Visa Inc. (V) Deutsche Bank 2024 Technology Conference (Transcript)

Visa Inc. (NYSE:V) Deutsche Bank 2024 Technology Conference August 29, 2024 12:30 PM ET

Company Participants

Chris Newkirk – Global Head of New Flows, Commercial & Money Movement Solutions

Conference Call Participants

Bryan Keane – Deutsche Bank

Bryan Keane

Okay. Happy to get started here. We’re excited to have Visa, Chris Newkirk, who’s the Global Head of New Flows, Commercial & Money Movement Solutions. I’m Bryan Keane. I cover the payments processors and IT services at Deutsche Bank. And so, we’re excited to get to all these questions I have for Chris.

So, Chris, maybe you could just start and give us a little bit about your background, we were just talking about that. And then I know you were Chief Strategy Officer and now as kind of Global Head of New Flows.

Chris Newkirk

Yes, great. Well, Bryan, thanks so much for having me, and thanks, everyone, here and online for joining. Really excited to be here. So, yes, I — so I joined Visa a little bit over four years ago, Bryan, as you said, as Chief Strategy Officer, which was a little bit of a new role me to play in my career and I’ll sort of come back to that. But as Chief Strategy Officer, my job was to really focus on connecting as a long-time operator, which is what I was for 15, 18 years before Visa and what I am, once again, was to really connect our strategy to our execution all around the world.

And I look after strategy, interchange and pricing globally at Visa and our regional products and solutions teams, which is sort of — think of that as a technical sales force that does presales, sales, and then post-sales solutioning for our products and solutions with our clients all around the world. That team actually mostly is in the sort of consumer payments and value-added services space. So that was my first, I don’t know, two-plus years at Visa, and it was, I want to say, a great way to get deeply into the breadth of all we have to offer at Visa.

And then for about the last 1.5 years, with our CEO transition, one of the changes, Bryan, you know that Ryan made was to take our strategy, which has three pillars to it: consumer payments, new flows, and value-added services and to have P&L owners and really dedicated leadership reporting directly into Ryan driving new flows and value-added services. And I took the new flows role.

So, I lead New Flows at Visa, which the short version is it’s everything we’re doing in payments and money movement globally beyond consumers paying merchants with consumer credit, debit and prepaid cards so there’s a large B2B component to that. And then there’s a whole other set of pay out to short-end capabilities there. I’m super excited about new flows, and I think it’s honestly the most exciting part of what we have going on at Visa, and I’m really excited to talk about that here.

But to just round out your question about my background, prior to Visa, I spent 14 years as a P&L leader in financial services across consumer, small business and commercial, mostly in cards, payables, and a little bit in banking. And 12 of those years before joining Visa, I was at Capital One, where I led — I was one of five P&L leaders reporting to the Capital One CEO leading small business and consumer, cards, small business banking, a little bit of wealth management in the U.S., the U.K. and Canada.

So, I was a Visa client for a very long time. That’s part of why I came to Visa. I was so excited about the opportunities in front of us. And prior to that, I started my career in consulting at McKinsey doing financial services, technology and data services in the U.S. and U.K.

Question-and-Answer Session

Q – Bryan Keane

Got it. You got a couple of McKinsey guys at your guys’ shop.

Chris Newkirk

We do, we do. Ryan and I worked together back in the McKinsey days, and it’s really fun to be back together again.

Bryan Keane

Nice. So, the big question that we get from investors is trying to think about the long-term growth for Visa, like how the growth is going to work. Obviously, new flows is going to be a huge part of this. It was a robust 18% in the third quarter and accelerated about 4 points from 14% in the second quarter. So, I guess first, what drove that acceleration that we’re seeing in new flows? And what is the target of new flows revenue growth? Is it — can it be a 20%-plus grower?

Chris Newkirk

Yes. So let me just go back to the sort of the growth algorithm for the Company. So, it’s — we’ve got like a beautiful consumer payments business. And we’re counting — that’s one pillar. And we’re really counting on new flows and value-added services to drive growth above the growth rate of the consumer payments business. And we’ve got a lot of conviction that we’ll be able to do that now and well into the future.

