that visa has finalized a multiyear extension of our successful credit co branded partnership with Alaska Airlines, a portfolio that benefits from a loyal customer base.

Ryan Mcinerney: And high cross border usage.

Ryan Mcinerney: We have also had significant co brand momentum in Cemig.

Ryan Mcinerney: First we launched a new co brand card in partnership with Qatar Airways, British Airways and National Bank of Kuwait.

Ryan Mcinerney: Second we expanded our strong global Marriott relationship to launch cutters first hospitality co branded card with Qatar Islamic Bank.

Ryan Mcinerney: Across the United Arab Emirates, we now have exclusive agreements with all the leading airlines marked by a recent agreement with Emirates Skywards and.

Ryan Mcinerney: And we also signed an inaugural inaugural airline co brand agreement in Morocco with Royal Air Maroc.

Ryan Mcinerney: Now newer digital issuers are equally important to our future growth in consumer payments and in Saudi Arabia.

Ryan Mcinerney: Now newer digital issuers are equally important to our future growth in consumer payments, and in Saudi Arabia, Fintech STC Pay, which has over 12 million customers, is transitioning from a digital wallet to a full digital bank and expanding its Visa prepaid business into Visa Debit and Credit. Digital Bank Maya in the Philippines has chosen Visa to offer its millions of mobile wallet users and bank depositors access to consumer credit cards with new issuance of affluent products. In the U.S., we signed a newly expanded credit deal with brokerage platform Robinson.

Ryan Mcinerney: <unk> STC pay which has over 12 million customers is transitioning from a digital wallet to a full digital bank.

Ryan Mcinerney: And expanding its visa prepaid business into visa debit and credit.

Ryan Mcinerney: Digital Bank Maya in the Philippines has chosen visa to offer its millions of mobile wallet users and bank depositors.

Ryan Mcinerney: Access to consumer credit cards, with new issuance of affluent products.

Ryan Mcinerney: In the U S. We signed a newly expanded credit deal with brokerage platform Robin Hood.

Ryan Mcinerney: Including the launch of a new Robinhood Gold Card, which offers 3% cashback for all purchases. In Europe, broker and savings platform Trade Republic has launched a new Visa card that combines spending and savings for its 4 million customers across 17 markets. Over 1 million people joined the waitlist for the card in just a few weeks.

Ryan Mcinerney: Including the launch of a new Robinhood gold card, which offers 3% cashback for all purchases.

Ryan Mcinerney: In Europe broker and savings platform trade Republic has launched a new visa card that combines spending and savings for their 4 million customers across 17 markets.

Ryan Mcinerney: Over 1 million people joined the wait list for the card in just a few weeks.

Ryan Mcinerney: As I've mentioned in the past, we feel great about our products, our value-added services, our new flows capabilities, our brand, and our people, all coming together to deepen and expand our partnerships with our clients around the world. As we think about Visa's growth, tap-to-pay and e-commerce are key drivers in the digitization of payments. This quarter, tap-to-pay grew 5 percentage points from last year to 79% of face-to-face transactions globally, excluding the U.S. Of note, Japan nearly doubled its penetration since last year to almost 30%. In the U.S., in the second quarter, we're nearing 50 percent penetration with New York City at over 75 percent.

Ryan Mcinerney: As I've mentioned in the past, we feel great about our products our value added services, our new flows capabilities, our brand and our people all coming together to deepen and expand our partnerships with our clients around the world.

Ryan Mcinerney: As we think about visa's growth.

Have to pay in E. Commerce are key drivers in the digitization of payments.

Ryan Mcinerney: This quarter tap to pay grew five percentage points from last year to 79% of face to face transactions globally, excluding the U S.

Ryan Mcinerney: Of note, Japan nearly doubled its penetration since last year to almost 30%.

Ryan Mcinerney: In the U S. In the second quarter were nearing 50% penetration with New York City at over 75%. The first U S city to reach this milestone up from 50% two years ago, demonstrating the impact that transit and our focused issuance in <unk>.

Ryan Mcinerney: The first U.S. city to reach this milestone, up from 50 percent two years ago, demonstrating the impact that transit and our focused issuance and acceptance have on accelerating growth. On the e-commerce front, we continue to see Visa's U.S. e-commerce payments volume grow several points faster year-over-year than face-to-face spend, and the same is true in many key countries around the world, including Canada, Brazil, Australia And this matters to Visa's growth because, in the e-commerce space, cash is not usually an option.

Ryan Mcinerney: <unk> have on accelerating growth.

Ryan Mcinerney: On the E Commerce front, we continued to see visa as U S e-commerce payments volume grow several points faster year over year than face to face spend and the same is true in many key countries around the world, including Canada, Brazil, Australia and India.

Ryan Mcinerney: And this matters to visa's growth because in the ecommerce space cash is not usually an option.

Ryan Mcinerney: And although e-commerce payments are a highly competitive environment, we believe our capabilities and our focus on safety, security, reliability, and user experience position us very well. Adding to the potential for growth is tokenization, which brings several benefits to the ecosystem, especially in e-commerce. Reducing fraud, Improving authorization rates, and Making It Easier for Customers to Purchase Goods or Services. As of the second quarter, we have over 9.5 billion tokens globally and have surpassed a milestone of 1 billion tokens in Asia-Pacific, joining the ranks of the U.S. and Europe. We continue to be focused on all of these efforts, in addition to seeking new areas of acceptance and spending. Now, moving to New Flow.

Ryan Mcinerney: And although e-commerce payments are a highly competitive environment, we believe our capabilities and our focus on safety security reliability and user experience position us very well.

Ryan Mcinerney: Adding to the potential for growth as <unk>, which bring several benefits to the ecosystem, especially in e-commerce, including reducing fraud, improving authorization rates and therefore, making it easier for a customer to purchase a good or service.

Ryan Mcinerney: As of the second quarter, we have over nine 5 billion tokens globally and have surpassed a milestone of 1 billion tokens in Asia Pacific joining the ranks of the U S and Europe.

Ryan Mcinerney: We continue to be focused across all of these efforts. In addition to seeking new areas of acceptance and spending.

Ryan Mcinerney: Now moving to new flows.

Ryan Mcinerney: We mentioned last quarter that we see $200 trillion of opportunity excluding Russia and China, and we are delivering Visa's commercial and money movement solutions to help digitize these flows. This quarter, New Flow's revenue growth improved to 14% year-over-year on a constant dollar basis, with Visa Direct overall transactions growing 31% for the quarter to $2.3 billion, and commercial volumes up 8% year-over-year in constant dollars. Throughout the quarter, we remained focused on our Visa Direct strategy across several areas of growth, including new use cases, expansion to new geographies, and enabling. One recent example is our expanded agreement with Tune, which increased the number of countries in which Visa Direct can enable push-to-wallet from 78 to 100.

Ryan Mcinerney: We mentioned last quarter that we see 200 trillion dollars of opportunity, excluding Russia and China.

Ryan Mcinerney: And we are delivering visa commercial and money movement solutions to help digitize. These flows.

This quarter, new flows revenue growth improved to 14% year over year on a constant dollar basis.

Ryan Mcinerney: With visa direct overall transactions growing 31% for the quarter to $2 3 billion and commercial.

Ryan Mcinerney: <unk> volumes up 8% year over year in constant dollars.

Ryan Mcinerney: Throughout the quarter, we remained focused on our visa direct strategy across several areas of growth, including through new use cases expansion to new geographies and enablers.

Ryan Mcinerney: One recent example is our expanded agreement with tunes, which increase the number of countries in which visa direct can enable pushed the wallet from 78 to 108.

Ryan Mcinerney: In addition, Tunes is implementing Visa Direct's push-to-card capability to enable payouts made to eligible Visa cards and accounts. We have also expanded earned wage access in Canada through an agreement with Payfair and have brought our first Visa Direct cross-border capability to Taiwan with Taishan Bank. On the enabler front, we are pleased that our longtime partner, JPMorgan Payments, will be seamlessly integrating Visa Direct into their acquiring operations to offer their business clients faster push payments capabilities.

Ryan Mcinerney: In addition tunes is implementing visa direct push to card capability to enable payouts made to eligible visa cards and accounts.

Ryan Mcinerney: We have also expanded earned wage access in Canada through an agreement with pay fair and have brought our first visa direct cross border capability into Taiwan with Tai Shan Bank.

Ryan Mcinerney: Are the enabler front, we are pleased that our longtime partner JP Morgan payments will be seamlessly integrating visa direct into their acquiring operations to offer their business clients faster push payments capabilities.

Ryan Mcinerney: In addition, we continued to deepen our relationship with Chase in the small business market with investment and enhancements in products and services. And in accounts receivable and payable, we renewed and expanded our multi-year agreement with Bill on their accounts payable, spend, and expense management platform. We have also reached a global partnership with Taulea, an SAP company and a leading provider of working capital management solutions.

Ryan Mcinerney: In addition, we continued to deepen our relationship with chase in the small business market with investment in enhancements and products and services.

Ryan Mcinerney: And in accounts receivable and payable we renewed and expanded our multiyear agreement with bill on their accounts payable spend and expense management platforms.

Ryan Mcinerney: We have also reached a global partnership with Telia.

Ryan Mcinerney: And as a company and a leading provider of working capital management solutions.

Ryan Mcinerney: The collaboration will incorporate Visa's digital payment technology into Thalia's virtual platform, a solution that integrates with SAP ERP solutions and business applications to make embedded finance accessible for businesses through a seamless and streamlined payments experience for buyers and suppliers. One vertical in NewFlows that has immense potential is government payments, representing over $15 trillion in annual payments volume opportunity, where we are in a strong position to combine many of our NewFlows offerings. A recent example is in Kenya, where we signed an agreement with PesaFlow, a technology partner for the government of Kenya, to expand card payments for e-citizens.

Ryan Mcinerney: The collaboration will incorporate visa digital payments technology into poly is virtual cards, a solution that integrates with SAP ERP solutions and business applications to make embedded finance accessible for businesses through a seamless and streamlined payments experience.

