Alfred F. Kelly
Chairman and Chief Executive Officer at Visa
Jennifer, thank you. And good afternoon to everybody and thanks for joining us. Amidst much uncertainty this quarter resulting from the ongoing COVID pandemic, Visa's financial performance was very strong. Our net revenues grew 24% year-over-year, non-GAAP EPS was $1.81, up 27%. And our financial performance was driven by record volumes, transactions and credentials.
In Q1, we crossed the $60 billion payment transaction mark for the first time in history, up 26% from two years ago. Visa cards were used 28 million times per hour in the last quarter. And we also increased our card credentials to over $3.8 billion, up 10% in one year. I'm going to leave the rest of the details to Vasant as I want to focus on the future.
As we look ahead, we expect accelerated revenue growth versus pre-COVID over the coming years, driven by our three strategic levers of consumer payments, new flows and value-added services. Many current trends in payments, including A2A, RTP, Buy Now Pay Later, Crypto and Wallet are enabling new ways to pay. These represent opportunities for Visa where we are extraordinarily well-positioned to utilize our unique strength in global network to help them grow and scale.
Let me start by talking about consumer payments. The opportunity to displace cash and check is enormous. At our last Investor Day, we said it was $18 trillion. In Q1, we saw debit cash volumes at Visa grow 6%, while debit payment volumes grew 19%. While cash displacement is certainly a reality, global personal consumption expenditure of cash and check grew at a CAGR of 2% over the 10 years ending in 2019. When we look at the opportunity ahead, if you assume global cash grows at 1% annually, industry-wide digital penetration of personal consumption expenditure wouldn’t reach 90% for several decades.
For example, in Latin America until a few quarters ago, there was more cash volume than payments volume on Visa credentials. In fact, in the past year, there has been a nearly 6.5-point shift and payments volume is now 55%of the total volume, even with cash in Latin America growing 10% this past quarter. We have expanded acceptance locations in Latin America by almost 30% in the past year to 18.5 million locations and we've grown credentials over 20%. This quarter, we signed an eight-year agreement with Santander Chile, one of the largest issuers in the country. And in Brazil, we recently signed a deal with Banco XP, one of the country's largest digital banks with over 3 million customers. Brazil remains a growth market with payments volume growth up more than 1.5 times historic levels in recent quarters.
The key to digitizing cash is that the onramps to our network have never been easier to access. Wallet providers have been rapidly issuing Visa credentials that they see value in an open-loop ecosystem. Naranja X is a rapidly growing Argentinian wallet using Visa cards with 2 million credentials issued between prepaid and debit over the last two years. This quarter, we renewed our partnership with PayPay Bank, which enables accounts to PayPay wallet users. PayPay is one of the fastest growing digital wallets in Japan with 42 million users and the bank already has 4 million Visa debit users.
We recently extended our partnership with Safaricom, the operator of M-PESA, to cover African markets outside of Kenya where M-PESA has 50 million customers. We're also providing onramps for crypto players creating connectivity with fiat economies. There are over 65 crypto platforms and exchanges that are partnered to issue Visa credentials. This quarter, Visa credentials in crypto wallets had more than $2.5 billion in payments volume, which is already 70% of the payments volume for all of fiscal 2021.
In addition to embedding credentials in crypto platforms, we continue to innovate around our settlement and crypto API capabilities, which has been key differentiators for us for fintechs and financial institutions that are looking to extend crypto capabilities to their customers. We will continue to lean into the crypto space. And our strategy is to be a key partner to provide the connectivity, scale, consumer value propositions, reliability and security that is needed for crypto offerings to grow.
Earlier this month, we previewed CBDC payment APIs currently in development, which would enable central banks to connect their Ethereum-based CBDCs with Visa rails through a wallet with digital issuance capabilities, enabling consumers to spend with CBDCs at any Visa merchant. We partnered with ConsenSys to develop this concept, which was selected as one of the winning entries out of 300 ideas from 50 countries at the Global CBDC Challenge as part of the Singapore Fintech Festival judged by representatives from the IMF, the World Bank, the Bank of International Settlements and the Central Banks of Brazil, India, Kenya and Indonesia. In a face-to-face world, tap to pay continues to accelerate growth.
