Visa Inc (NYSE: V) Q4 2023 Earnings Call dated Oct. 24, 2023
Corporate Participants:
Jennifer Como — Senior Vice President and Global Head of Investor Relations
Ryan McInerney — Chief Executive Officer
Chris Suh — Chief Financial Officer
Analysts:
Darrin Peller — Wolfe Research — Analyst
David Koning — Robert W. Baird — Analyst
David Togut — Evercore Partners — Analyst
Ramsey El-Assal — Barclays — Analyst
Will Nance — Goldman Sachs — Analyst
James Faucette — Morgan Stanley — Analyst
Jamie Friedman — Susquehanna — Analyst
Sanjay Sakhrani — KBW — Analyst
Trevor Williams — Jefferies — Analyst
Tien-Tsin Huang — JPMorgan — Analyst
Ashwin Shirvaikar — Citi — Analyst
Harshita Rawat — Bernstein — Analyst
Presentation:
Operator
Welcome to Visa’s Fiscal Fourth Quarter and Full-Year 2023 Earnings Conference Call. All participants are in a listen-only mode until the question-and-answer session. Today’s conference is being recorded. If you have any objections you may disconnect at this time.
I would now like to turn the conference over to your host, Ms. Jennifer Como, Senior Vice-President and Global Head of Investor Relations. Ms. Como, you may begin.
Jennifer Como — Senior Vice President and Global Head of Investor Relations
Thanks, Jordan. Good afternoon, everyone, and welcome to Visa’s fiscal fourth quarter and full-year 2023 earnings call. Joining us today are Ryan McInerney, Visa’s Chief Executive Officer; and Chris Suh, Visa’s Chief Financial Officer.
This call is being webcast on the Investor Relations section of our website at investor.visa.com. A replay will be archived on our site for 30 days. A slide deck containing financial and statistical highlights has been posted on our IR website.
Let me also remind you that this presentation includes forward-looking statements. These statements are not guarantees of future performance, and our actual results could differ materially as the result of many factors. Additional information concerning those factors is available in our most recent Annual Report on Form 10-K and any subsequent reports on Forms 10-Q and 8-K, which you can find on the SEC’s website and the Investor Relations section of our website.
For non-GAAP financial information disclosed in this call, the related GAAP measures and reconciliation are available in today’s earnings release.
And with that, let me turn the call over to Ryan.
Ryan McInerney — Chief Executive Officer
Good afternoon, and thank you for joining us. Before we begin. I wanted to take a moment to acknowledge the tragic loss of life and suffering in Israel and Gaza. We are in constant contact with our teams in Israel and throughout the region and I have the deepest admiration for their commitment to each other and their clients during this exceptionally challenging time. We continue to monitor the situation, prioritize the safety of our people, and stay close to our clients to ensure the continuity of business operations.
Turning now to our results. At the beginning of 2023, there was a lot of uncertainty around the macroeconomic environment with fears of a recession. There were many unknowns around FX, volatility, interest rates, and inflation. There was also some noise in our growth rates in early 2023 due to the effects of Omicron and the suspension of operations in Russia. Against that backdrop, Visa delivered. Total full-fiscal year, net revenues grew a 11% with GAAP EPS up 18% and non-GAAP EPS up 17%. Credentials grew 7%. We also surpassed 0.5 billion tokens. Total transactions, including cash and payment transactions, were $276 billion, which means that Visa credentials were used on average 757 million times a day during the fiscal year.
We signed over 500 commercial partnerships with fintechs globally from early-stage companies to growing and mature players up 25% versus last year. Merchant locations were up 17%, helped by strong growth in Latin America and CEMEA. Global tap-to-pay penetration excluding the US grew five points from last year to 76% of total face-to-face transactions and in the US penetration expanded 13 points to surpass 40%. Global tap-to-ride transactions were $1.6 billion for the full year of 2023, up over 30% and we added nearly 150 new transit systems throughout the year, such as in Philadelphia and Bangkok, bringing the footprint to more than 750 systems. More than 40% of our transit system launches this year also included our value-added services acceptance solutions. On the new flow side, total revenue grew 17% in constant dollars for the full year.
I will note a few highlights. Total commercial volume was $1.57 trillion, up 12% in constant dollars. We have increased the number of banks that have signed on to Visa B2B Connect by more than 70% this year and activation continues to happen with the number of transacting banks more than doubling. Visa Direct had 7.5 billion transactions up 19% year-over-year and nearly 30% excluding Russia across 65-plus use cases and over 2 800 programs helped by more than 500 enablers. Cross-border P2P transactions grew 65% year-over-year and reached a new record for payments volume in the fourth quarter. Value-added services revenue grew 18% for the full year in constant dollars.
