Visa CEO: Libra agreement is nonbinding

Visa’s decision on how or if it will participate in Facebook’s Libra will be based on how the social network handles the mountain of criticism and requirements that global regulators and lawmakers are heaping upon it.

The card brand has signed a nonbinding letter of intent to join Libra, which is set to launch in 2020, and is one of 27 companies that have expressed interest in Facebook's cryptocurrency project, Visa CEO Alfred Kelly said during Tuesday’s earnings call. “No one has officially joined.”

Facebook’s crypto march was gradual, but its recent white paper announcing Libra set off a political storm involving Congress, the Trump administration and myriad regulators in other countries.

Michael Nagle/Bloomberg

One of the unanswered questions about Libra is the role of Facebook’s partners, which include Visa, Mastercard, Stripe, PayPal and other companies from financial services and retail. These companies may help with security, compliance or risk management, though those roles are based more on the companies' existing core competencies than formal announcements.

In an earlier PaymentsSource interview, Jorn Lambert, executive vice president of digital solutions for Mastercard, said Libra is aligned with regulators’ concerns on issues such as consumer protection and risk. David Marcus, who is leading Facebook’s blockchain operation, said in prepared congressional testimony that Libra won’t be launched until regulators are satisfied with its model.

During Tuesday evening’s earnings call, Visa’s Kelly was noncommittal under audience questioning.

“Our ultimate decision will be determined by how [Libra] satisfies regulatory requirements,” Kelly said. “It’s early days and there’s a tremendous amount to be finalized.”

In his prepared remarks, Kelly touted Visa’s recent series of acquisitions and the role the brand's dealmaking will play in expanding Visa's digital footprint.

Visa’s Earthport acquisition, which has now closed, will allow Visa Direct to reach more than 99% of bank accounts in 88 countries, including the largest 50 markets, up from about 50% coverage before the merger.

Visa also recently agreed to acquire Munich-based Payworks, which provides payment gateway software that will help Visa manage omnichannel payments. In another recent deal, Visa agreed to buy Rambus’ token and ticketing services. Visa also agreed to acquire Verifi, a technology firm that attempts to reduce chargebacks.

Rambus will aid Visa’s network-agnostic services, as well as add technology to support real-time payments.

“These acquisitions and investments will accelerate progress in tapping new payment flows and extending our boundaries,” Kelly said.

For the quarter that ended June 30, Visa reported revenue of $5.84 billion, up about 11% year over year, and said earnings per share rose roughly 14% to $1.37. FactSect’s estimates were $5.7 billion in revenue and earnings per share of $1.33, according to Investors.com. Visa projected low-double-digit growth in net revenue for the full year.