Let me highlight progress in a few larger markets. In Brazil, the tap to pay penetration has increased from 5% to 24% in the past year. In India, where we have increased merchant locations 30% since fiscal year 2019 to 6 million at the end of fiscal year '21, the tap to pay penetration is nearly doubled to 16% in the same period. And all of these efforts have helped to fuel our 40%-plus year-over-year growth rate in payments volume in India this past quarter.
In the United States, we're nearing 20% tap to pay penetration with key metro cities showing even stronger growth. LA, Seattle, Detroit, Orange County, Miami and Salt Lake City have all surpassed 25%, San Francisco, San Jose and Oakland are up over 30% and New York has reached 45%.
E-commerce is also key to digitizing payments and e-commerce merchants are certainly growing as are our relationships with them. We successfully closed the US co-brand deal with Shopify, a key e-commerce platform with millions of global merchants and entrepreneurs. The Shopify Balance card will allow Shopify's US merchants to access funds from sales by the next business day and receive cash back on everyday business expenses like shipping and marketing.
Buy Now Pay Later, or BNPL, continues to grow and we're seeing more and more BNPL fintechs issuing Visa credentials. Visa is enabling their shift to open-loop so that their value proposition to consumers can scale through Visa's broad acceptance. Last quarter, I mentioned [Indecipherable] and this quarter I'm pleased to announce that Affirm has chosen Visa as their network partner for the Affirm Debit+ card as well as renewing the virtual card business. We look forward to supporting Affirm's continued growth through Visa's wide acceptance and reach.
BNPL fintechs are increasingly using Visa virtual cards to settle with merchants, driving triple-digit payments volume growth year-over-year in the United States. BNPL fintech consumers also continue to use their cards to pay off their instalments with active cards growing 50% in the same period. For traditional issuers, we have a network installment solution called Visa Installments, which enables our financial institution clients to seamlessly offer BNPL capabilities through an existing credit credential on any Visa transaction.
In Canada, one of the countries where we are launching the capability, we now have commitments from issuers and acquirers representing the majority of payments volume. Credentials on our network of networks through BNPL, crypto, other fintechs and our traditional issuers bring compelling value propositions like identity protection, fraud prevention, dispute resolution, security, loyalty and more to consumers. This tremendous value motivates consumers to use their Visa credential online or in face-to-face versus cash A2A, RTP or even blockchains.
So to summarize, the opportunity in consumer payments is huge and has an incredible long-term runway. Onramps to our network of networks have never been easier. We provided compelling consumer value proposition and the advances in new ways to pay are good for Visa and these payment providers. Visa is enabling utility and scale for BNPL, crypto and wallets and all other nuance entrants.
Now let me move to progress with use cases and new flows, which represents a $185 trillion opportunity, 10 times that of consumer payments. We are seeing a large appetite from our partners in experiencing significant growth. A key driver is Visa Direct, which targets a $65 trillion opportunity across P2P, B2b, B2C and G2C. These are all use cases that Visa didn't really serve just five years ago. By aggressively pursuing these flows with our more compelling solution, Visa is seemingly displacing alternatives that rely on fragmented and dated technology, not the other way around.
Visa transaction growth was 35% this quarter. In the US, domestic P2P is currently our largest use case and also our lowest yielding one. As we scale and grow other geographies and use cases, especially those that are cross-border, we expect the revenue yield to increase. Regardless of the yield, Visa Direct is accretive, given it mostly leverages our existing platforms and capabilities.
Usage is growing with banks. Signing on for global remittances using cards or accounts, among them the Qatar Islamic Bank, one of the largest banks in Qatar and CIBC and Simplii Financial in Canada. Visa Direct is also enabling Fintech, Chime and neobank Varo in the US for account-to-account money movement.