If we think about the sort of the components of that in new flows, now to drill into new flows, we’ve got sort of a commercial business that’s B2B payments, Visa Commercial Solutions, which are — you can think about that as both a carded business, I put sort of air quotes around carded because really a lot of that is virtual payables business. And the — we’ll get to the revenue in a second.

But if we look at the underlying drivers of the commercial business, we’ve seen fairly stable growth this year in terms of the payment volume in that commercial business of sort of 7% to 8% over the first three quarters of this fiscal year. And we’re very excited about the continued growth of that commercial business and the opportunity we have to penetrate what’s really a massive TAM, massive market opportunity in B2B flows.

The rest of the new flows business is the sort of Visa Direct and cross-border capabilities that we have that are going after a wide variety of money movement, for lack of a better term, money movement use cases, which can be anything ranging from P2P, both domestically and cross-border, a.k.a. remittances, to disbursements and payouts of all kinds, whether they’re kind of large business to micro business, business to consumer, could be insurance payouts, gig economy payouts, earned wage access payouts, or government or development bank, humanitarian organization NGO payouts to small businesses and/or consumers.

And that Visa Direct business, again, if you look at the drivers, we’ve seen very strong transaction growth throughout the year, 20% in the first quarter, more than 30% in the second quarter, more than 40% in the third quarter. And I think that’s a testament to continuing not only to issue new use cases but to really deepen the penetration of our existing use cases in that business.

And if I come back to the revenue that you described, we were single-digit revenue growth for new flows in Q1. As you said, 14% year-over-year growth on a constant dollar basis in Q2, 18% in Q3. With respect to the Q2 to Q3, the Q1, I think we’ve already described as essentially one-timers that occurred in Q1. And when it comes to the acceleration from Q2 to Q3, the reason I started with the drivers is we see, I think, strength and stability in the underlying drivers with respect to how that materializes as revenue. There can be sort of lumpiness and mix shifts in that.

And I think you also asked about sort of future expectations. I would just reiterate that we have a lot of conviction in the New Flows business, ability to grow revenue stronger and on a sustained basis above consumer payments. We’ve not provided guidance on that actual growth rate or target growth rate.

Bryan Keane

Got it, yes. In my head, I’m thinking 20% potential. The other question that we get often when you talk about new flows is the yields because the yields are going to be a little bit lower. Can you just talk about what you see in current yields and then the opportunity to grow them?

Chris Newkirk

Yes. So, we don’t disclose new flows revenues and therefore, new flows yields. But maybe the way to help you think about it is, again, if we sort of oversimplify it to the commercial solutions side of the business and the Visa Direct and cross-border solutions side of the business. In the commercial side, to sort of first approximation, the yields look a lot like the yields in our consumer business.

On the Visa Direct side, a way to think about that is when we look at yields on a per transaction basis, they’re really comparable to the yields we get in the data processing across all of Visa’s business. So, we like not just the yields of the business but the margins of the business. Most of the Visa Direct business, the overwhelming share of transactions in the Visa Direct business ride VisaNet infrastructure where we’ve got massive scale, very good operating costs, et cetera.

And so, we — while there’s a sort of a portfolio of yields and pricing in the Visa Direct business that come together, we really — it’s all very attractive at the end of the day in terms of driving revenue at attractive margins for us.

Bryan Keane

Yes, I was just thinking about that. The margins, because you’re riding — if you’re riding on the network, it’s not like you’re starting a new business where it would be much lower or at a loss. You’re already using riding it on the network you have.

Chris Newkirk

Absolutely.

Bryan Keane

You can scale it that way.

Chris Newkirk

Yes. I mean, that’s one of the beauties of building this business inside this new flows business inside of Visa is we built — a lot of what Visa Direct rides on is, as you know, to Visa Debit, VisaNet capability where years ago, we made the technology investment to enable essentially flows to go multi-direction on that, not just from a consumer to a merchant but from a consumer to a consumer or to a merchant to a merchant or a merchant to a consumer, et cetera, to really get — to enable those flows to be multidirectional.