Ryan Mcinerney: For buyers and suppliers.

Ryan Mcinerney: One vertical in new flows that has immense potential is government payments representing over 15 trillion dollars in annual payments volume opportunity.

Ryan Mcinerney: Where we are in a strong position to combined many of our new flows offerings.

Ryan Mcinerney: A recent example is in Kenya, where we signed an agreement with pacer flow at <unk>.

Knowledge partner for the government of Kenya to expand card payments on E citizen the government electronic platform with over 12 million users.

Ryan Mcinerney: The government's electronic platform with over 12 million users. We achieved this by bringing together Visa Virtual Credentials and Visa Direct into the platform. Now, let me move on to value-added services, where revenue was up 23% in the second quarter in constant dollars.

Ryan Mcinerney: We achieved this by bringing together visa virtual credentials and visa direct into the platform.

Ryan Mcinerney: Now, let me move on to value added services were.

Ryan Mcinerney: Where revenue was up 23% in the second quarter in constant dollars.

Ryan Mcinerney: The growth and opportunity in value-added services continue to be significant and broad-based. For example, in the Acceptance Solution, we signed an agreement with Millicom International Cellular in Latin America for CyberSource Gateway, Decision Manager, and Token Management Solutions. As it relates to open banking, Just about two years ago, we acquired Tink as we saw the opportunity in open banking to enable the movement of data and money and to provide consumers with control over their financial data. Over those two years, we have been expanding our presence in Europe, winning deals with companies such as Audein and Revlon.

The growth and opportunity in value added services continue to be significant and broad based.

Ryan Mcinerney: In acceptance solutions, we signed an agreement with Millicom International cellular.

Ryan Mcinerney: In Latin America for Cybersource Gateway decision manager and token management solutions.

Ryan Mcinerney: As it relates to open banking.

Ryan Mcinerney: Just about two years ago, we acquired tank as we saw the opportunity in open banking to enable the movement of data and money.

Ryan Mcinerney: And to provide consumers with control over their financial data.

Over those two years, we have been expanding our presence in Europe, winning deals with such as audience and revenue.

Ryan Mcinerney: We're now expanding open banking solutions through TINK into the United States. We have signed several data access agreements, including with Capital One, Fiserv, and Jack Henry, so that their customers may share data with Tink. We've also signed partnerships on the fintech and merchant side, including Dwala and MaxRewards, and across our risk offerings. We continue to bolster them through our technology, innovation, and AI expertise, and are expanding their utility beyond the Visa Network.

Ryan Mcinerney: We're now expanding open banking solutions through <unk> into the United States.

Having signed several data access agreements, including with capital one fiserv and Jack Henry So that their customers may shared data with tank.

Ryan Mcinerney: We've also signed partnerships on the Fintech and merchant side, including Duara and Max rewards.

Ryan Mcinerney: And across our risk offerings, we continue to bolster them through our technology innovation and AI expertise.

Ryan Mcinerney: Recently, we announced three such capabilities in our Visa Protect offer. The first is the expansion of our signature solutions, Visa Advanced Authorization and Visa Risk Manager, for Non-Visa Card Payments, making them network agnostic. This allows issuers to simplify their fraud operations into a single fraud detection solution.

Ryan Mcinerney: And are expanding their utility beyond the visa network.

Ryan Mcinerney: Recently, we announced three such capabilities in our visa protect offering.

Ryan Mcinerney: The first is the expansion of our signature solutions visa advanced authorization and visa risk manager for non visa card payments, making them network agnostic.

Ryan Mcinerney: Second, is the release of Visa Protect for account-to-account payments. Our first fraud prevention solution built specifically for real-time payments, including P2P digital wallets, account-to-account transactions, and Central Bank's Instant Payment System. Powered by AI-based fraud detection models, this new service provides a real-time risk score that can be used to identify fraud on account-to-account payments. We've been piloting both of these in a number of countries, and our strong results thus far have informed our decision to roll them out globally.

Ryan Mcinerney: This allows issuers to simplify their fraud operations into a single fraud detection solution.

Ryan Mcinerney: The second is the release of visa protect for account to account payments. Our first fraud prevention solution built specifically for real time payments, including PDP digital wallets account to account transactions and central banks instant pay.

Ryan Mcinerney: <unk> systems.

Ryan Mcinerney: Powered by AI based fraud detection models. This new service provides a real time risk score that can be used to identify fraud on account to account payments.

Ryan Mcinerney: The third solution is Visa Deep Authorization, a new transaction risk scoring solution tailored specifically to the U.S. market to better manage e-commerce payments, powered by a world-class deep learning recurrent neural network model and petabytes of contextual data.

Ryan Mcinerney: We've been piloting both of these and a number of countries and our strong results. Thus far have informed our decision to roll these out globally.

Ryan Mcinerney: The third solution is visa deep authorization.

Ryan Mcinerney: We also continue to make our offerings available through third-party platforms. We mentioned ServiceNow last quarter, and we are excited to have recently joined the AWS Partner Network to help seamlessly provide our clients running systems in the cloud access to Visa's solutions, initially starting with Currencycloud, now known as Visa Cross-Border Solutions, and PISB.

Ryan Mcinerney: It is a new transaction risk, scoring solution tailored specifically to the U S market to better manage e-commerce payments powered by a world class deep learning recurrent neural network model and Petabytes of contextual data.

Ryan Mcinerney: We also continue to make our offerings available through third party platforms.

Ryan Mcinerney: We also signed an agreement with Stripe for them to distribute Verify solutions through a self-service dispute management platform for their merchants. All of these efforts are part of our strategy to build and offer our solutions for both Visa and our network of networks. Before I hand it to Chris, I wanted to note that we have commenced the exchange offer for Visa's Class B1 common stock, which is set to expire at the end of next. I also wanted to highlight that this quarter, after nearly 20 years of litigation, we have agreed to a landmark settlement with U.S. merchants, more than 90 percent of which are small businesses.

Ryan Mcinerney: We mentioned service now last quarter and we are excited to have recently joined the AWS partner network to help seamlessly provide our clients running systems in the cloud access to visa solutions initially starting with currency cloud now known as visa Cross border solutions.

Ryan Mcinerney: And Pismo.

We also signed an agreement with stripe for them to distribute verify solutions through a self service dispute management platform for their merchants.

Ryan Mcinerney: All of these efforts are part of our strategy to build and offer our solutions for both visa and our network of networks.

Ryan Mcinerney: Lowering credit interchange rates and capping those rates into 2030 once approved by the court. The Injunctive Relief Class Settlement also provides updates to several key network rules, giving merchants more choice in how they accept digital payments. Last, let me share a few closing thoughts on the quarter and beyond. First, our second quarter was marked by stable results and strengthened relationships with clients across the globe. Second, as we head into the back half of our fiscal year and beyond, new flows and value-added services will remain key areas of focus.

Ryan Mcinerney: Before I hand, it to Chris I wanted to note that we have commenced the exchange offer for visa class B. One common stock that is set to expire at the end of next week.

Speaker Change: I also wanted to highlight that this quarter. After nearly 20 years of litigation, we have agreed to a landmark settlement with U S merchants more than 90% of which are small businesses.

Speaker Change: Lower in credit interchange rates and tapping those rates into 2030 once approved by the court.

Sanjay Sakhrani: The injunctive release, the injunctive relief class settlement also provides updates to several key network rules, giving merchants more choice in how they accept digital payments.

Ryan Mcinerney: We also see a significant opportunity in consumer payments by digitizing cash and checks, enhancing our capabilities in e-commerce, and building new solutions for our network of networks. I could not be more excited for what lies ahead. Finally, all of this is possible because of the 30,000 Visa employees who come to work every day in service of our clients and partners. I am grateful for everything that you do. Thank you, and now over to Chris.

Speaker Change: Last let me share a few closing thoughts on the quarter and beyond.

Speaker Change: First our second quarter was marked by stable results and strengthened relationships with clients across the globe.

Second as we head into the back half of our fiscal year and beyond new flows and value added services remain key areas of focus.

Speaker Change: We also see significant opportunity in consumer payments by digitizing cash and check enhancing our capabilities in E Commerce and building new solutions for our network of networks I could not be more excited for what lies ahead.

Christopher Suh: Thanks, Ryan. Good afternoon, everyone. As Ryan said, Q2 was a strong quarter with relatively stable growth across payments volume, process transactions, and cross-border volume. Looking at our drivers, in constant dollars, global payments volume was up 8% year over year, and process transactions grew 11% year over year. Cross-border volume growth, excluding intra-Europe, was up 16% year-over-year in constant dollars.

Speaker Change: Finally, all of this is possible because of the 30000 visa employees, who come to work every day in service of our clients and partners I am grateful for everything that you do thank you and now over to Chris.

Sanjay Sakhrani: Thanks, Ryan and good afternoon, everyone.

Sanjay Sakhrani: As Ryan said Q2 was a strong quarter with relatively stable growth across payments volume processed transactions and cross border volume.

Christopher Suh: Fiscal's second quarter net revenue was up 10% in nominal and constant dollars, which was slightly above our expectations, primarily due to lower-than-expected incentives and better-than-expected value-added services revenue that collectively more than offset lower-than-expected currency volatility. GAAP EPS was up 12%, and non-GAAP EPS was up 20% in nominal and 21% in constant dollars. So let's go into the details, starting with total payments volume. Global Payments Volume Growth in Q2 was 8%, consistent with Q1 growth. There are a couple things I'd like to highlight when comparing Q2 to Q1.

Sanjay Sakhrani: Looking at our driver in constant dollars global payments volume was up 8% year over year and process transactions grew 11% year over year.

Cross border volume growth, excluding intra Europe was up 16% year over year in constant dollars.

Sanjay Sakhrani: Fiscal second quarter net revenue was up 10% in nominal and constant dollars, which was slightly above our expectation primarily due to lower than expected incentives and better than expected value added services revenue that collectively more than offset lower than expected currency volatility.