Usage has also expanded across several other use cases this quarter such as payouts to DoorDash dashers in Canada. We also recently signed an agreement with Toast to leverage Visa Direct on several fronts. First, near instant cash flow access to daily sales and loan disbursement for their 48,000 plus restaurant customers. And second, for fast tip payout and earned wage access for their restaurant client employees.
Visa Direct is a compelling capability because we offer incredible reach to more than 5 billion cards and accounts, global scale, a leading technology stack, world-class security and 24x7 365 reliability, all of which was easy to access through hundreds of partners across our global network of networks, reaching bank accounts through a combination of card, ACH and RTP systems in more than 175 countries.
In the B2B new flows opportunity, we expect future growth to have several vectors. Let me just highlight a couple. First, B2B carded issuance in both physical and virtual cards where we have a leading share. This quarter in India, after partnering with leading B2B neobank Open for several years, we signed a deal for credit and debit issuance as well as the implementation of Visa Direct. In virtual card, we're expanding to new verticals. One recent example is health care. And this quarter, we signed an agreement with a direct health care company, Nomi Health, a health care provider that serves 30,000 people per day across 10 US states for its claims payments solution.
A second vector of B2B growth is large ticket account-based cross-border payment through Visa B2B Connect, which links our global payments infrastructure with best-in-class capability to address the primary pain points of existing solutions. In Latin America, Visa B2B Connect is available in nearly 30 countries, and we have enrolled partners in more than a third of those countries already.
One partner is CIBanco, a leading bank in Mexico. Since enabling the solution in March 2021, the Bank has grown Visa B2B Connect volumes double-digits every quarter and has processed thousands of payments and hundreds of millions of payments volume. We also recently added Spirobank, the largest in Russia, Eastern and Central Europe, which will be live and processing transactions later this year.
So to summarize new flows, the opportunity is 10 times consumer payments. Our capabilities and value proposition are strong versus the competition, and we expect revenue yield to continue to improve as we scale and grow Visa Direct, especially in cross-border use cases.
Now let's move to value-added services. If Q1, revenue grew over 20% and we expect strong growth to continue. One example is with Visa Consulting and Analytics. In addition to our crypto offerings that I mentioned earlier, we recently launched a specialized global crypto advisory practice to help financial institutions eager to offer customers a crypto solution, retailers who are looking to delve into NFTs or Central Banks exploring digital currencies. Another example is with the authentication. In Europe, we have tripled the use of Visa's new authentication technology, EMV 3DX since the start of 2021. And this has coincided with a reduction in card-not-present fraud by 28% and it has also positively impacted the transaction authorization rates.
And we are launching new capabilities to build for the future. Visa Acceptance Cloud enables clients to move embedded payment-processing software from individual devices to the cloud, eliminating the need for expensive terminals as well as the costs and time to certify the processing software. In addition, clients can access value-added services from fraud management to BNPL.
We also recently closed our acquisition of Currencycloud. We believe the combination of Currencycloud's APIs on the front end, which provide real-time foreign-exchange capabilities, and our settlement capabilities across our network of networks, we will have a very compelling value proposition. Together, we can enable new use cases and payment flows, particularly as we expand the cross-border use cases we provide our clients, including B2B Connect and Visa Direct. We can extend our FX platform for easier connectivity for fintechs and non-financial institution partners and we can offer real-time FX rates and improve transparency for our partner customers.
So to summarize value-added services, we will continue to bring Visa's innovation to the payments ecosystem. We are diversifying our revenue mix and this will help us retain and win business and grow revenue well into the future.
In conclusion, as I think about Visa's future, I'm extremely optimistic and energized. While much has been written about new payment types being potentially disruptive to Visa, we see a lot more opportunity than disruption. Our global infrastructure is providing connectivity through our network of networks to power more traditional payment types and newer ways to pay and move money. Our interconnectivity, security, reliability, consumer and fraud protections, risk management and other value-added services offer a superior experience. We expect to attract more and more transactions which will continue to fuel our growth at an accelerated rate.
With that, let me turn it over to Vasant.