Across our hundreds of products, our top 265 largest clients used 22 products on average, up 8% from last year versus our overall clients who used 11 products on average. With all of this strong momentum in performance, we finished the fourth quarter with net revenue growth of 11% and GAAP EPS growth of 22%. Other highlights from the fourth quarter include the following in constant dollars: global payments volume grew 9%, US payments volume grew 6%, international payments volume grew 11%, cross-border volume excluding intra-Europe grew 18% with cross-border travel up 26% year-over-year and processed transactions were up 10%. Across all of our growth levers, we continued to drive progress in innovation and money movement. As I mentioned last quarter when asked why Visa, our clients tell us they are choosing to deepen and expand their partnerships with us for a number of reasons including our people, our products, our value-added services, our new flows capabilities, and our brand. We continued to see that play out in our fourth quarter.
I’ll walk through each one and highlight some examples. First, our people. We have the best team in the business and our clients tell us that they deeply value the advice, local support, and partnership from our outstanding teams who are laser-focused on helping our clients grow their businesses. Our clients also appreciate our thoughtful leadership on important and complex industry issues across the ecosystem. An example, this quarter was with U.S. Bank, one of the largest issuers in the United States. They have renewed our long-term agreement for their consumer and commercial portfolios.
In addition, we are engaging in consulting services and co-marketing projects that include leveraging our NFL sponsorship. Also in the US, we are very pleased to have renewed our long-standing relationship with top 20 US issuer F&BO across consumer, commercial, and value-added services. In Brazil, credit unions or cooperatives are fast-growing and we recently reached an expanded relationship with Pismo whose system spans nearly 340 cooperatives and 7.5 million members. In addition to our people, our payment products and innovations consistently help us win. We are constantly driving innovation and delivering next-generation payment solutions and experiences that enable our clients to better serve their customers and grow their businesses.
In terms of our capabilities to serve fintechs. In Colombia, we expanded our partnership with Rappi. The first digital wallet in the country to enable their 17 million-plus account holders for tap to pay with digital credentials. We also provide targeted offerings for certain customers. In India, we are focused on delivering market-leading offerings for affluent customers. With that in mind, we have signed with Fintech Amplify for a consumer credit offering for high-net-worth and mass-affluent customers. We also recently expanded our acceptance with Fintech Razorpay to enable Visa debit cards to purchase mutual funds and securities offering greater convenience to customers with higher payment success rates versus traditional methods.
And in the e-commerce seller space, we renewed our agreement with Shopify for the Balance card allowing Shopify’s US sellers to access funds from sales by the next business day and receive cash-back on everyday business expenses like shipping and marketing. We also signed a new issuing agreement for small-business credit.
Next, our value-added services are helping us win. They help our clients innovate and grow, provide risk management solutions, and drive better outcomes for them and in turn for Visa. Our acceptance solutions including CyberSource have really resonated with clients this year. We sold more than 2,600 new acceptance services in over 100 countries. In North America, Costco has chosen Visa Acceptance Solutions including CyberSource for all of their US and Canadian e-commerce transactions. Alaska Airlines has selected CyberSource to process their kiosk payments in support of their initiative to transform the airport lobby experience.
In Asia-Pacific, China Merchants Bank, the largest issuer in Mainland China has renewed its consumer and small-business portfolios. In addition to our flagship risk management services, Visa Advanced Authorization and Visa Risk Manager, they will also expand their use of consulting services. Bank of China and AM Financial Service in Japan have also signed on to use VAA and VRF. In Latin America, we have been focused on expanding our processing penetration as it allows us to offer more value-added services to our customers. In Colombia, we have recently expanded our processing penetration through the addition of four more banks under our strategic agreement with Credibanco, the market’s largest acquirer and issuer processor. This positions us to reach nearly 80% of domestic transactions by the end of FY ’24 from essentially zero in 2019. As part of these agreements, banks have added anywhere from four to 11 value-added services, including risks and acceptance services.
As part of our network of network strategy, we continue to both collaborate with and offer our solutions in the real-time payment space, most recently with FedNow. In Q4, Visa became a certified service provider for FedNow using our service, Visa financial institution clients can receive funds in real-time through the FedNow Service with origination capabilities to follow. This means that Visa is now processing FedNow payments with the Clearing House RTP to follow in the next few months.
Now onto our new flows capabilities, which are increasingly an important differentiator to our clients. On the B2B side, we are pleased to have reached an expanded long-term global agreement across more than 60 countries with Citibank for their commercial card business, which also encompasses over 20 value-added services. We also recently won the IBM [Phonetic] Commercial card business spanning T&E meeting in purchasing card programs in over 60 countries also with Citibank as the issuer.
In Singapore, we renewed our longstanding partnership with DBS. The largest bank in Southeast Asia to continue offering commercial debit and credit services for consumers and expanded into new commercial products for small businesses. On the Visa Direct side, we continue to expand, Visa Direct’s reach, especially to wallet endpoints. Most recently, we signed an agreement with Tencent for the Visa Direct cross-border remittance business. This will bring the total wallet reached for Visa Direct to over $2.5 billion. We’ve expanded our partnership with Paysend from US and UK payments to enable all of Paysend’s customers across the globe to send money in real-time to eligible Visa cards across a 170 countries and territories. Paysend is also a currency Cloud Customer offering compelling cross-border solutions.
