SAN FRANCISCO From the outside, Visa CEO Joseph Saunders oversees a $9.2 billion business that looks like old-school capitalism.
But the payment card-processing company sees vast potential in the mobile-payment market. Just 150,000 of an estimated 8 million terminals in the United States are equipped to take payments with phones. Visa has a small, undisclosed stake in Square, the payment-processing start-up founded by Twitter inventor Jack Dorsey, which is valued at $3.25 billion.
Visa also knows a thing or two about successful initial public offerings: It raised a record $17.9 billion in 2008. By contrast, the IPOs of social-networking giant Facebook and social-gaming company Zynga faltered. Saunders recently sat down with USA TODAY technology reporter Jon Swartz to discuss IPOs, the shift toward a cashless society and Visas future growth. Answers are edited for length and clarity.
Q: Are we headed to a cashless society, where the end of money is fast approaching?
A: Our primary competition has always been cash and checks. There is a ton of impact that has been made. Being able to use a mobile phone to effect a transaction instead of a card, well, its simpler to use.
Q: How large a role do smartphones and tablets play in a cashless society/mobile payments?
A: What youve got is a whole younger generation that has been weaned on electronics, and they understand PCs. They understand iPads. They understand mobile technology. They have nimble fingers; I mean, they learn how to touch a keyboard instead of playing the piano. Theyre very comfortable with it. Thats whats really, really going to push it. What you need to make sure of is that the technology is as flawless as it can be, and its reliable. You know? If youve got something sitting in a phone and somehow the phone runs out of juice, or it doesnt work or something like that, youre kind of up a creek.
Q: How do you assess the IPO market? Visa had such a successful initial public offering in 2008, during an economic crisis.
A: We were conservative, and we always looked at the IPO as being a starting point, not an ending point. We didnt create an IPO to enrich venture capitalists. We did it to put the company on the market. The first day in the history of being a public company, and all the days after it, make the most difference. Starting at the right place is important.
I cant really comment on Facebook or what theyve done. I think there are certain climates into which you ought to be very careful about doing an IPO, period, but yeah, you can do it in a difficult climate if youve done it.
These things are all multiples of very, very little revenue, so it carries the expectation that youre going to have all the revenue. There was an Internet bubble once before, and when it burst, everybody said itll never happen again. Weve learned our lesson. Were not going to wildly just invest in companies.
Q: What do you anticipate as breakthrough technology in your market (retail, banking) in the next few years?
A: If you had asked me 10 years ago where we would be today, I cant fathom how I could have answered you because to me, its been an explosion.
When you think of the opportunity for Visa in the long run, a lot is going to come from whats going on in Africa, or whats going on in India, or whats going on in other economies that are less mature.
Its going to be as individuals move up into middle classes. Are they going to be using electronic money or arent they going to be using electronic money?
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