Christopher Suh: First, the extra day for leap year was a benefit to the quarter. However, this was offset primarily by slowing payments volume growth in Asia Pacific, mostly due to macroeconomic weakness in mainland China. When we adjust for Asia and some other smaller factors, we see second quarter global payments volume growth generally in line with the first quarter. Now on to the U.S. U.S. payments volume grew 6% year-over-year, credit grew 6%, and debit grew 6%.

Sanjay Sakhrani: GAAP EPS was up 12% and non-GAAP EPS was up 20% in nominal and 21% in constant dollars.

Speaker Change: So let's go into the details starting with total payments volume.

Global payments volume growth in Q2 was 8% consistent with Q1 growth.

Speaker Change: There are a couple of things I'd like to highlight when comparing Q2 to Q1 first the extra day for leap year was a benefit to the quarter. This was offset primarily by slowing payments volume growth in Asia Pacific, mostly due to macroeconomic weakness in mainland China.

Christopher Suh: Card Present Spend grew 4%, and Card Not Present Volume grew 8%. Reg II had a similar modest impact in Q2 as we saw in Q1. When we normalize for leap years, we see relatively stable U.S. payments volume growth. Consumer spend across all segments, from low to high spend, has remained relatively stable. Our data does not indicate any meaningful behavior change across consumer segments.

Speaker Change: When we adjust for Asia and some other smaller factors, we see second quarter global payments volume growth generally in line with the first quarter.

Speaker Change: Now onto the U F U S payments volume grew 6% year over year credit grew 6% and debit grew 6%.

Speaker Change: Card present spend grew 4% and card not present volume grew 8%.

Speaker Change: Reg I had a similar modest impact in Q2 as we saw in Q1 when.

Christopher Suh: Moving to international markets, where total payments volume growth was up 11% in constant dollars, payments volume growth rates were strong for the quarter in most major regions, with Latin America, CEMEA, and Europe ex-UK each growing more than 19% in constant dollars. Normalized for leap year and weakness in mainland China, total international payments volume growth was relatively stable in the first quarter. As a reminder, domestic volumes in mainland China drive a very small amount of revenue, and therefore, the impact on our financial statements is not significant. Now to cross-border, which I'll speak to in constant dollars and exclude intra-European transactions.

Speaker Change: When we normalize for leap year, we see relative relatively stable U S payments volume growth.

Speaker Change: Consumer spend across all segments from low to high spend has remained relatively stable our data does not indicate any meaningful behavior change across consumer segment.

Moving to international market, where total payments volume growth was up 11% in constant dollars.

Speaker Change: Payments volume growth rates were strong for the quarter in most major regions with Latin America, EMEA and Europe ex UK, each growing more than 19% in constant dollars.

Speaker Change: Normalized for leap year and weakness in mainland China total international payments volume growth was relatively stable to the first quarter.

Christopher Suh: Total cross-border volumes were up a healthy 16% in Q2, generally in line with our expectations. Cross-border card not present volume growth, excluding travel and adjusted for cryptocurrency purchases, was within the mid-teens, stronger than expected. Cross-border travel volume was up 17% or 152% indexed to 2019.

Speaker Change: As a reminder, domestic volumes in mainland China drive a very small amount of revenue and therefore, the impact to our financial statements is not significant.

Speaker Change: Now to cross border, which I'll speak to in constant dollars and excluding intra Europe transactions total cross border volumes were up a healthy 16% in Q2 generally in line with our expectations.

Speaker Change: Cross border card not present volume growth, excluding travel and adjusted for crypto currency purchases within the mid teens stronger than expected.

Christopher Suh: Consistent with our expectations for the year, we continue to see strong travel volume growth in and out of LAC, Europe, and CEMEA, and out of the US, ranging from 158 to 192% of 2019 levels. U.S. inbound travel volume has continued to recover within our expectations, up several points from Q1 versus 2019 levels. Asia-Pacific travel volume continues to recover, but the pace has been slower than we anticipated. Travel volume into Asia indexed at 142% of 2019 levels for the quarter, up 8 points from Q1, while travel volume out of Asia was up 2 points to 124% of 2019. We see the primary drivers as one, macroeconomic weakness in key markets like Australia and mainland China.

Speaker Change: Cross border travel volume was up 17% or 152% indexed to 2019.

Speaker Change: Consistent with our expectations for the year, we continue to see strong travel volume growth in and out of.

Speaker Change: Europe and EMEA it out of the U S ranging from 158% to 192% of 2019 levels.

Speaker Change: The U S. Inbound travel volume has continued to recover within our expectation up several points from Q1 versus 2019 level.

Speaker Change: Asia Pacific travel volume continues to recover but the pace has been slower than we anticipated.

Speaker Change: Travel volume into Asia index at 142% of 2019 levels for the quarter up eight points from Q1, while travel volume out of Asia was up two point to 124% of 2019.

Christopher Suh: Weakness in some Asia-Pacific currencies, which is impacting consumer purchasing power, particularly in Japan. And three, airline capacity that is still below 2019 levels, particularly in mainland China and North American corridors. All together, we're pleased with our total cross-border volume growth, with e-commerce growth generally offsetting the travel weakness in Asia. And this is a great testament to the strength and diversification of our model.

Speaker Change: We see the primary drivers being one macroeconomic weakness in key markets like Australia and mainland China.

Speaker Change: Weakness in some Asia Pacific currencies, which is impacting consumer purchasing power, particularly for Japan.

Speaker Change: And three airline capacity that is still below 2019 levels, particularly the mainland China and North American corridor.

Altogether, we're pleased with our total cross border volume growth with E Commerce growth generally offsetting the travel weakness in Asia and this is a great Testament to the strength and diversification of our model.

Christopher Suh: Now let's review our second quarter financial results, starting with the revenue component. Both service revenue and data processing revenue grew generally in line with their underlying drivers, which resulted in their respective revenue yields remaining relatively consistent with the first quarter. Service revenue grew 7% year-over-year versus the 8% growth in Q1 constant dollar payments volume. Data Processing Revenue Group grew 12% versus the 11% process transaction growth. International transaction revenue was up 9% versus the 16% increase in constant dollar cross-border volume, excluding intra-Europe, impacted by lapping strong currency volatility from last year. However, as volatility reached lows that we haven't seen in about four years, revenue growth was lower than we expected.

Speaker Change: Now, let's review, our second quarter financial results, starting with the revenue components, both service revenue and data processing revenue grew generally in line with their underlying drivers, which resulted in their respective revenue yields remaining relatively consistent to the first quarter.

Speaker Change: Service revenue grew 7% year over year versus the 8% growth in Q1 constant dollar payments volume.

Speaker Change: Data processing revenue grew 12% versus the 11% process transaction growth.

International transaction revenue was up 9% versus the 16% increase in constant dollar cross border volume, excluding intra Europe impacted by lapping strong currency volatility from last year.

Speaker Change: As volatility reached lows that we haven't seen in about four years the revenue growth was lower than we expected.

Christopher Suh: Other revenue grew 37%, primarily driven by strong consulting and marketing services revenue growth and, to a lesser extent, price. Client incentives grew 12% lower than we expected due to client performance and deal timing. Across our three growth engines, consumer payments growth was driven by relatively stable payments volume, process transactions, and cross-border volume. New flows revenue improved as expected to 14% year-over-year growth in constant dollars. Visa Direct Transactions improved to 31% year-over-year growth, helped by growth in Latin America for interoperability among P2P apps.

Speaker Change: Other revenue grew 37%, primarily driven by strong consulting and marketing services revenue growth and to a lesser extent pricing.

Speaker Change: Client incentives grew 12% lower than we expected due to client performance and deal timing.

Speaker Change: Across our three growth engines consumer payments growth was driven by relatively stable payments volume processed transactions and cross border volume.

Speaker Change: New flows revenue improved as expected to 14% year over year growth in constant dollars.

Speaker Change: Visa direct transactions improved to 31% year over year growth helped by growth in Latin America for interoperability among PDP app.

Christopher Suh: Commercial volume rose 8% year over year in constant dollars. In Q2, value-added services revenue grew 23% in constant dollars to $2.1 billion, primarily driven by issuing and acceptance solutions and advisory services. GAAP operating expenses increased 29% driven by increases in the litigation provision and G&A expenses. Non-GAAP operating expenses grew 11% primarily due to increases in G&A and personnel expenses. SX and TISMO each represented an approximately half-point headwind.

Commercial volume rose, 8% year over year in constant dollars.

Speaker Change: In Q2 value added services revenue grew 23% in constant dollars to $2 1 billion, primarily driven by issuing and acceptance solutions and advisory services.

Speaker Change: GAAP operating expenses increased 29% driven by increases in the litigation provision and G&A expenses.

non-GAAP operating expenses grew 11%, primarily due to increases in G&A and personnel expenses.

Speaker Change: FX and Pismo each represented approximately half point headwind.

Christopher Suh: Excluding net losses from our equity investments of $30 million, non-GAAP non-operating income was $189 million. Our GAAP tax rate was 15.4%, and our non-GAAP tax rate was 16% due to the resolution of some non-U.S. tax matters. GAAP EPS was $2.29, and non-GAAP EPS was $2.51, up 20% over last year, inclusive of an almost one point drag from exchange rates and an approximately half point drag from PISMO. In Q2, we bought back approximately $2.7 billion in stock and distributed over $1 billion in dividends to our stockholders. At the end of March, we had $23.6 billion remaining in our buyback authorization.

Speaker Change: Excluding net losses from our equity investments of $30 million.

Speaker Change: non-GAAP non operating income was $189 million.

Speaker Change: Our GAAP tax rate was 15, 4% and our non-GAAP tax rate was 16% due to the resolution of some non U S tax matters.

Speaker Change: GAAP EPS was $2 in 2009.

Speaker Change: non-GAAP EPS was $2 51 up 20% over last year inclusive of an almost one point drag from exchange rates and an approximately half point drag from Pismo.

