Visa Suffers Major Spending Lull From COVID-19

Share Article
In Brief
  • The coronavirus has forced business closures, layoffs, and people to restrict their movement.

  • Visa and other major payment processing networks are reporting drops in revenue.

  • Not all payment networks need continuous profitability to remain viable.

  • promo

    Want to know more? Join our Telegram Group and get trading signals, a free trading course and daily communication with crypto fans!

The Trust Project is an international consortium of news organizations building standards of transparency.

Global payments giant Visa says consumer spending via its network is considerably down this month. The spread of the coronavirus and associated movement restrictions are causing people to shop less — even online.



On Monday, Visa announced a sharp lull in transaction volume for this month. The payments firm anticipates its growth will slow to single figures for the second quarter of 2020. It also says that this month will see a four percent drop on figures from this time last year



Global Lock-Downs See Consumer Spending Fall

The month of March has been one of the most disruptive for many industries in living memory. Volatility abounds in just about every market. From oil and gold to stocks and cryptocurrencies, the swinging prices in both directions highlight the level of panic gripping global markets.

With increasing numbers of the planet’s population being urged or forced to stay indoors, businesses shutting down, and unemployment rising, people are understandably less inclined and physically less able to spend their money. Many shops are closed for the foreseeable, the income of millions has been disrupted and postal services are delayed or on hold.

All of this combined has understandably taken its toll on consumer spending. Visa’s latest report on company growth clearly demonstrates the reluctance and inability of the public to spend like they did pre-corona.

The second half of March saw a sudden drop in transaction volumes on the payments network. [Reuters] The company also reports a steep decline in cross-border spending relating to travel.

The slowdown in consumer spending will, of course, impact Visa’s profitability. The company is expecting just single-digit growth over the course of 2020’s second quarter.

In a recent statement, Visa wrote:

“As countries have imposed social distancing, shelter-in-place or total lock-down orders, domestic spending, most notably in travel, restaurants, entertainment and fuel, has sharply declined week on week.”

Other payments companies appear similarly affected. Mastercard, American Express, and PayPal are all warning of a drop in revenue over the coming weeks or months. [American Banker]

Not All Payments Networks Need Continuous Profits…

As a centralized payments network, Visa is entirely dependent on its own profits to exist. It’s much too early to tell if the decline in growth will continue. But if it does, the company may be forced to amend its business model, impacting the experience of those making payments using the network.

The need for Visa to continually generate profit does raise some interesting themes, chief of these being: with truly decentralized networks, like Bitcoin and other cryptocurrencies, proving their functionality over the last decade, making payments no longer needs to rely on the success of entities like Visa or Mastercard. If dwindling profits force service changes to existing networks like Visa, such alternative payment systems will likely become more appealing around the world.

Share Article

Related topics

A former professional gambler, Rick first found Bitcoin in 2013 whilst researching alternative payment methods to use at online casinos. After transitioning to writing full-time in 2016, he put a growing passion for Bitcoin to work for him. He has since written for a number of digital asset publications.

Follow Author

Daily signals, Bitcoin analytics and traders chat. Join our Telegram today!

Let’s Go
Daily signals and Bitcoin analytics.