And so yes, we do ride the benefit of doing all of these new flows work inside of Visa with Visa cybersecurity, Visa scalability in terms of transaction handling per second, risk and fraud capabilities that we can add on top of those Visa Direct transactions. Distribution, we have 14,000, 15,000 bank partners globally and thousands of fintech partners, et cetera, and we get to leverage that distribution, the brand, the trust. This gives us like the right to play and be in this conversation and then do it in a way where we can do it at really attractive margins while we’re growing a new business that’s still in its very early and I think exciting days.

Bryan Keane

So, all of the peers talk about new flows in the commercial market as growth opportunities. So, I was hoping you could just talk about how Visa differentiates its strategy and its assets versus the peers in new flows.

Chris Newkirk

Yes. Well, rather than do like a direct compare and contrast, maybe I can just tell you why we have conviction that we’re going to continue to succeed and grow this business really strongly based on both looking in the rearview about what’s worked and about what’s going to come to market.

So, I guess I’d outline, Bryan, a few factors that lead to that conviction. First, it’s just like the staggering, like the breathtaking size of the opportunity of the market that we’re going after. So, we recently resized this. We’ve shared this publicly. In the markets that we operate in, there’s $200 trillion of flows that we’re going after in the New Flows business. The numbers sometimes get so big, it’s literally like hard to make sense of intuitively, like how big is $200 trillion?

I mean, other than saying like it’s really, really big, I mean, some of the things I think about. All right, so last year, federal income tax revenues in the U.S. were like $4.5 trillion, give or take, right? So that’s like an annual kind of flows number, $4.5 trillion. So, the TAM that we’re going after is whatever — 44x the size of U.S. federal government revenue. It’s like a massive — I just used that as kind of one benchmark.

A second would be just in terms of how big the opportunity is. As you know, we did $1.6 trillion of commercial volume last year in new flows. I mean, there are a lot of doublings to be had of that business and still be in the kind of single-digit, high single-digit share of the opportunity. So, look, there’s a massive opportunity. That’s number one.

Number two, the minute you actually get into the user experience, like the end user experience in those flows, whether they’re B2B or any other types of flows that we’re going to talk about, and the user experience, frankly, is not that good on average, by and large, in these flows. That’s particularly true in the B2B context. So, there’s $200 trillion of flows. $145 trillion of that is B2B and $55 trillion is the other sets of kind of disbursement, payout, P2P, push payments payout.

In the $145 trillion of B2B, go spend time with like the function inside your company that is doing buyer supplier payments. And you will just — you might be surprised at how much manual work is still going on there. And it’s so vastly different than how good sort of core consumer banking and payments experiences are, thanks to Visa and our partners and who’ve really done an amazing job bringing really slick consumer experiences to the consumer payments experience.

That hasn’t happened yet at scale in B2B, and it’s absolutely going to happen. We’re going to see a consumerization, what I would describe as a consumerization of those B2B flows, it’s going to be mobile-first. It’s going to be much simpler, much more empowered. But there are big problems to solve there in terms of why don’t those flows work very well today? Well, there’s different kinds of data reconciliation. I’ve got to match an invoice to a payment. I’ve got to match a payment to an invoice that I sent out. All those data flows need to work, et cetera. So, we can talk more about that.

So, number one was massive opportunity. Number two — or massive TAM. Number two is that there’s real problems to be solved. There’s major advances to be made in the digitization of those payments to make them seamless and simple for end users. And that’s totally core to what Visa has done in the past and will continue to do in the future. So, if I go to the number three reason to believe is the product market fit, we have with our solutions in the market today.

So, in the B2B space, we have a powerful set of solutions in market today, and we’ll continue to innovate behind those to solve problems in the B2B space. We’ve got — if you think about what we’re doing in Visa Commercial Solutions, the growth strategy sort of shares a lot in common with the consumer payments growth strategy that we’ve talked to you about.