Speaker Change: In Q2, we bought back approximately $2 7 billion in stock and distributed over $1 billion in dividends to our stockholders.

Speaker Change: At the end of March we had $23 6 billion remaining in our buyback authorization.

Christopher Suh: Now, let's move to what we've seen so far in April through the 21st. U.S. payments volume was up 4%, with debit up 4% and credit up 5% year-over-year, down from March primarily due to Easter timing. However, process transactions grew 9% year over year. Constant dollar cross-border volume excluding transactions within Europe grew 15% year-over-year. Travel-related cross-border volume excluding intra-Europe grew 15% year-over-year in constant dollars, or 151% indexed to 2019, and cross-border card not present, X travel grew 15% in constant dollars.

Speaker Change: Now, let's move to what we've seen so far in April through the 21.

Speaker Change: U S payments volume was up 4% with debit up 4% and credit up 5% year over year down from March primarily due to Easter timing.

Speaker Change: Processed transactions grew 9% year over year.

Speaker Change: Constant dollar cross border volume, excluding transactions within Europe grew 15% year over year.

Speaker Change: Travel related cross border volume, excluding intra Europe grew 15% year over year in constant dollars or 151% indexed to 2019.

Speaker Change: And cross border card not present ex travel grew 15% in constant dollars.

Christopher Suh: Now on to our expectations. Remember that adjusted basis is defined as non-GAAP results in constant dollars and excluding acquisition impacts. You can review these disclosures in our earnings presentations for more detail. Let's start with the full year.

Speaker Change: Now onto our expectations remember that adjusted basis as defined as non-GAAP result in constant dollars and excluding acquisition impacts you can review these disclosures in our earnings presentation for more detail.

Speaker Change: Let's start with the full year, we are reaffirming our prior year guidance for the full year for adjusted net revenue and operating expense growth in the low double digits and EPS growth in the low teens.

Christopher Suh: We are reaffirming our prior year guidance for the full year for adjusted net revenue and operating expense growth in the low double digits and EPS growth in the low teens. As for drivers, things are progressing generally as we expected, except for the trends in Asia that we discussed. Accordingly, we are making a small adjustment to our outlook for total payments volume growth to the high single digits from the low double digits.

Speaker Change: As for drivers things are progressing generally as we expected except for the trends in Asia that we discussed.

Speaker Change: Accordingly, we are making a small adjustment to our outlook for total payments volume growth to the high single digits from the low double digits.

Christopher Suh: Total cross-border volume, excluding intra-Europe, is expected to continue to grow strongly in the mid-teens, with the strength in e-commerce generally offsetting weakness in Asia travel. Remember that our drivers assume no recession or no further increase in Reg II impact. Currency volatility remains low, and we are assuming volatility in the third quarter continues at a similar rate to the second quarter and adjusts up slightly in the fourth quarter. Now, on to the third quarter.

Speaker Change: Total cross border volume, excluding intra Europe is expected to continue to grow strongly in the mid teens with the strength in E Commerce generally offsetting weakness in Asia travel.

Speaker Change: Remember that our drivers assume no recession or no further increase in Reg II impacts.

Speaker Change: Currency volatility remains low and we are assuming volatility in the third quarter continues at a similar rate to the second quarter and adjusts up slightly in the fourth quarter.

Speaker Change: Now.

Speaker Change: Onto the third quarter expectations.

Christopher Suh: We expect adjusted net revenue growth in the low double digits, generally in line with the adjusted second quarter growth. Adjusted operating expenses in the third quarter are expected to grow in the low teens. Driven primarily by Olympic-related marketing expenses due to the strong client engagement that Ryan referenced, non-operating income is expected to be between 50 and 60 million dollars, and the tax rate is expected to be between 19 and 19.5 percent in Q3, with the full year unchanged.

Speaker Change: We expect adjusted net revenue growth in the low double digits generally in line to the adjusted second quarter growth rate.

Speaker Change: Adjusted operating expenses in the third quarter are expected to grow in the low teens, driven primarily by Olympic related marketing expense due to the strong client engagement that Ryan referenced.

Speaker Change: Non operating income is expected to be between 50% and $60 million.

And the tax rate is expected to be between 19 and 19, 5% in Q3 with the full year unchanged.

Christopher Suh: This puts third quarter adjusted EPS growth in the high end of the low double digits. For the third quarter, PISMO is expected to have minimal benefit to net revenue growth and an approximately one point headwind to non-GAAP operating expense and an approximately half point drag to non-GAAP EPS growth. FX for the third quarter is expected to have an approximately one point drag on net revenue growth, an approximately one and a half point benefit on non-GAAP operating expense growth, and an approximately half point drag on non-GAAP EPS growth.

Speaker Change: Third quarter adjusted EPS growth.

Speaker Change: In the high end of low double digits.

Speaker Change: For the third quarter Pismo is expected to have minimal benefit to net revenue growth and an approximately one point headwind to non-GAAP operating expense.

Speaker Change: And approximately half point drag to non-GAAP EPS growth.

Speaker Change: FX for the third quarter is expected to have an approximately one point drag to net revenue growth and approximate one and half point benefit to non-GAAP operating expense growth and an approximately half point drag to non-GAAP EPS growth.

Christopher Suh: In summary, we had another solid quarter in Q2 with relatively stable underlying drivers and strong financial results. We feel good about the momentum in our business as we head into the second half, across consumer payments, new flows, and value-added services. We remain thoughtful with our spending plans as we continue to balance short and long-term considerations in the context of a changing environment. So now, Jennifer, let's do some Q&A. Thanks, Chris.

Speaker Change: In summary, we had another solid quarter in Q2 with relatively stable underlying drivers and strong financial results. We feel good about the momentum in our business as we head into the second half across consumer payments, new flows and value added services.

Speaker Change: We remain thoughtful with our spending plans as we continue to balance between short and long term considerations in the context of a changing environment.

Speaker Change: So now Jennifer let's do some Q&A, thanks, Chris and with that we're ready to take questions Holly.

Jennifer Como: Thanks, Chris. And with that, we're ready to take questions, Holly. Thank you. If you would like to ask a question, please press star 1 and clearly record your name. You will be announced prior to asking your question. To ensure that all questionnaires...

Thank you if you would like to ask a question. Please press star one and clearly record your name will be announced prior to asking your question.

Jennifer Como: To ensure all question here as you heard we ask that you. Please limit yourself to just one question.

Operator: Thank you. If you would like to ask a question, please press star 1 and clearly record your name. You will be announced prior to asking your question. To ensure all questionnaires are heard, we ask that you please limit yourself to just one question. Once again, to ask a question, please press star one, and to withdraw your question, please press star two. Our first caller is Sanjay Sakhrani from KBW. You may go ahead.

Jennifer Como: Once again to ask a question. Please press star one and two.

Jennifer Como: Sorry. Your question. Please press star two.

Sanjay Sakhrani: Our first caller is Sanjay stock Ronny with K B W.

Sanjay Sakhrani: Go ahead thank.

Sanjay Sakhrani: Thank you Chris a clarification question you mentioned Easter was mainly affecting the quarter to date trends is it fair to assume that the growth rate would be commensurate with the last quarter. If you adjusted for that and then just on a related matter did the tax refund timing have any impact.

Sanjay Sakhrani: In later in the quarter in the quarter or into the quarter to date trends. Thanks.

Christopher Suh: Yeah, thanks for the question. So April volumes, as I said on the call, through the first three weeks were lower than March, the month of March. This was due to the timing of Easter, which again, was in March this year and April of last year. And so once you factor that into March and April growth rates, the change between the months is not meaningful. As far as tax payments at this point, you know, I don't really have an update. Largely, they've been consistent at this point year to date.

Sanjay Sakhrani: Yes. Thanks for the question So April volumes.

As I said on the call through the first three weeks from lower than March the month of March. This was due to the timing Bestir, which again was in March this year and April of last year and so once you factor that into March and April growth rates.

Sanjay Sakhrani: The change between the months.

Sanjay Sakhrani: The change in growth rate is not meaningful as <unk>.

Far as tax payments at this point.

Speaker Change: Not really have an update.

Speaker Change: Largely they've been consistent at this point year to date.

Operator: Next.

Operator: Next question, Holly.

Holly: Next question Holly.

Holly: Our next caller is Timothy Chiodo with UBS you May go ahead.

Operator: Our next caller is Timothy Chiodo with UBS. You may go ahead.

Christopher Suh: Great, thank you for taking the question. There were some helpful comments around the e-commerce strength within cross-border offsetting some of the travel weakness. When we think about the components of overall cross-border, clearly, there's the traditional travel, so card present and card not present, and then there's the traditional e-commerce, right, so retail e-commerce. But there are other faster growing but smaller portions, whether it be the remittances or marketplace payouts, or you gave the tunes example earlier. I was wondering if you could maybe size in aggregate how large some of those other, maybe faster growing, portions of cross-border have become as a part of the overall mix.

Great. Thank you for taking the question there were some helpful comments around the e-commerce strength within cross border offsetting some of the travel weakness when we think about the components of overall cross border clearly there is the traditional travel so card present and card not present.

And then there is the traditional e-commerce right. So retail ecommerce, but there are other faster growing but smaller portions whether it be the remittances or marketplace payouts or you gave the tunes example earlier I was wondering if you could maybe size the in aggregate how large some of those other maybe faster growing portions of cross.

Holly: Border have become as a part of the overall mix.

Speaker Change: Yes, sure why don't I start, yes, we don't have specifics to break out as we talked about the E Commerce business has.

Christopher Suh: Yeah, sure. Why don't I start?

Christopher Suh: Yeah, we don't have specifics to break out. As we talked about, the e-commerce business has been strong, and it continues to grow above what we expected. The yields across our entire cross-border business are positive and accretive to Visa overall. And so, you know, we're happy with all flavors of cross-border. But I don't have a further breakout for you in terms of the pieces that you were asking.