We also recently renewed with the largest issuer in Korea, Shinhan Card for consumer and business credit, which also incorporates the provision of our data capabilities in value-added services and the enablement of Visa Direct for cross-border remittances. We have also continued to add new Visa Direct use cases with our partners such as with small-ticket B2B payments and bill-pay. In Brazil, Banco BRB will enable Visa Direct for low-value high-velocity cross-border payments as part of their corporate banking business. In the US, payment platform, Everyware will be enabling bill payments with Visa Direct.
And last but certainly not least, our brand. Visa’s brand strength helps deliver added value to our clients and their customers, financial institutions, merchants, and partners through a wide range of products and services as well as innovative brand and marketing efforts. We are pleased to have signed an agreement with Universal Destinations & Experiences to be the exclusive payment network for their new co-branded credit card that will be issued by FNBO. In addition, Visa is now the official way to pay at Universal Destinations & Experiences and together we will provide compelling benefits to Visa cardholders across their Orlando and Hollywood properties. Also in the US, we have recently renewed the Fidelity Investments co-brand credit portfolio issued by U.S. Bank and we signed with Coupang, a large retailer with 20 million customers in Korea for their inaugural co-brand card. And in CEMEA, we have signed a Saudi Airlines co-brand with Riyad Bank and we renewed our co-brand partnership with Etihad Guest, the loyalty program of Etihad Airways.
As we look ahead, we’re excited to be activating our brand with clients and partners at the Paris 2024 and Milano-Cortina 2026 Olympic and Paralympic summer games and winter games. Since 1986, Visa has been a proud sponsor of the Olympic movement, which provides an unparalleled opportunity to promote the Visa brand at a regional and global level, while also facilitating partnerships and joint business initiatives with clients. The games provide a unique platform for showcasing product innovation and engaging consumers and clients with exclusive experiences. We are looking forward to the upcoming games and we have been building momentum in the business across Europe with a particular focus on the continent.
I’ll share a few recent highlights for our European business. On the people front. Payments is a local business and we have expanded into seven new locations over the past five years and have more than doubled our workforce in the market. On innovative products, we have well over 100 FinTech relationships and have expanded our capabilities through the acquisitions of Tink and Currencycloud. In new flows, Visa Direct has more than 100 enablers and over 1,000 programs with transactions more than doubling over the past two years.
And in value-added services, we have increased our client penetration. In VAA alone, the number of clients enrolled in the service has more than doubled since three years ago and we will be introducing nearly 20 additional products in 2024. We have been steadily building an attractive position on the continent and have built a strong pipeline of signed deals for the future by competing uniquely in each market. Active cards across Continental Europe have grown nearly 50% since 2019. Over the next few years, we expect to migrate more than 40 million cards across nearly 40 clients and the nature of the portfolios we are winning in Continental Europe tend to include more cross-border volume resulting in higher yields. So, our brand, our capabilities, our people, all of these make a difference for Visa’s clients.
2023 had many milestones and solid financial performance. As we are now three weeks into our new fiscal year, I would like to make a few general points and then Chris will go into more detail. One, there are still macro uncertainty but just like in fiscal year ’23, I am confident that we can manage through it. Our strategy and focus remain the same propelling growth across consumer payments, new flows, and value-added services. Two, we are focused on delivering for our stockholders. In that light, I’m sure that you saw that we released an 8-K back in September regarding our potential exchange offer program. We appreciate the dialog we’ve had with Class A, B, and C stockholders, and the Board is evaluating the next steps as we continue to engage with investors. Finally, you may have seen today that we announced a $25 billion multi-year share repurchase program, which reflects our Board’s confidence in our strategy and future potential. I continue to see tremendous opportunity ahead. Visa has the brand, the capabilities, the strategy, and most importantly, the people to propel our growth for years to come.
And with that, let me hand it over to Chris.
Chris Suh — Chief Financial Officer
Thanks, Ryan. Good afternoon, everyone. As Ryan said, Q4 was another good quarter, closing out a strong fiscal ’23, driven by healthy growth in payments volume, cross-border volume, and processed transactions, and continued solid execution of our strategy with new flows and value-added services revenue growing faster than consumer payments.
I’ll first start with a high-level summary of our Q4 performance and then click into more details. Looking at our drivers. In constant dollars, global payments volume was up 9% year-over-year, and processed transactions grew 10% year-over-year both stable to Q3. Cross-border volume excluding intra-Europe growth was strong, up 18% year-over-year in constant dollars. Fiscal fourth quarter net revenues were up 11% and 10% in constant dollars with minimal impact from FX, in-line with our expectations. GAAP EPS was up 22% and non-GAAP EPS was up 21% in both nominal and constant dollars.
Now on to the details, starting with the US payments volume was up 6% year-over-year, stable to Q3. Credit volume grew 6% year-over-year and debit volume grew 17%. Card present spend grew 3%, in the US, card-not-present volume excluding travel grew 9%. US process transactions growth was stable at 8%. Over the course of the quarter, we saw payment volume growth tick-up from July to September, primarily driven by sequential improvement in ticket size growth that was mostly led by fuel with higher gas prices and easier year-over-year comparisons, as well as a positive days mix impact. Consumer spend across all segments from high to low spend has remained stable since March. Our data did not indicate any behavior change across consumer segments.