Fundamentally, it’s about growing credentials, growing acceptance and driving usage. The way you do that in the B2B space, though, has to be differentiated from what happens in the consumer space. And so, we have B2B solutions that we offer on the issuance side to grow credentials, so we have a payables automation platform. We have a virtual commercial payables platform.

What those two platforms enable our clients to do is either the bank issuer client manage the capability to issue virtual credentials to their clients that provide control, transparency, data reconciliation in those B2B flows or to allow our clients to give that power to their end users.

And what’s so powerful about that in these virtual payables is what you can solve for is like, look, a business owner is different than a consumer, right? Or a business client is different than a consumer client. There are different user types, right? There’s the business owner. There’s the bookkeeper or the treasury function. There are field salespeople.

And for B2B payments to work more seamlessly, those different users need different sets of capabilities. And so what our commercial payables platform and virtual payables platform enable our clients to do and their clients to do is to issue a virtual payable credential with totally customizable and configurable controls around that.

So, you might give your field sales person the ability to spend a limited amount at a limited set of endpoints, like, I don’t know, hotels and restaurants, quick-service restaurants, if they’re on the road doing sales. You might issue a single-use credential that’s only for use to pay a particular invoice with reconciliation back to the buyers and suppliers that, that payment has been made.

So, the ability to meet the needs of different users in the B2B context is, I think, what’s going to really transform B2B payments over the next kind of 5, 8, 10 years. And so, we’re very much focused on bringing our solutions to market. And this is my long way of telling you like number three, we’ve got solutions that fit.

But equally, on the acceptance side, we have solutions that enable Visa Accounts Receivable Manager, which we’ve launched in the U.S. and we’ll roll out to the rest of the world, enables the acceptor of the virtual credential to automate the acceptance of that virtual credential to like pull the virtual credential, match it to the invoice, straight-through process payments and then, again, feedback into their ERP or whatever their platform is that, that’s been paid out.

So, sorry, number three reason to believe is that we’ve got a really good product market fit for our solutions. And then number four, I actually touched on, which is the ability for us to leverage all of Visa to grow this business in a way that is highly efficient and effective. We’ve got distribution. We have the relationships. We have sales force in the market all around the world that we can leverage.

We have Visa technology that we can either just reuse or we can like slightly repurpose or recombine in new ways. And that’s an incredible privilege and a real sort of advantage. And so, we’ve always got certainly like more work to do, and we’ve got an ambitious product road map to continue to build and ship solutions that really resonate with the market.

While we’ve got work to do, I think we’ve come a long way in terms of lighting up the front line of Visa to go after new flows. We’ve had our teams have had to come up learning curves and have conversations about products and solutions that are — they’re different, and some of them are different and more complicated than sort of consumer payments use cases.

I think we’ve made really significant strides in terms of upskilling our frontline. At Visa, we have more work to do, and we’ll continue to drive innovation but really so much of the focus is about continued execution.

Bryan Keane

Yes, yes. It’s definitely — I think Visa — it feels like it’s an offensive strategy with new flows, but it could also be seen as defensive. We’re first to competition. Lots of payment experts point to growth in A2A or account-to-account payments as a competitive threat. How do you see account-to-account payments? And what role is Visa seeing with the FedNow and other real-time payment rails?

Chris Newkirk

Yes. I guess a couple of thoughts there, Bryan. I mean, certainly, the growth of RTP systems around the world is like a secular trend that’s here to stay. And fundamentally, it’s about the modernization of domestic payment infrastructure. And that’s a good thing. I mean, we’re in the digitization of payments business for a whole bunch of reasons, including like it’s just a great place to be and a force for good in the world. And we absolutely support the growth of RTPs all around the world.

I guess I’d make a couple of points, though, with respect to your question. The first is there’s more to a payment network and a payments ecosystem than kind of, call it, the core infrastructure layer that connects one account to another account. A payments network that works for payors and payees have to have security, scalability, economic incentives and business models that work, that pull in both payors and payees. You have to have rules that are understood by the participants, both by the sort of the providers and by their end customers and drive value for those end users.