Speaker Change: Been strong it continues to grow above what we expected the yields across our entire cross border business are positive and accretive to visa overall and so we're happy with all flavors of cross border, but I don't have a further breakout for you in terms of.

Speaker Change: The pieces that you were asking about.

Operator: Next question, Heidi.

Speaker Change: Next question.

Speaker Change: Our next caller is Craig Maurer with Ft Partners you May go ahead.

Operator: Our next caller is Craig Maurer with FT Partners. You may go ahead.

Craig Jared Maurer: Yes, thanks for taking the question I wanted to ask a question on U S debit trends.

Christopher Suh: Yeah, thanks for taking the question. I want to ask you a question on US debit trends. April continued the trend of weakening that we've seen, that we saw also in March and basically since February. Wanted to know to what degree your guidance for both third quarter and the year embeds continued weakening in US debit. You know, it would seem, if we look at the restaurant data released by the likes of Darden, that the lower income portion of the US is significantly reducing spend in certain areas. I am so curious about the commentary there. Thanks.

Craig Jared Maurer: April continued the trend of weakening that we've seen that.

Craig Jared Maurer: We saw some in March and basically since February.

Craig Jared Maurer: Wanted to know to what degree your guidance for both third quarter and the year.

Craig Jared Maurer: Beds continued weakening in U S debit it would seem if we look at the restaurant data released by the likes of Darden.

Craig Jared Maurer: The lower income portion of the U S is significantly reducing spend.

Craig Jared Maurer: In certain areas. So curious from your commentary there. Thanks.

Speaker Change: Yes as.

Christopher Suh: Yeah, as we talked about on the call, we see quite stable, relatively stable volumes in the U.S. across credit and debit, normalizing for the things that I talked about. And so, you know, in addition, as I talked about, Reg II, the impact remains stable as well. And so, from our perspective, our data indicates stable volume growth in the U.S. Next question, Holly. Our next caller is Bryan Bergen with TD Talon

Speaker Change: As we talked about on the call, we see quite stable relatively stable volumes in the U S across credit and debit normalizing for the things that I talked about and so.

Speaker Change: In addition.

Speaker Change: As I talked about Reg II, the impact remains stable as well and so from our perspective, our data indicates a stable stable volume growth in the U S.

Next question Holly.

Speaker Change: Our next caller is Bryan Bergin with TD Cowen you May go ahead.

Unknown Attendee: Hi, Good afternoon. Thank you I wanted to ask on new flows. So a nice recovery there and growth can you give a comment on what areas were most pronounced in the underlying growth recovery relative to what you saw last quarter.

Christopher Suh: Our next caller is Bryan Bergen with TD Talon. You may go ahead.

Christopher Suh: Yeah, let me talk about Q2 growth. The two pieces of information that we gave you in terms of Q2 growth, we saw commercial volume growth, globally, 8%, stable to Q1, and, in fact, stable over the last several quarters. And we saw very strong growth in Visa direct transactions, growing 31% for the quarter, new flows, and revenue in total, growing 14%, which was in line with our expectations that we shared with you at the start of the year. I think the recovery that you're referencing is because Q1 growth was lower. And that was really due to some lapping issues that were one time and non-recurring, which we've passed at the

Speaker Change: Yes, let me talk about Q2 growth.

Unknown Attendee: Two pieces of information that we gave you in terms of future growth, we saw commercial volume growth globally at 8% stable to Q to Q1 and in fact stable over the last several quarters and we saw very strong growth in visa direct transactions growing 31% for the quarter New flows revenue in total growing 14%.

Which was in line with our expectations that we shared with you at the start of the year.

Unknown Attendee: The recovery that you're referencing two was because Q1 growth was lower and that was really due to some lapping issues that were onetime and nonrecurring which.

Unknown Attendee: Path at this point.

Holly: Next question Holly.

Operator: Our next caller is Will Nance with Goldman Sachs. You may go ahead.

Holly: Our next caller is will Nance with Goldman Sachs. You May go ahead.

Christopher Suh: Hey guys, I appreciate you taking the question. A bit of a dual-part question on just some of the prior guidance commentary you made around first half versus second half dynamics and some of the drivers of acceleration over the course of the year, and I guess specifically, I guess incentives. You talked about a step down in the growth rate from first half to second half. Is that still your expectation, you know, despite it coming in a lot lower in the most recent quarter?

William Alfred Nance: Hey, guys I appreciate you taking the question a bit of a dual part question on just some of the Powerbar and <unk> made a one half versus second half dynamics.

William Alfred Nance: Some of the drivers of acceleration over the course of the year and I guess specifically.

William Alfred Nance: You talked about a step down in the growth rates in the first half to second half is that still your expectation.

William Alfred Nance: Despite that coming in a lot lower.

William Alfred Nance: In the most recent quarter and then a similar question on the volume growth trends I guess I hear you.

Christopher Suh: And then sort of similar question on the volume growth trends; I guess I hear you on the Asian trends, but I guess overall, you've had some kind of upbeat commentary on ticket sizes over the course of the year and kind of easing inflation comps; seems like gas prices might help that as well. So just any commentary on ticket sizes and specifically, you know, the negative ticket sizes you've seen in the US, any commentary on kind of what's structural versus, you know, kind of more environmental there? Thanks.

On the Asia overall.

William Alfred Nance: Overall, you had some kind.

William Alfred Nance: Kind of upbeat commentary on ticket sizes over the course of the year and kind of easing inflation seem to gas prices won't help that as well. So just any commentary on ticket sizes and specifically the negative ticket sizes, you've seen in the U S. Any commentary on kind of what structural versus.

William Alfred Nance: Kind of more environmental damage.

Yes, Okay. Let me start first with incentives the first part of your question. So.

Christopher Suh: Okay, let me start with incentives, the first part of your question. As you all have seen, from quarter to quarter, incentive growth can vary based on a number of factors, client performance, deal timing, which is what caused half one to come in lower than anticipated. For our outlook for the second half of the year, our expectations remain largely unchanged. We still expect year-over-year growth to be lower in the second half than in the first half, as we launder the higher incentives that we saw starting in the second half of last year. And we do expect the Q4 incentive growth rate will be the lowest growth quarter of the year, so expectations for half two are unchanged.

As you all have seen from quarter to quarter incentive growth can vary based on a number of factors client performance deal timing, which is what caused half one to come in lower than anticipated.

William Alfred Nance: For our outlook for the second half of the year, our expectations remain largely unchanged, we still expect year over year growth to be lower in the second happened in the first half as we lap the higher incentives that we saw starting in the second half of last year and we do expect the Q4 incentive growth rate will be the lowest growth quarter of the year.

William Alfred Nance: Expectations for half two unchanged.

Christopher Suh: To your second question on ATS, there are a lot of moving parts here, and so maybe I'm just gonna kind of go through it in detail and unpack bit by bit. Globally, Q2 ATS year-over-year growth was down slightly, which is consistent with the growth that we saw in Q1. Breaking that apart between the U.S. and international, in the U.S., ticket size growth actually continued to improve from Q1 to Q2, still slightly negative, but the trend improved from Q1 to Q2.

William Alfred Nance: To your second question on Ats, Let me, there's a lot of moving parts in here. So maybe I'll just going to kind of go through it in detail unpack bit by bit.

William Alfred Nance: Globally Q2, EPS year over year growth was down slightly which is consistent with the growth that we saw in Q1.

William Alfred Nance: Breaking that apart between the U S and international in the U S ticket size growth actually continue to improve from Q1 to Q2 still slightly negative, but the trend improved from Q1 to Q2.

And looking ahead in the U S. But it's something that we've spoken to previously we do continue to expect Ats will turn positive in the second half of this year as we lap the lower ticket sizes in the second half of last year.

Christopher Suh: And looking ahead in the U.S., something that we've spoken to previously, we do continue to expect ATS to turn positive in the second half of this year as we lap the lower ticket sizes in the second half of last year. Internationally, outside of Asia Pacific, let's set that aside for a second, we saw improvement in several regions, including the impact of higher inflation in several markets. And so overall, excluding Asia, we still expect ATS to turn positive in the second half based on the expected improvements in the US. With the impact of Asia factored in, global ATS will be slightly negative. And that was factored into the revised payment volume outlook that I gave for the full year.

William Alfred Nance: Internationally outside of Asia Pacific, Let's set that aside for a second we saw improvement in several regions, including the impact from higher inflation in several markets and so overall, excluding Asia, we still expect Ats to turn positive in the second half based on the expected improvements in the U S with the.

William Alfred Nance: The impact of Asia factored in global Ats will be slightly negative and that was factored into the revised payment volume outlook that I gave for the full year.

Operator: Next question, Holly. Our next caller is Moshi Khatri with Wedbush Securities. You may go ahead. Hey, thanks for taking.

Holly: Next question Holly.

Holly: Our next caller is Moshe <unk> with Wedbush Securities You May go ahead.

Moshe: Hey, Thanks for taking my question. It seems like there is a there was a pretty significant uptick sequentially and growth for value added services is there anything to call out there. Thanks.

Operator: Our next caller is Moshi Khatri with Wedbush Securities. You may go ahead. Hey, thanks for taking my question.

Ryan Mcinerney: I mean, I'll talk about the business just for a minute. Moshe, thanks for the question.

Moshe: Okay.

I'll talk about the business just for a minute Moshe. Thanks for the question and then Chris you can add any specific callouts.

Ryan Mcinerney: And then, Chris, you can add any specific call-outs. You know, as I think I said in my prepared remarks, the business is really hitting its strides in a lot of different areas, in terms of, you know, the product we're bringing to market, and the success our sales teams are having around the world. You know, we're really focused on three big areas of trying to drive growth. One is just deepening the penetration of products we have with existing clients. That's, if you think about it, the most near-term opportunity that we have. And, you know, we've got metrics client by client all around the world. What are they using? What are they not using?

Speaker Change: I think I said in my prepared remarks, the business is really hitting its strides in a lot of different areas in terms of the product, we're bringing to market. The success of our sales teams are having around the world.