In international markets, total payments volume growth was up 11% in constant dollars. Payments volume growth rates were strong through the quarter in most major regions with Latin America, CEMEA, and Europe, ex-UK growing about 20% or more in constant dollars. Now to cross-border, which I’ll speak to in constant dollars excluding intra-Europe transactions. Total cross-border volume was up 18% and up 152% versus 2019. Cross-border card-not-present volume growth excluding travel grew 9% year-over-year and 173% versus 2019. Adjusted for cryptocurrency purchases cross-border e-commerce spending grew year-over-year in the low-double-digits in line with pre-COVID growth rate and consistent with the trends we have seen for most of the fiscal year. Cross-border travel-related spend grew 26% year-over-year. The cross-border travel volume index to 2019 increased from 139% in June to 143% in September, totaling 141% for the quarter, a five-point improvement from Q3. We continued to see healthy travel volume levels in and out of LAC, Europe, and CEMEA ranging from 145% to 165% of 2019 levels.
Travel volume into Asia continues to improve indexing at 128% to 2019 levels for the quarter, up 10 points from Q3 while travel volume out of Asia was up seven points to 114%. Looking at Mainland China specifically cross-border travel volume continued to improve but remained below 2019 levels. Travel volume outbound from the US to all geographies continued to be strong in the mid-150s indexed to 2019. US inbound travel recovery accelerated this quarter, pushing the index above 2019 levels for the first time even as the dollar continued to remain strong relative to pre-COVID levels.
Now let’s review our fourth quarter financial results. Service revenues grew 12% year-over-year versus the 9% growth in Q3 constant dollar payments volume, primarily due to business mix, pricing, and card benefits. Data processing revenues grew 13% versus 10% process transaction growth led by value-added services and pricing. International transaction revenues were up 10% versus the 18% increase in constant dollar cross-border volumes excluding intra-Europe. Revenue growth lagged volume growth primarily due to declining currency volatility. Other revenues grew 35% led by pricing, consulting, and marketing services and client incentives grew 20%.
Now, let me dive into revenues growth across our three growth engines. Consumer payments growth was driven by stability in domestic volume growth and processed transactions as well as strong growth in cross-border volumes. New flows revenue grew 14% in constant dollars. Commercial volumes were up 9% in constant dollars and up 156% versus 2019. Remember that revenue is recorded based on last quarter’s payment volumes growth, which was 9% in constant dollars in Q3. Visa Direct transactions grew 19%, and as we mentioned last quarter were impacted by a client that transitioned it’s domestic P2P transactions to an internal ledger system and that was not meaningful to revenue. Value-added services grew 19% in constant dollars, driven primarily by strong advisory services, select pricing actions, and higher volume.
GAAP operating expenses increased 13%. Non-GAAP operating expenses grew 9% primarily due to personnel expenses from growth in headcount and FX had a nearly two-point drag. Excluding net gains from our equity investments of $7 million, non-GAAP non-operating income was $79 million, benefiting from higher interest income due to rising rates. Our GAAP tax rate was 16.9% and non-GAAP was 17% due to a tax benefit related to the extension of the US foreign tax credit regulations, which resulted in an indirect tax expense in the operating expense line and a much larger tax benefit in the income tax provision.
GAAP EPS was $2.27, non-GAAP EPS was $2.33, up 21% over last year, inclusive of a little more than half a point of drag from exchange rates. In Q4, we bought back approximately $4.1 billion in stock and distributed $928 million in dividends to our stockholders. We also added $150 million to the litigation escrow account, which has the same effect as a stock buyback. At the end of September, we had $4.7 billion remaining in our buyback authorization. For the full fiscal year 2023, net revenues increased 11%. GAAP EPS of $8.28, was up 18% and non-GAAP EPS of $8.77 was up 17%, inclusive of an over two-point drag from exchange rates.
Now let’s move to fiscal year 2024. Before we share our perspectives on the year, I want to make a few brief comments. In many ways. FY ’24 will be as close to a normal year as we’ve had in a while. We have fully lapped the Russia and Omicron impacts and overall inflation continues to moderate in many of our markets. As such, we’re pleased to resume our pre-COVID guidance practices and will provide our outlook for FY ’24, which we will update each quarter. At the same time, we will no longer be providing the intra-quarter 8-Ks associated interim driver updates.
Now let’s look at what we’ve seen through the first three weeks of October. US payments volume was up 5% with debit and credit both up 5%. The sequential step-down from September was primarily driven by the days mix impact in September and declining fuel prices in October. Excluding those two items, payments volume growth was relatively stable from September to October. REG II has not meaningfully impacted volumes so far. Processed transactions grew 10% year-over-year. Constant dollar cross-border volume excluding transactions within Europe grew 19%, and travel-related cross-border volumes were 144% indexed to 2019.
