““There is no clear difference between high-end and low-end consumers. They may be buying different things, but the nominal level of spending remains fairly stable, and that’s pretty much the case around the world.”»
Visa Inc. continues to see signs that consumer spending is holding up well despite economic pressures, its chief financial officer said on a conference call on Monday.
Certainly in the current economy there is “something to worry about”, Visa
V,
CFO Vasant Prabhu told investors about this at the Goldman Sachs conference. “Consumer confidence in the US has been seriously damaged,” he said, and the war in Ukraine brings additional geopolitical uncertainty.
“Despite all of this, consumer spending has been remarkably stable,” Prabhu noted, which echoes Visa’s sentiment when the company earnings were last reported at the end of July.
While Visa continues to see changes in category preferences, at the end of the day, consumers are still opening their wallets.
“As you would expect, people have moved from, as they say, buying things to taking action,” Prabhu said. “Travel is booming” and hotels, airlines, entertainment and restaurants are “doing well.”
Visa’s business is related not only to the health of consumers, but also to the status of electronic payments. In recent years, the company has been able to benefit from the shift to cards and away from cash, especially amid the pandemic wave of digital payment adoption.
According to Prabhu, the company’s payments volume in Latin America, the Middle East and Africa has doubled over the past three years as Visa has made further progress in markets where more than half of people are accustomed to withdrawing cash from ATMs.
“It shows how much money there is to go digital,” he said, noting that Visa faces a “long runway” as it seeks to push further.
Prabhu’s comments on Monday came as fellow credit card company Mastercard Inc.
MA,
shared some of his own thoughts on the state of consumer spending.
Mastercard released monthly SpendingPulse data showing an 11.7% year-over-year increase in total retail sales in August, excluding the automotive category. Such sales increased by 20.4% compared to 2019, the purpose of the comparison is to show performance compared to the period before the pandemic.
Mastercard’s SpendingPulse also forecast a 7.1% year-over-year rise in total retail sales excluding autos for the holiday season, with e-commerce sales expected to rise 4.2% and in-store sales up 4.2%. 7.9%.