Speaker Change: Really focused on three big areas of trying to drive growth. One is just deepening the penetration of products, we have with existing clients.

Speaker Change: If you think about it the most near term opportunity that we have.

And we've got metrics client by client all around the world what are they using what are they not using we're arming. Our sales teams are that we're building case studies on how we can help them and we're driving progress in terms of deepening the relationship we have with our existing clients and then we're building new products that we're bringing to market I mentioned a few of those in my prepared.

Ryan Mcinerney: We're arming our sales teams with that, and we're building case studies on how we can help them. And, you know, we're driving progress in terms of deepening the relationship we have with our existing clients, and then we're building new products that we're bringing to market. I mentioned a few of those in my prepared remarks today, both in the risk and fraud space, as well as in the open banking space and then driving geographic expansion.

<unk> remarks today.

Speaker Change: Both the risk and fraud space as well as in the open banking space.

Speaker Change: And then driving geographic expansion.

Ryan Mcinerney: You know, I mentioned just one cybersource deal in my prepared remarks. But cybersource has been a great example of, you know, a platform where we've been having success growing in markets where we hadn't traditionally been as deep. AP is actually a positive example of that in the cybersource space. So, I don't know, those are a couple of call-outs. Next question. Our next caller is Chris Kennedy with William Blair.

Speaker Change: I mentioned I think just one cybersource deal in my prepared remarks, but cybersource has been a great example of a platform where we've been having success growing in markets, where we haven't traditionally been as deep.

AP is actually a positive example of that in the Cybersource space. So those are a couple.

Speaker Change: Callouts machine in terms of kind of how we've just seen the broader business.

Speaker Change: Next question.

Speaker Change: Our next caller is Cris Kennedy with William Blair You May go ahead.

Operator: Our next caller is Chris Kennedy with William Blair. You may go ahead. Good afternoon.

Unknown Attendee: Good afternoon. Thanks for taking the question you talked about bringing <unk> into the U S. Can you talk about the open banking opportunity in the U S relative to Europe. Thank you.

Ryan Mcinerney: Yeah, thanks, Chris. I think Europe is the most developed open banking market in the world. We bought Tink two years ago, believing that it was the best platform in Europe. And I think that's proven true over the couple of years that we've had a chance to own it. You know, on the client side in Europe, we've been making great progress. I think I mentioned a couple of my prepared remarks.

Unknown Attendee: Yes, Thanks, Chris.

Unknown Attendee: I think Europe is the most developed open banking market in the world.

Speaker Change: We bought <unk> two years ago.

Speaker Change: Believing that it was the best platform in Europe, and I think that's proven true over the couple of years that we've had a chance to own it.

On the client side in Europe, we've been making great progress I think I mentioned a couple of my prepared remarks, we've been we've been winning business and winning share with both.

Ryan Mcinerney: We've been, you know, winning business and winning share with both fintech as well as more traditional banks, merchants, and others, both on the payment side of things and in the account information side of things. I would describe the US market as less developed than Europe. And so I think it's an opportunity for us to take the learnings that we've had in the much more developed European market, as well as the success we've had with our clients, the products, the services, the wins and the losses, and bring all of that to the US market.

Speaker Change: Fintech as well as more traditional banks merchants and others both.

Speaker Change: The payment side of things in the <unk>.

Speaker Change: The account information side of things I would describe the U S market as less developed as Europe, and so I think it's an opportunity for us to take the learnings that we've had in a much more developed Europe market as well as the success we've had.

Speaker Change: With our clients the products the services, the wins and losses and bring all of that to the U S market. So we're excited to do that.

Ryan Mcinerney: So we're excited to do that. As I mentioned, I think the US market is still in the very early stages of its development. So I think it's a good time for us to be a competitor in the market. And, you know, we're hopeful that over the coming quarters and years, we'll have a chance to share with you a lot of the success that we have in the US market. Next question, please. Our next caller is Dan Perlin with RBC Capital Markets. You may go ahead. Thanks, Ryan. I just wanted to ask you a question about the Visa Deep Authorization commentary and the kind of market there.

Speaker Change: Yes, as I mentioned I think the U S market is still at the very early stages of its development. So I think it's a good time.

Speaker Change: For us to be a competitor in the market and we're hopeful that over the coming quarters and years, while the chance to share with you a lot of the success that we have in the U S market.

Speaker Change: Next question please.

Speaker Change: Our next caller is Dan Perlin with RBC capital markets. You May go ahead.

Thanks, Ryan I just wanted to ask a question on the visa deep authorization commentary and kind of the market. There I just want make sure I understand are you <unk>.

Daniel Rock Perlin: This is a means with which to equalize.

Daniel Rock Perlin: e-commerce across the market for authorization rates, so that like acquirer's needs to be partnered with you more specifically and therefore, they're not competing maybe shows.

Operator: Our next caller is Dan Perlin with RBC Capital Markets. You may go ahead. Thanks.

Daniel Rock Perlin: Individually on kind of operates within e-commerce or is there something different within this platform. Thank you.

Ryan Mcinerney: Hey Dan, let me back up. I think this is a little different than what you were describing. What we found in the U.S. e-commerce market is that, on the one hand, it's the most developed e-commerce market on the planet. On the other hand, it's become the place of the most sophisticated fraud and attack vectors that we see anywhere in the world. And so what we are bringing to market with Visa Deep Authorization is a e-commerce transaction risk scoring platform and capability that is specifically tailored and built for the unique sets of attack vectors that we're seeing in the U.S. So, as I was mentioning in my prior remarks, it's built on deep learning technology that's specifically tuned to some of the sequential and contextual views of accounts that we've had in the U.S. market.

Speaker Change: Hey, Dan.

Speaker Change: Listen let me back up I think this is a little different than what you were describing what we've found in the U S e-commerce market.

Speaker Change: Is that is the most on the one hand, it's the most developed e-commerce market on the planet on the other hand, it's become the place of the most sophisticated.

Speaker Change: Fraud and attack vectors that we see anywhere in the world and so what we are bringing we are bringing to market with visa deep authorization is a e-commerce transaction risk, scoring platform and capability that is specifically tailored and built for the unique.

Speaker Change: Set of attack vectors that we're seeing in the U S. So as I was mentioning in my prepared remarks.

Speaker Change: It's built on deep learning technology that specifically tuned to some of the sequential contextual view of accounts that we've had in the U S market and the whole goal is what we do with a lot of our fraud and authorization products, we want to we want to make it a better buyer and seller experience, we want to reduce fraud rates increase authorization.

Operator: And that whole goal is what we do with a lot of our fraud and authorization products. We want to make it a better buyer and seller experience. We want to reduce fraud rates, increase authorization rates, and increase shopping conversion for our merchant partners, and we think Visa Deep Authorization is going to be yet another tool that will help do that. Next question, please. Our next caller is Tinson Wong from JPMorgan. You may go ahead.

Speaker Change: Rates increased shopping conversion for our merchant partners and we think visa depot authorization is going to be yet another tool that will help do that.

Speaker Change: Next question please.

Our next caller is tinson Wang with Jpmorgan you May go ahead.

Tinson Wang: Thanks, so much it sounded like the middle East deal activity is in a good place here I believe that the takeaway for you I'm just curious if there's something new going on there from a pipeline perspective, it sounds like maybe some of the best thing is just a growth market, we should be paying more attention to maybe.

Ryan Mcinerney: Thanks, Sanjay. I think what you're seeing is good execution from our sales team, which is doing what we do when we do it best, which is being with our clients, listening, learning, obsessing about what's important to them, and then bringing them products and value propositions that are helping meet their needs and drive their strategies. And really, just kudos to our team on the ground there and the great work that they

Speaker Change: Thanks, Andrew.

Speaker Change: I think what Youre seeing is good execution from our sales team.

Doing what we do when we do it best which is in with our clients listening learning obsessing about what's important to them and then bringing them products and value propositions that are helping to meet their needs and drive their strategies.

Speaker Change: And really just kudos to our team on the ground there and the great work that they're doing.

Operator: Next question, please. Our next caller is Trevor Williams from Trevor Williams and Jeffreys. You may go ahead. Great, thanks a lot. This one's for Ryan.

Speaker Change: Next question please.

Speaker Change: Our next caller is Trevor Williams with Jefferies. You May go ahead.

Trevor Williams: Great. Thanks, a lot. This one is for Brian just wanted to go back to the merchant settlement in the U S. Clearly you guys aren't directly impacted by lower interchange, but I'm, just curious kind of what you're expecting the downstream impact to be on visa the relationships between you and your issuing banks. If you think in any way kind of changes.

Ryan Mcinerney: I just wanted to go back to the merchant settlement in the U.S.

Operator: Our next caller is Trevor Williams with Jeffreys. You may go ahead. Okay.

Ryan Mcinerney: Thanks, Trevor. I think the good news on this front is it brings clarity and stability to the market. This is litigation that's been out there for the better part of 20 years or so, and I think there's been a lot of great work that's been done to bring this to a resolution.

Brian: The competitive dynamics at all within the U S credit market. Thanks.

Brian: Thanks, Robert I think the good news on this front is it brings clarity and stability to the market.

Brian: This is litigation that's been out there for the better part of 20 years or so.

Brian: I think theres been a lot of great work, that's been done to bring this to a resolution.

Ryan Mcinerney: Just to remind everyone what the main tenets of the resolution are, it really is two different sets of things. One is it will reduce interchange for credit cards in the U.S. market for both Visa and MasterCard, and it will have no increases in interchange for the five years of the agreement. And then the second set of things are tools that give merchants more flexibility in how they manage payments, specifically as it relates to surcharging and things like that.

Brian: Just to remind everyone. What the main planks of the resolution are it really is two different sets of things.

Brian: One is it will reduce interchange for U S for credit cards in the U S market for both visa and Mastercard.

Brian: And it will have no increases in interchange for the five years of the agreement and then the second.

Brian: Set of things are tools that give merchants more flexibility to how they manage payments.