Turning now to our key assumptions. As we’ve said consistently, we’re not economic forecasters. And so, at a macro-level, we are assuming no recession in our outlook. We’re also not factoring in any impacts from REG II and student loan repayments because as I mentioned before, we’ve yet to see any meaningful impact. As the year progresses and we gather more information with regard to these assumptions, we will continue to provide updates. For key drivers, we are assuming that the trends we saw in Q4 generally continue throughout the year. Overall payments volume growth and processed transaction growth are expected to be in the low-double-digits on a year-over-year basis. Cross-border card-not-present ex-travel and ex-crypto volume growth will continue to be in the low-double-digits year-over-year on a constant dollar basis. Cross-border travel volume excluding intra-Europe year-over-year growth will moderate to the low 20s in constant dollars and when compared to 2019 would equate to a four-point to five-point improvement each quarter. This assumption is driven primarily by improving AP cross-border travel volume mostly from China and to a lesser extent, improving US inbound travel volume.
In terms of what this means for the financials, I’ll speak to the numbers. On an adjusted basis, which we define as non-GAAP results presented in constant dollars and excluding acquisition impacts, which you can review in the footnote in our earnings release and earnings presentation for more detail.
Okay, first, let’s discuss net revenues. For the full-year, we expect low-double-digit adjusted net revenue growth. Based on current currency forward curves, FX will be approximately a one-point drag for the year. We are assuming that currency volatility moderates slightly from Q4 levels but remains relatively stable throughout the year. On a year-over-year basis, incentives are expected to grow slightly less than what we saw in FY ’23. For new flows and value-added services, we continue to expect those to grow faster than consumer payments in FY ’24.
Now moving to expenses. Our current plans are to grow adjusted operating expense in the high-single-digit to low-double-digits with approximately 1.5 points of FX benefit to nominal non-GAAP growth. Non-operating income is expected to be between $250 million and $300 million. The tax rate is expected to be slightly favorable to our typical rate of 19% to 19.5% due to some offsetting factors. On the one hand, we have the impact of tax-rate increases in certain countries, which puts our new run rate closer to 19.5% to 20%. However, we also anticipate some one-time tax benefits in the second half related to the resolution of certain tax matters. In total, this will put us between 18.5% and 19% for the full fiscal year.
Putting all this together, we expect full-year adjusted EPS growth in the low teens with about half a point of FX drag to nominal non-GAAP growth. Also, FY ’24 will likely be a tale of two halves with variability in our growth rate from the first half to the second half. A few aspects to keep in mind. First cross-border volume ex-intra-Europe grew 31% year-over-year in the first half of FY ’23 and 20% in the second half. Second, recall that we had relatively high currency volatility in the first half of FY ’23 and it moderated considerably in the second half. Third, incentives were 16% higher in the second half of FY ’23 versus the first half due primarily to deal timing and client performance. As a result, we expect overall adjusted net revenue growth to be lower in the first half than in the second half of FY ’24. This will also be the case on a nominal basis, even with a slightly larger FX headwind in the second half of FY ’24 than the first half.
On the expense side, as Ryan mentioned, this is an Olympics year and we expect Q2 and Q3 expenses to have the largest percentage increases as we ramp. But adjusted operating expense growth and FX impact will roughly be the same in both halves. The tax rate is expected to be lower in the second half than the first half due to the anticipated one-time tax benefits, I mentioned. So for the first quarter, specifically given the variables, I just described Q1 is expected to have the lowest adjusted year-over-year net revenues growth rate with an improving trend throughout the year and Q4 is expected to be at the highest adjusted growth rate. We expect first quarter net revenues growth in the upper mid-to-high single-digits on an adjusted basis.
A few factors to keep in mind, again, one, currency volatility was the highest in Q1 of ’23; two, cross-border volume grew 31% in Q1 of ’23 and three, Q1 ’23, other revenue was strong due to the FIFA World Cup-related value-added services revenue and incentives were lower than expected due to client performance and other items. Adjusted operating expense growth is expected to be in the high single digits driven by headcount growth and salary increases. We anticipate approximately half a point FX headwind to nominal net revenues growth and approximately 1.5 point benefit to nominal non-GAAP expense growth.
The tax rate is expected to be closer to a new run-rate of between 19.5% and 20% in Q1. This first quarter adjusted EPS growth in the upper mid-single-digits with minimal impact from FX. Keep in mind that the adjusted basis is defined as non-GAAP results presented in constant dollars and excluding acquisition impacts and non-GAAP expenses and EPS exclude acquisition-related items and the litigation provision for the first quarter of 2023.
For FY ’24, the estimated results exclude approximately $20 million or one set of acquisition-related costs and approximately $40 million or $0.02 from the amortization of acquired intangibles.
And finally, moving to capital return. As Ryan said, the Board has authorized a $25 billion multi-year share repurchase program and increased our quarterly dividend by 16%. In summary, Visa’s underlying business continues to be healthy and stable and the growth opportunities are significant. While there continue to be macro uncertainties, we feel confident in our ability to manage the business through a changing environment and deliver value for our stockholders.
And now, Jennifer let’s move to Q&A.
Jennifer Como — Senior Vice President and Global Head of Investor Relations
Thanks, Chris. And with that we’re ready to take questions.