So you can think about for us, all that we do around fraud and security, risk management, disputes, charge-back rules, et cetera, we’ve built over time with our partners a very robust ecosystem that you can see by the success we’ve had has a network and creates that network effect. And so, there’s — I’m not here to make a bear case again RTPs.

I’m just pointing out that like there’s more to creating a payments network than that sort of connectivity layer. And we have invested decades to build that kind of ecosystem with the well-understood practices and an economic model that works for participants and incent people to participate in our network and like really breathtaking scalability, cybersecurity, fraud management, et cetera.

And that’s, that backbone is Visa credit and Visa debit. And one of the beauties and, as I say, in the Visa Direct business is we’re leveraging all of that investment in Visa Direct in a way that’s like highly, highly scalable. And the growth that we see in Visa Direct is in many, many markets around the world and coexists alongside other domestic schemes and we add value. The market is telling us we add value and what we’re doing with all the ways in which I described.

The second thing I’d say is we’re very happy to work and we do work with RTPs around the world, very close to home in my business in Visa Direct. We are connected to more than 70 domestic payment schemes, more than 10 RTP schemes. One of the things I think that was really most important in our strategy articulated several years ago was that to really win in this money movement universe, we needed to move beyond — we have a beautiful network and we love — we currently — most of the volume is on our network.

But to really be able to reach the last mile, we had to pursue a network of networks strategy. And so therefore, we are connected to different the domestic payment schemes all around the world. Equally, in the value-added services side of the business, which obviously I don’t run, we found really good opportunities to add value, again, in collaboration with our bank partners to those RTP schemes. The RTP schemes, the payments are immediate and they’re not reversible.

And the kind of risk management and fraud systems in place, they’re new payment schemes. And so, they attract fraud as new payment schemes often do. And we have proven our ability to meaningfully add value in terms of fraud and risk management. So, we’ve talked about this. We did a pilot with Pay.UK, and we uplifted the fraud defense, fraud success rate 40 points by taking our risk management know-how, our AI, our machine learning, the models that we’ve — the neural net models that we’ve built over time and applying them to the A2A transactions.

So that’s a success story we’ve been public about. We’ve turned that into a value-added services product for RTP schemes called Visa Account to Account Protect. We are — we’re doing that also in Argentina. We’re launching Visa Protect. Again, same thing. We proved our ability to add value on top of the scheme there. And we’re launching in Latin America. And I think we’ll continue to see that Visa Protect product grow.

I guess the last thing I’d say on the — on how we work with RTPs is we are — yes, it’s something about FedNow, sorry, which is what made me think of this. So, we’re a certified service provider for FedNow. And what does that mean for our clients? So, Visa has a solution called Visa Faster Payments Gateway. And what that enables our clients to do is to connect once to Visa’s Faster Payments Gateway and get access to multiple faster payments like modalities.

So, our clients can connect to us once and send us messaging in various different formats, which we will reconcile for them, and they can leverage the Visa Direct network through the Visa Faster Payments Gateway and they can also access the FedNow. So maybe a long way of saying we welcome the continued digitization of domestic payment schemes. And we, I think, are very excited about our ability to partner in some of the ways that I’ve described and add value to them.

Bryan Keane

Got it, got it. Want to drill down on Visa Direct, B2B and cross-border, if I can fit three questions in on that. I guess first on Visa Direct. That’s been a standout in growth. Transaction is up 41%. I think you even mentioned this, from 31% and 20% the prior two quarters, so a really nice acceleration. What’s resonating? What’s driving that growth? And what might be some new use cases to keep that kind of growth going?

Chris Newkirk

Yes. So, it is really a portfolio effect, Bryan, of we have 65 use cases. We have 2,800 programs live. We have 500 enablers to help bring Visa Direct solutions to the last mile with our clients. Most of the transaction volume that we do today are domestic use cases. What’s resonating in the market? It’s everything from P2P transactions to payouts for a gig economy. Earned wage access, we’ve spoken about a couple of the earned wage access deals that we’ve struck to enable workers to get paid real-time promptly for their work when it’s completed.