Significantly specifically as it relates to surcharges and things like that I think.

Ryan Mcinerney: I think, overall, it's what I said, Trevor, which is clarity and stability that lets everybody who operates in the U.S. market move on and move on, continuing to grow the digitization of this great payments ecosystem that we've all collectively built in the United States.

Brian: Overall, it's what I said, Trevor which is clarity and stability that lets everybody who operates in the U S market move on and move on continuing to grow the digitization of this great payments ecosystem that we've all collectively built in the United States.

Speaker Change: Question. Please.

Operator: Our next question is Harshita Rawat with Bernstein. You may go ahead.

Speaker Change: Our next question next question <unk> with Bernstein, you May go ahead.

Ryan Mcinerney: Good afternoon. So, Ryan, I want to follow up on value-added services, such an important part of your growth story. I know you've talked about the five types of services you offer and how your top 250 clients use almost 2x the number of services versus the rest of your client base. Can you give us some sense of how these penetration numbers have evolved over time? And finally, as you kind of think about pricing for these services, to what extent is the bundle pricing along with the core versus the separately-priced services?

Bernstein: Hi, good afternoon, So Ryan I wanted to follow up on that and it's such an important question.

Tony I know you've talked about the fact that you're servicing.

Bernstein: You offer and how you got 250 clients is almost <unk>.

Bernstein: Congrats again.

Bernstein: Can you give us some sense and how these penetration numbers.

Bernstein: Overtime and finally as you think about pricing for these services to what extent, it's abundant pricing along with core versus kind of separately right.

Bernstein: Okay.

Speaker Change: If you have a great memory.

Ryan Mcinerney: We have a great memory. As we've said, you know, our top 265 clients or so use on average about 22 of our value-added services. We don't talk about how that's, you know, moved quarter to quarter.

Speaker Change: As we've said our top 265 clients or so use on average about 22 of our value added services.

Speaker Change: We don't talk about like how thats move quarter to quarter, but the opportunity is enormous just when you think about the number of clients we have around the planet.

Ryan Mcinerney: But the opportunity is enormous, just when you think about the number of clients we have around the planet. And so, as I was mentioning earlier, kind of what we've done is we've armed our frontline teams with, client by client, what are they using? What are they not using?

Speaker Change: And so as I was mentioning earlier.

Speaker Change: What we've done is we've armed our frontline teams with kind of client by client what are they using what are they not using one of the what are the opportunities to create value for the client by putting value added services, a b C or D to work for them.

Ryan Mcinerney: What are the opportunities to create value for the client by putting value-added services A, B, C, or D to work for them? And we're having great success. And you know, you see that in the numbers.

And we're having great success and you see that in the numbers.

Ryan Mcinerney: In terms of pricing, we have different pricing models for different products and different suites of solutions in different places around the world. You know, we're always trying to come up with the right product pricing mix that's going to work best for our products in the market. And, you know, we have a portfolio of value-added services that extends from issuing to acceptance to risk and identity to advisory and to open banking, and the competitive sets are deep and different in all of those markets.

Speaker Change: In terms of the pricing.

Speaker Change: It has different pricing models for different products and different suites of solutions in different places around the world and we're always trying to come up with the right product pricing mix, that's going to work best for our products in the market and we have a portfolio of value added services that span from issuing to acceptance to risk in <unk>.

Speaker Change: Entity to advisory into open banking and the competitive sets are deep and difference in all of those markets. So we're bringing different pricing approaches to each and every market around the world to help meet the best that we can for our clients.

Ryan Mcinerney: So we're bringing different pricing approaches to each and every market around the world to help, you know, meet the best that we can for our clients. Next question, please. Our next caller is Ramsey Elassal with Barclays. You may go ahead. Hi, thanks for taking my question. I wanted to ask about one of

Speaker Change: Next question please.

Speaker Change: Our next caller is Ramsey El <unk> with Barclays. You May go ahead.

Ramsey Clark El: Hi, Thanks for taking my question.

Ramsey Clark El: I wanted to ask about one of the consumer payment opportunities that Ryan called out, namely taking share from domestic card networks. How do you drive that is it just a question of getting banks to issue more of your cards or is it more on the acceptance or the consumer side what are the levers that you have to basically.

Operator: Next question, please. Our next caller is Ramsey Elassal with Barclays. You may go ahead. Hi, thanks for taking my ques-

Operator: Yeah, thanks for the question. It's really the first of the things that you mentioned. Now, of course, we need to have great acceptance. We need to have great capabilities and all those types of things, which we do in every market we operate in around the planet. So then it becomes sitting down with clients, helping them understand the value of, for example, a Visa debit card versus a card that runs primarily on domestic schemes.

Ramsey Clark El: Speed that up.

Speaker Change: Yes, thanks for the question.

Speaker Change: It's really the first of the things that you mentioned of course, we need to we need to have great acceptance, we need to have great capabilities in all of those types of things, which we do in every market we operate around the planet. So then it becomes.

Speaker Change: Sitting down with clients, helping them understand the value of for example, a visa debit card versus.

Speaker Change: Our card that runs primarily on domestic schemes and then you get into e-commerce capabilities that visa debit is able to provide their clients that maybe they don't get the same type of capabilities from the domestic scheme, you get to cross border travel opportunities.

Operator: And then you get into e-commerce capabilities that Visa debit is able to provide its clients that maybe they don't get the same type of capabilities from the domestic scheme. You get into cross-border travel opportunities that their customers would have if they were using a Visa card versus one of those domestic schemes that I mentioned. You also get into the risk and fraud prevention capabilities that I mentioned earlier and the ability to have more transactions approved and lower fraud rates through tokenization.

Speaker Change: That their customers would have if they were using a visa card versus one of those domestic schemes that I mentioned, you also get into the risk and fraud prevention.

Speaker Change: Capabilities that I mentioned earlier and the ability to have more transactions approved and lower fraud rates <unk> I mean, all of these kind of benefits that you've heard us talk about over and over again those are what our teams can sit down with the clients and explained to them often the clients will do some.

Operator: I mean, all these kinds of benefits that you've heard us talk about over and over again, those are what our teams can sit down with the clients and explain to them. Often, the clients will do some pilots and some tests. They'll see the results. They'll see higher spend. They'll see higher client satisfaction, and then, ultimately, the decision to issue Visa cards to their clients becomes a very clear decision. Next question, please. Our next caller is Jamie Friedman with Susquehanna. You may go ahead.

Speaker Change: Pilots in some tests they will see the results you will see higher spend you will see higher client satisfaction and then ultimately the decision to issue visa cards to their clients becomes a very clear decision for them.

Speaker Change: Question. Please.

Speaker Change: Our next caller is Jamie Friedman with Susquehanna you May go ahead.

Ryan Mcinerney: Thanks, Jamie. We view the Mexican opportunity as a very significant one. Coincidentally, I was just down there a couple weeks ago meeting with clients and meeting with the PROSTA team as well. So, as I think I explained in one of these calls, today, because we don't process transactions domestically in Mexico, we're not able to deliver a lot of the value-added services that I've mentioned over the course of this call to our clients.

Speaker Change: Hi.

James Eric Friedman: I was wondering if you could share some color on how process is doing so far.

James Eric Friedman: How do you view the opportunity in Mexico, as you start to press and product ties into the Mexican market. Thank you.

James Eric Friedman: Yeah, Thanks, Jamie we view the Mexican opportunity as a very significant one.

Speaker Change: Coincidentally I was just down there a couple of weeks ago meeting with clients and meeting with the pros the team as well so.

Speaker Change: As I think I explained.

Speaker Change: One of these calls today, because we don't process transactions domestically in Mexico.

Speaker Change: Not able to deliver a lot of the value added services that I've mentioned over the course of this call to our clients and so first and foremost our clients are very excited about us having the opportunity to have a majority ownership stake in process and then bring these world class capability.

Ryan Mcinerney: And so, first and foremost, our clients are very excited about us having the opportunity to have a majority ownership stake in PROSTA and then bring these world-class capabilities that we've built to the Mexican market. The things I mentioned earlier, tokenization or the risk scoring algorithms that I mentioned, or the e-commerce capabilities that I mentioned. Now, PROSA itself is a great asset, you know, it's been operating for 50 years in Mexico, it has deep processing experience, it has scale, they do more than, you know, 10 billion transactions annually, and they have a great base of clients.

Is that we've built to the Mexican market the things I mentioned earlier <unk>.

Speaker Change: The risk, scoring algorithms that I mentioned or the e-commerce capabilities that I mentioned those types of things now process itself is a great asset it's been operating for 50 years.

Speaker Change: In Mexico as deep processing experience at a scale they do more than 10 billion transactions annually. They have a great base of clients. So it is really the combination of vote of process experience and deep footprint in the Mexican market combined with our <unk>.

Ryan Mcinerney: So it's really the combination of PROSA's experience and deep footprint in the Mexican market combined with our experience, our technology, and our track record of bringing a lot of these services to market. The combination of those two things gives us a lot of confidence and our clients a lot of confidence that we can digitize the significant amount of cash and check and electronic payments that exist today in Mexico.

Speaker Change: Experience our technology, our track record in bringing a lot of these services to market the combination of those two things.

Speaker Change: It gives us a lot of confidence in our clients a lot of confidence that we can digitize the significant amount of cash in and check and electronic payments that exist today in Mexico.

Speaker Change: Next question please.

Speaker Change: Our next question is from Andrew Schmidt with Citi. You May go ahead.

Operator: Next question, please. Our next question is from Andrew Schmidt with Citi. You may go ahead.

Speaker Change: Okay.

Andrew William Jeffrey: Hey, Brian Hey, Chris Thanks for having me on the call here.

Andrew William Jeffrey: Wanted to go back to our cross border for a second obviously, a part of the <unk>.

Andrew William Jeffrey: Back half growth is the narrowing of the spread between cross border ramps in volumes, maybe if you could talk a little about how.