Questions and Answers:
Operator
[Operator Instructions] Our first question comes from Darrin Peller with Wolfe Research. Your line is open.
Darrin Peller — Wolfe Research — Analyst
Hey guys, thanks for the time, and congrats on the quarter. Just when thinking about your guidance for the fiscal year ahead, it’s good to see the constant-currency double-digit growth rates. So, I just want to make sure we understand the inputs and how you think about structural growth as far as some of the inputs like value-added services, new flows. So, number one, I mean, maybe you can give us a little more color on what you’re assuming for some of those –some of the vast and new flows growth potential. And then more importantly, do you believe that’s the right algorithm medium-term is the structural growth of this company sustainably at the same 10% to 12% range it’s been, or has anything changed? Thanks, guys.
Ryan McInerney — Chief Executive Officer
Yeah. Hi, Darren. Yeah, let me address that. So yeah, the a couple of things I’ll say about FY ’24 guide. First, the underlying drivers, as we shared. Both payments volume and processed transactions will be growing in the low-double-digits, which is very consistent and reflects the stable business trends that we see in the underlying drivers. I also said on the call commentary that we do expect that value-added services and new flows to continue to be our growth engines, growing faster than the consumer — the consumer payments part of the business and so I think that structure which you described is consistent in many ways to ’23 and that’s what we certainly expect to see in ’24.
Jennifer Como — Senior Vice President and Global Head of Investor Relations
Next question, Jordan.
Operator
Our next question comes from Dave Koning with Baird. Your line is open.
David Koning — Robert W. Baird — Analyst
Yeah, thanks so much. Good job and I guess two quick ones. Asia-Pacific constant-currency volume growth was 4%, a little lower-than-normal. Maybe you could dive into that. And then tax rate longer-term. Basically in the out years 19.5% to 20%, that’s how we should think about it. Thank you.
Ryan McInerney — Chief Executive Officer
I’ll talk about Asia and maybe put in the context of what we’re seeing around the world. And then, Chris, you can take a tax rate. Just to answer your question specifically on Asia, as you said growth ex-China slowed four points from Q3. There’s a couple of things going on there. One is, we’re lapping some strong COVID ramp in Q4 of ’22, but we’re also seeing a little softness in a couple of places, notably, Australia is what I’d point you to. If you guys just kind of back — back up and look at that and kind of the bigger picture, what are we seeing around the world? Outside of Asia as it sounds like you’ve looked at the numbers and you would have seen, we’re seeing resiliency. Outside of North America and Asia if you look at Europe, ex-UK, Latin America, CEMEA. most of these regions are growing at around 20% or more. So we feel good about what’s happening there. On the tax rate, Chris, I’ll turn it over to the long-term tax rate.
Chris Suh — Chief Financial Officer
Yeah, sure. Hi, Dave. Yeah, I do think that’s the right way to think about at least based on what we know now, the new run-rate, we would put it about 19.5% to 20%, it does, it is related to how our tax — the mix of tax jurisdictions around the world and certain tax increases in certain parts of those royalties. As we talked about in the next fiscal year will be below that due to some of the benefits that we anticipate in the second half of the year but based on what we know today the new run rate is as you estimated.
Jennifer Como — Senior Vice President and Global Head of Investor Relations
Next question, Jordan.
Operator
Our next question comes from David Togut with Evercore ISI. Your line is open.
David Togut — Evercore Partners — Analyst
Thank you. Good to see the 19% growth in Visa Direct transactions, and, in particular, 65% growth in cross-border P2P transactions year-over-year. As we look to FY ’24, what are some of the biggest most promising new use cases, you’re working on for Visa Direct?
Ryan McInerney — Chief Executive Officer
Yeah, hey David. Cross-border remittances is a big one, since you called that out, I’ll highlight it. I mentioned, I think on this call and some others the work we’re doing with Paysend, Shannan, and things we’re doing around the world. We’ve mentioned in previous calls with some of the both kind of traditional and Fintech remittance players. 65% year-over-year growth is strong and continue to invest behind that with new partners and try to drive further growth going forward.
We’re focused on bill payments. We’re focused on earned wage access. We’re focused on insurance disbursements. We continue to focus on P2P more broadly in new geographies around the world, both domestic and cross-border. If you just back up, I’ve said this, I think on previous calls, I believe at this point in time, Visa Direct is the largest at-scale money movement network on the planet. We have made investments consistently year-over-year to get to a point where we now have 8.5 billion endpoints, three billion cards, three billion accounts with some of the news I announced in my prepared remarks, 2.5 billion digital wallets and we’ll continue to invest in expanding the network even further, but now we’ve got the ability to work with enablers around the world, sell new use cases in and put this network to work and we’re going to continue to do that and look forward to hopefully talking about more good results to come.
Jennifer Como — Senior Vice President and Global Head of Investor Relations
Next question, Jordan.
Operator
Our next question comes from Ramsey El-Assal with Barclays. Your line is open.