Marketplace payouts. So Airbnb is a good example of that, where if you’re an Airbnb host, you can go on to your account on Airbnb and you can get an instant payout leveraging the Visa Direct capability. So, there’s been, I think, really strong adoption of a number of those sort of domestic payout use cases. Cross-border in Visa Direct is a smaller share of transactions but also growing very, very strongly and frankly a really key strategic focus for us.

So Q3 year-over-year cross-border use cases for Visa Direct almost doubled on a year-over-year basis. That’s really important for us because as we talked about yields earlier, there’s more opportunity for us to add value in a cross-border transaction than in the domestic transaction and get FX attachment and drive better yields because we’re adding more value to those transactions.

And so, we really see growth across a wide variety of use cases. And I do want to say that some of the acceleration that we saw, I think we’ve talked about this as well. Some of the acceleration that we’ve seen has been like a pleasant surprise. Sometimes we get asked like what’s surprising you, is the pleasant surprise of very rapid adoption of an interoperability solution that we have in Latin America where we connected to P2P wallets.

So that one, as you can imagine, is lower yielding. It’s domestic. It’s not sort of the cross-border. But again, it’s running like Visa’s scale business. So, while the yield might be lower, the revenues and the margins are still really attractive to that. I think you asked three questions. I’m not sure I answered all.

Bryan Keane

Yes, that was pretty close. We talked — the last one was just on Horizons but you talked about some of the cross-border opportunities. So, we can move on to B2B. Commercial spend volumes were up 7% in the last quarter. I think a lot of folks are trying to figure out where we are in commercial spending in this uncertain macro environment. So, I’d love to get your thoughts on that. That’s one. I feel like it’s an analyst call. Now I’m going with a part two question.

The second part of the question is just understanding, there’s been some concerns about virtual cards and being higher pricing and maybe some pushback on virtual cards and cards because they have higher interchange rates in it. So maybe you could just talk about that. Are you seeing any pushback on pricing for virtual cards? So first one is just what do you think about the commercial spending volumes environment in this macro and then also on any pushback you’re seeing on virtual card acceptance.

Chris Newkirk

Yes. So, with respect to the first, yes, I think I’d just unpack the growth rate a little bit. So, what we see, if you look U.S. versus non-U.S., for instance, in non-U.S. rest of the world, international, we’ve seen growth rates that continue to, on the commercial side, that continue to outperform the consumer payments growth rate, which is core to our thesis in new flows. If we look at the U.S., we’ve seen and we’ve talked about this, what others have also talked about, which is a little softness in the kind of middle large market and more kind of steady on the small business side.

If we sort of double click into the U.S., what I would describe, we’ve seen is, for instance, TD that recovered extremely strongly after COVID. There’s a lot of pent-up demand not just on the consumer side for people to go take vacations again in two parts of the world. But on the B2B side for people to get out and see their clients in person, and we saw a really strong performance in T&E. And I think what we’ve seen recently is just more normalization there.

And then if I pull way up across U.S. and international, I’d say the same is true for cross-border in the commercial space, that we saw a very strong kind of post-COVID cross-border spend, which is, again, back to sort of normalization. So that’s what we’re seeing in terms of kind of the macro on commercial. And sorry, what was the second part of your question?

Bryan Keane

On the virtual cards.

Chris Newkirk

On the virtual, yes. Look, the key in B2B is to — for us to be able to sell on the value that we’re providing in the payment and not sort of the “direct cost” of acceptance is just sort of one piece of the equation. I think we’re having a lot of success. So go back to what I said, the core strategy, the drive credentials, drive acceptance, drive usage. On the drive acceptance side, we’re having a lot of success. Again, this is about sort of educating our frontline and then really educating our clients.

We’ve done third-party research, which I think is highly salient in this space to describe really, the value that we can deliver through virtual cards to buyers and suppliers who maybe today haven’t — we’ve not done a good enough job. I think we’re doing an increasingly good job of really explaining the full economic cost of their current buyer-supplier payment handling.