Operator: Hey, Ryan. Hey, Chris. Thanks for having me on the call here. I want to go back to cross-border for a second.

Or whether those assumptions have changed at all with FX volumes coming down or.

Operator: Our next question is from Andrew Schmidt with Citi. You may go ahead.

Andrew William Jeffrey: If there is other puts and takes we should consider there. Thanks a lot.

Christopher Suh: Sure. Yeah, I spoke at length about volatility. So we have, in Q2, we saw volatility, currency volatility at multi-year lows. This one's hard to predict.

Speaker Change: Yes, sure, yes, I spoke at length about volatility. So we had in Q2, we saw volatility currency volatility at multiyear lows.

Speaker Change: This one is hard to predict in Q3, our assumption what's embedded in the guidance for Q3 is that the currency volatility levels remain at this low level. We do have again embedded in our in our forecast we do anticipate that Q4 improved slightly and that's generally in line with market expectations.

Operator: In Q3, our assumption, what's embedded in the guidance for Q3, is that the currency volatility levels remain at this low level. We do have, again, embedded in our forecast, we do anticipate that Q4 improves slightly. That's generally in line with market expectations. But yeah, that is our view of currency volatility. That said, you know, the underlying health of our business as we enter the second half of the year, we feel really good about across consumer payments, across new flows, across value-added services. And so volatility is sort of the variable, and we'll have to see how it comes in. Next question, please. Our next question comes from Jason Kupferberg with Bank of America.

Speaker Change: But yes that is our view of currency volatility that said the underlying health of our business as we enter the second half of the year, we feel really good about across consumer payments across new flows across value added services and so volatility is sort of the.

Speaker Change: The variable and we'll have to see how it comes in.

Speaker Change: Next question please.

Speaker Change: Our next question comes from Jason Kupferberg with Bank of America, You May go ahead.

Operator: Next question, please. Our next question comes from Jason Kupferberg with Bank of America. You may go ahead.

Jason Kupferberg: Thank you guys can you talk about your second half expectations for new flows in Vas revenue growth as well as cross border travel volume growth.

Jason Kupferberg: Yes.

Jason Kupferberg: Sure, let me unpack that a little bit from a.

Christopher Suh: Sure. Let me unpack that a little bit.

Jason Kupferberg: As you've heard us we reaffirm firmed our prior year guide for the full year adjusted net revenue growth Opex EPS and within that I spoke about the fact that volatility is going to cause our currency volatility treasury revenues and international to be lower than we anticipated in Q3.

Christopher Suh: As you heard us, we reaffirmed our prior year guide for the full year, adjusted net revenue growth, OpEx, and EPS. And within that, I spoke about the fact that volatility is going to cause our currency volatility, and treasury revenues in international to be lower than we anticipated in Q3. But again, full year, unchanged.

Jason Kupferberg: But again full year unchanged within that.

Christopher Suh: Our expectations for new flows in VAS are consistent with the ones that we shared at the beginning of the year, which we anticipated. For the full year, new flows will grow faster than consumer payments, with faster growth in the second half of the year. We're seeing that with the 14% growth in Q2. We anticipate continuing to see good growth in the second half of the year. The value-added services have grown over 20% in each of the first two quarters. The momentum there is pretty evident.

Jason Kupferberg: Our expectations for new flows in Vas are consistent with the ones that we shared at the beginning of the year, which we anticipated for the full year.

Jason Kupferberg: New flows will grow faster than consumer payments with weighted toward faster growth in the second half of the year, we're seeing that with the 14% growth in Q2 anticipate.

Jason Kupferberg: Continuing to see.

Good growth in the second half of the year value added services has grown over 20% in each of the first two quarters. The momentum there is pretty evident.

Christopher Suh: The second part of your question was, I think, around cross-border travel volumes in total. So, we did make a little bit of an adjustment, as you heard me talk about, based on Path 1 trends. And so again, this is one with a couple of parts, so let's just go through it in detail.

Jason Kupferberg: The second part of your question was I think around cross border travel.

Volumes in total so we.

Jason Kupferberg: We did make a little bit of adjustment you heard me talk about based on half one trends.

Jason Kupferberg: Again. This is one with a couple of parts. So let's just go through it in detail first of all we feel really good feel great about our first half total cross border performance, 16% growth in Q2 in line with our expectations and within that travel was 17 and e-commerce growth mid teens better than expected.

Christopher Suh: First of all, we feel really good, feel great about our first half total cross-border performance, 16% growth in Q2, in line with our expectations. And within that, travel was 17, and e-commerce growth, mid-teens, better than expected. And so, then unpacking travel a bit, we've seen most of our travel volume expectations play out, actually, as we planned at the beginning of the year, which continues to be strong and healthy in most regions, LAC, Europe, CEMEA, all the ones that I talked about on the call, with Asia being the exception to that, which again, continues to improve with the pace of recovery being slower than expected, offset again by strength in the e-commerce cross-border business, which is performing better than we expected.

Jason Kupferberg: And so then unpacking travel a bit we've seen most of our travel volume expectations play out actually as we planned at the beginning of the year, which it continues to be strong and healthy in most regions lessee Europe EMEA.

Jason Kupferberg: All the ones that I talked about on the call with Asia being the exception to that which again continues to improve but the pace of recovery being slower than expected.

Jason Kupferberg: Offset again by strength in the E Commerce Cross border business, which is performing better than we expected. So we.

Christopher Suh: So we expect these trends to continue into the second half, and thus, we've moderated our outlook for travel due to AP and upped our expectations for e-commerce. So putting that all together, our view is that total cross-border volumes remain strong, growing in the mid-teens in the second half, which is frankly the better measure in relation to our financial performance given the strong yields across both travel and e-commerce.

Jason Kupferberg: And we expect these trends to continue into the second half and thus we have moderated our outlook for travel due to AP and upped our expectations on E. Commerce, so putting that all together overall, our view is that total cross border volumes remained strong growing in the mid teens in the second half, which is frankly, the better measure in relation to.

Jason Kupferberg: Our financial performance given the strong yields across book travel and E. Com next question. Please.

Operator: Next question, please. Our last question comes from Ken Suchoski with Autonomous Research. You may go ahead. Hey, good afternoon. Thanks for taking the question. A lot of my questions have already been asked. I just want to ask about service yields.

Jason Kupferberg: Our last question comes from Ken <unk> with Autonomous Research you May go ahead.

Ken: Hey, good afternoon, thanks for taking the question.

Ken: A lot of my questions have been asked but I just wanted to ask about the service yields, though because they came in a little bit lighter than we were expecting.

Operator: Our last question comes from Ken Suchoski with Autonomous Research. You may go ahead.

Ken: So can you just talk about what drove that it looks like the service yield declined year over year, but maybe there is some offset with client incentives also come in a little bit lower in the quarter.

Christopher Suh: As we talked about, both service revenue and data processing revenue grew generally in line with the underlying drivers. Service revenue at $7 versus the $8 in constant dollar PV, Q1 constant dollar PV, that's impacted by a number of smaller things, none of which I would call out as a single thing. Data processing revenue grew a little bit above process transactions, 1.12 versus 11, and that was helped a little bit by pricing.

Speaker Change: So any detail there would be helpful. Any thoughts on how to think about the year over year change in that yields going forward. Thanks.

Speaker Change: As we talked about both service revenue and data processing revenue grew generally in line with the underlying drivers service revenue at 7% versus the 8% in constant dollar PV Q1 constant all at PV, that's impacted by a number of smaller things, none of which I would call out as a as a single thing data processing revenue revenue grew.

A little bit above processed transactions $1 12 versus 11 and that was helped aided a little bit by pricing.

Christopher Suh: From a yield perspective, I think the thing that's important is that our second-quarter yield remained consistent, consistent with Q1 and consistent with the average over the last several quarters. And so we're seeing very stable yields across the business, and we're pleased to see that. And even more broadly, our net revenue yield across the whole company remained quite stable.

Speaker Change: From a yield perspective, I think the thing Thats important is that our second quarter yield remained consistent.

Speaker Change: Consistent with Q1 and consistent with the average over the last several quarters and so we're seeing very stable yields across the business and we're pleased to see that and even more broadly our net revenue yields across the whole company remained quite stable.

Operator: Great. And our last question comes from Paul Golding with Macquarie Capital. You may go ahead. Thank you so much. Ryan, you were talking about...

Speaker Change: Great and last question. Please Holly.

Holly: And our next question comes from Paul Golding with Macquarie Capital You May go ahead.

Paul Golding: Thanks, So much Brian you were talking about the addressable opportunity of <unk> 20 trillion of which cash check was half I was wondering if you had given any thought to quantifying the ECH versus the domestic network conversion and where you think you are in that opportunity capture for each of those.

Operator: And our last question comes from Paul Golding with Macquarie Capital. Please go ahead.

Ryan Mcinerney: We're having great success in all three. I'll give you examples. Some of our teams are ahead of others in different parts of the world, and domestic schemes are more prevalent in some parts of the world than others. As I mentioned, Europe is an example, but the opportunity is enormous in all three of these areas, and we've been having really good success in all three of these areas.

Brian: Yes, Thanks, we're having great success in all three.

Speaker Change: Given examples some some of our teams are ahead of others in different parts of the world.

Speaker Change: Domestic schemes are more prevalent in some parts of the world than others like I mentioned Europe as an example, but.

Speaker Change: The opportunity is enormous and all three of these.

Speaker Change: Areas and we've been having really good success in all three of the areas.

Ryan Mcinerney: And with that, we'd like to thank you for joining us today. If you have additional questions, please feel free to call or email our investor relations team. Thanks again, and have a great day.

Speaker Change: And with that we'd like to thank you for joining US today. If you have additional questions. Please feel free to call or email our investor relations team. Thanks, again and have a great day.

Operator: And this concludes today's conference. Thank you for participating. You may disconnect at this time and have a great rest of your day.

Speaker Change: And this concludes today's conference. Thank you for participating you may disconnect at this time and have a great rest of your day.