Ramsey El-Assal — Barclays — Analyst
Hi, thanks for taking my question. You guys had a lot of great commentary on commercial and P2P progress in deal wins in the quarter. Can you just give us a broader update on your commercial strategy? Where do you see the bigger opportunities there going forward?
Ryan McInerney — Chief Executive Officer
Yeah, thanks. It was we did have some really good commercial wins in the quarter. I’m wondering a couple of different buckets. One is, we’re looking to expand our partnerships, right? So I mentioned Citi and IBM this quarter, I mentioned SAP last quarter and we’re just we’re having good success, building and expanding those partnerships around the world. Second thing we’re focused on is expanding verticals. You’ve heard us talk about government, travel, fleet, and fuel. I talked about Agro, I think last quarter, we’re looking to sell into marketplaces like I mentioned, health care, so taking these products, innovating, creating new use cases, and delivering them into new verticals. And then just making the product easier to use.
Yesterday, we announced that actually we had a new product to make it easier to accept virtual cards, we call it virtual card acceptance platform. Virtual cards are the preferred acceptance of many suppliers, but they’re not as easy to accept as sometimes we’d like them to be. So, we are putting new platforms out to make the core products like virtual cards, easier to use. And then continuing to invest in the partnerships that we’ve announced over the last couple of years WEX is a great example of our partner that we announced a couple of years ago that we’ve investing in and growing in and really getting to see some of the benefits of that around the world.
So, I guess the last thing, I would say, Ramsey is just also taken these products more broadly around the world in so many different countries outside of the most developed markets that we work in there — there is opportunity to get some of the basic products into the hands of small businesses, for example. In a lot of countries we’re doing business, there’s still a lot of small businesses that are actually using consumer products instead of the more sophisticated advanced small business products, let alone the large and middle market products that we can get out there. So, more partners, more use cases, more verticals, more countries, we’ll continue to invest in that business.
Jennifer Como — Senior Vice President and Global Head of Investor Relations
Next question, Jordan.
Operator
Our next question comes from Will Nance with Goldman Sachs. Your line is open.
Will Nance — Goldman Sachs — Analyst
Hey, guys. I appreciate you taking the question. You had some interesting — interesting commentary around processing market-share gains. Wondering, if you could just give us kind of a state of the union of where you stand with that and if there is any geographies that are kind of top-of-mind as opportunities to increase processing share, what would those be? Thanks.
Ryan McInerney — Chief Executive Officer
Yeah, sure. I mean, we were very focused on processing share for a couple of reasons but the one I noted in my prepared remarks is a very important one, which is we can deliver more of our value-added services when we’re actually processing the transaction. Obviously, we earn more yield, when we process the transaction as well just on the core processing of it, but the ability to serve our clients more effectively, deliver them our risk capabilities, our issuing capabilities, our royalty capabilities, and those types of things are enhanced when we actually process the transaction. So we spent a lot of time on it and we’ve made very good progress over the last many years.
I mentioned Colombia in my prepared remarks, and Colombia is a good use case. In a lot of these markets to really unlock the processing we have to work with the local processor, which we did in Colombia, and then work with the clients to get them on that processor. They will then test out the transaction, see how they work, and ultimately move those transactions to Visa Net which we like.
We’ve been very focused in Latin America, we’ve made some good strides in several different countries in Latin America and I think we continue to have opportunity in Latin America. We’re making strides in Europe and we’ll continue to focus on processing opportunities in several different countries that have local schemes in Europe as well as some places in Asia-Pacific. So, those are some of the opportunities we have well. Thanks.
Jennifer Como — Senior Vice President and Global Head of Investor Relations
Next question, Jordan.
Operator
Our next question comes from James Faucette with Morgan Stanley. Your line is open.
James Faucette — Morgan Stanley — Analyst
Good afternoon, everybody. Just wanted to circle back on the travel component of cross-border and and how you’re thinking about that in the coming year. I can appreciate as you guys have often said that you’re not necessarily economic forecasters. But can you just repeat for us what your underlying assumption is for the coming year? And then maybe give a little bit of color on inputs of how you’re arriving at that expectation and target for the year? Thanks.
Ryan McInerney — Chief Executive Officer
Let me give some context on how we think about just cross-border travel in general and then Chris, you can add and/or fill in the blanks on the assumptions that we’ve made for the year. Here’s how I think about it. In and out of Asia, we still have yet to normalize. So, as Chris alluded to, or said in his prepared remarks, we have opportunity to continue to catch up to pre-COVID travel levels in and out of Asia. There is also the opportunity to still catch up into the United States but more broadly around the world, I would say we’ve got a normalized in terms of cross-border travel but I think what’s interesting is we’ve normalized at a growth rate higher than pre-pandemic levels. People are traveling international at this new normal at a faster rate than they would have been all else equal, before the pre-COVID levels. So in a couple of quarters, we still have an opportunity to catch up to what would be normalized levels. Around the rest of the quarters around the world, I think we’ve normalized but at higher growth rates than we saw pre-COVID. Do you want to mention the numbers for the year?