When you actually take into account all the sort of manual pieces of that, the cost of trade credit, et cetera, versus what can be achieved through virtual credentials, we’re doing a better and better job of articulating the value. And our clients are telling us and their end users are telling us that they’re really finding like a high degree of salience of our virtual commercial payables.

Bryan Keane

Got it, got it. Wanted to ask on cross-border in particular, we’ve been talking about that. But in particular, I was hoping you could talk about — touch on Currencycloud and what your capabilities are there.

Chris Newkirk

Yes. Currencycloud was really a terrific addition to Visa. So Currencycloud, what that brought us was a platform that had several things were additive to what Visa does, both in our core consumer payments business and in new flows.

So the two that I would highlight is really a more flexible cloud-based set of FX capabilities that enable us to offer, for instance, real-time in my business in the New Flows business, real-time FX rates as opposed to what we have been offering previously, which were kind of 24-hour one-day hold.

And what that’s enabled us to do with our partners is to offer real-time, so they can offer real-time FX in a more transparent way and grow their business. So we’ve attached that Currencycloud real-time FX capability to Visa Direct. That capability is also live and attached in our core consumer payments business.

So, for instance, we have a service called Persistent FX, which allows the holding of FX from the transaction all the way through to settlement for — so that can be disclosed and highly predictable, and the consumer knows what they’re getting, and that’s — you just think about over weekends how valuable that can be.

The second really core capability that Currencycloud brought to us was a set of capabilities around license payment activities in the U.S., Canada, U.K., Europe, and Australia to be able to collect.

So if you think about Visa Direct, it’s mostly been — mostly, not entirely, it’s mostly been disbursements, push payments, et cetera, where Visa Direct will go increasingly is pay in and pay out capabilities. And some of those require like regulatory licenses, et cetera, which Currencycloud has brought to us.

The third thing is multicurrency virtual wallet capabilities, which are highly applicable in the consumer space but actually also applicable in the business space to enable consumers or small business owners to have currency — or sorry, have accounts in local currencies and a wide variety of currencies. We’ve brought that to market, as you know, with Zing and HSBC in the U.K. on the consumer side.

And we also have deployments on the business side that allow, for instance, a small business owner in the U.K. to collect payments in the U.S. in U.S. dollars and then decide whether they want to hold them there, convert, send them back to the U.K. or maybe they want to hold dollars because they have their own supplier payments to make in U.S. dollars and they don’t want to take currency risk, et cetera. So those are the three real core value adds of Currencycloud. We’re super excited to have the Currencycloud team on board.

Bryan Keane

Got it. And so, I think we have about 60 seconds. I wanted to wrap on just what surprised you the most in New Flows as you’ve taken it over? And then what could be the kind of the biggest key trends to watch over the next several years?

Chris Newkirk

Yes. I don’t — I mean, I mentioned one surprise, which is just the sort of takeoff of one particular thing that we launched in Latin America. I’d say, Bryan, it’s less surprised. Okay, I’m going to try to do this in 40 seconds, less surprised than validation of a thesis that we had many, many years ago, where we’re succeeding in this business.

We’ve validated — think about like, well, someone did a PowerPoint where they said we could go after this kind of new flow space and look how big the TAM there, et cetera. We have proven that we have the right to play. We have a solid and growing set of solutions to win in the space. We’ve got the right to play. We’ve got the distribution and the scalability that I described. So, it’s — I would say it’s much more of a validation story.

In terms of trends to watch, I think a couple. One is like the consumerization of B2B. What I’d describe as a consumerization of B2B. The B2B experiences, they’re not great but they’re going to be much more consumer-like, mobile first, et cetera, over the years to come. Embedded finance, which just means kind of everyone talks about embedded finance.

All that means is taking a financial services transaction and embedding it in an existing user experience and meeting the users where they are. And I think those are going to be two very, very big drivers for our growth and the improvement of the B2B space over time.

Bryan Keane

Okay, awesome. Thanks so much, Chris, for the Q&A.

Chris Newkirk

Thank you, Bryan. Yes, appreciate it.