David Rosenthal: belief

Transcript context

…That is this tailwind that has been with Visa forever. Anytime you could come up with any bear case, it was always just trumped by the idea that, well, more people are going to do digital transactions, so they're just going to outrun any headwinds in their way. That will start to slow. It's not like Visa's core business revenue is going to flatline, decline, or anything like that. But they will have less of the growth tailwind from this amazing secular thing that's been happening, which is people shifting payments to cards and digital methods as the years progress. My next one is closed-loop systems like Alipay and Tencent's ecosystem, to the extent that super apps actually happened in the US the way that they did in China. You'd be telling a very different story. The amount of volume that flows in the mobile ecosystem there that is not a part of the credit card ecosystem, I actually don't know if it could have happened here, but the rise of that is super dangerous. People often will cite, well, the Starbucks app is a very good example of people using a digital wallet that's native to a retailer here. How many people do you know that reload their Starbucks app with their direct checking account routing an account number? Everyone actually loads it using a credit card. That is not bad for them at all. It only becomes bad for them if they actually get disintermediated, where a bank and a merchant go direct to the merchant's consumer and managed to initiate a payment flow digitally that doesn't involve a card network. The two things I would want to investigate on the could what happened in China happened here. (1) Just the build out of infrastructure happened more concurrently in China. Payments infrastructures already built out here, technology infrastructure got built out afterwards. Whereas it all happened all together in China. (2) Maybe more important is just the government influence. I doubt the Chinese government wanted Visa, ostensibly American corporation, powering their payments. There's actually this really interesting, weird deal that got cut between China UnionPay and Visa, where if you use a CUP card in China, it uses the CUP rails. But if you go internationally where there is no China Union Pay terminal at my local coffee shop here in Seattle, if you were to travel here and swipe it, it runs on Visa, but they have the national security benefit and the economic benefit of for people in China transacting in China that runs on China-owned payment rails.…

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