Chris Suh — Chief Financial Officer
The only thing I’d really add and I covered a lot of the assumptions in the call commentary, The thing that I might just emphasize is that it is pretty healthy growth. And if you look at what we’ve shared in terms of what we expect the index to grow at four points to five points a quarter, I think that does reflect what Ryan said, which is normalized in many cases and continuing to be elevated growth.
Jennifer Como — Senior Vice President and Global Head of Investor Relations
Next question, Jordan.
Operator
Our next question comes from Jamie Friedman with Susquehanna. Your line is open.
Jamie Friedman — Susquehanna — Analyst
Hi. Thanks for taking my question, Ryan, in your prepared remarks, you called out CyberSource. I know it’s a very important asset for you and always has been, but why is — am I inferring that there’s an increased cadence in the business and if so why would that be? Thank you.
Ryan McInerney — Chief Executive Officer
Yeah, as I said, Jimmy about federal remarks we’re seeing great strong client demand around the world for CyberSource, why? I think as a result, a lot of the investments we’ve made in the platform over the last several years, we’ve been very purposeful about investing in our omni-commerce capabilities for CyberSource. We’ve been very purposeful in investing in our tokenization capabilities, our risk management, fraud prevention capabilities, and a lot of that has been driven by sitting down with our clients and partners, understanding the roadmaps, understanding what they needed us to deliver making those investments, and then having success growing with our partners in any given market around the world when clients start adopting the CyberSource platform and others look around at the success they’re having with authorization rates or transaction success or others that leads to new opportunities and we’ve had the ability to sell into those. So, thanks for the question.
Jennifer Como — Senior Vice President and Global Head of Investor Relations
Next question, Jordan.
Operator
Our next question comes from Sanjay Sakhrani with KBW. Your line is open.
Sanjay Sakhrani — KBW — Analyst
Thanks. I have a question on Reg. Chris, you mentioned no impact yet. And also sort of caveat at the outlook, I’m just wondering, is there anything that gives you pause there and then Ryan, anything you guys are doing proactively to get in front of any adverse impact? Thanks.
Ryan McInerney — Chief Executive Officer
Why don’t I talk just contextually about Reg and then you can also on Sanjay’s question? So two things going on obviously with Reg, I was just talking about them both, one is the change that was made last summer that went into effect with regards to routing in the e-comm space. As we mentioned in our prepared remarks there, we haven’t seen any meaningful impact. Having said that, there’s a lot of work happening around the ecosystem and we’re out there talking to clients and partners about our products and our value propositions, making sure they understand the benefits of a Visa transaction, especially in the e-commerce space, were often the merchant holds fraud liability. So our sales teams are in with merchant clients and acquire clients day-in and day-out, explaining the value of our products, showing them the value of our products, and going forward we feel good about our ability to compete.
The second thing that’s going on with Reg II that I’m sure people would have seen as the Fed has announced that they’re going to. I think it’s tomorrow announced some changes, potentially to the debit interchange rate in the US. We don’t know what they’re gonna say will obviously follow very closely and when they do publish something we’ll take a look and see if it merits a response on our behalf.
And just as a reminder, interchange is the exchange value between the merchant and the issuer. And I think what’s notable about our business model is we’ve proven that we can be resilient and have a strong business in regulated interchange markets, not regulated interchange markets, in markets that have higher regulated interchange and lower regulated interchange. So, as you alluded to, a lot going on in the US with Reg II, but we’re all over it and we feel good about our ability to compete.
Chris Suh — Chief Financial Officer
Yeah, and I’ll just add on from a guidance perspective. Hopefully, we’re very clear on the call. We have not seen any meaningful impact thus far, and, therefore, haven’t included any impact of that in our FY ’24 guidance, but it is early days and there’s a lot going on as Ryan — as Ryan described at length. And so we’ll keep you posted as things evolve in the coming months.
Jennifer Como — Senior Vice President and Global Head of Investor Relations
Next question, Jordan.
Operator
Our next question comes from Dan Perlin with RBC Capital Markets. Your line is open.
Sanjay Sakhrani — KBW — Analyst
Thanks. I just wanted to ask a question around tokenization and the implications for just broader-based authorization rate improvements, and this is not just like domestic, but like international, it just feels like a lot of your partners are able to drive higher authorization rates as a result of the token. So, I’m just wondering how you’re viewing that and the context of being able to drive incremental transactions back to Visa. Thanks.
Ryan McInerney — Chief Executive Officer
Yeah, thanks for the question. Just a reminder for everyone. Tokenization is a technology that we use, that essentially helps protect issuers merchants, and consumers. And to your question ultimately drives higher authorizations and lower fraud. I think I’ve said in my prepared remarks, we crossed 7.5 billion tokens as of the end of September. We’re in 198 markets. I think we had 14 billion token transactions in the fourth quarter, which is growing at like 60%, so this is another example of a platform and a service that we invested in over many years and we’re now scaling broadly around the world.
To your question, we are, we’re seeing on average somewhere between 4% and 5% higher approval rates across our partners and we also see it with the reduction in fraud, 30% reduction in fraud. So you say, why do we have 7.5 billion tokens that are now out there in the ecosystem? Well, if you’re one of our partners, as you said and you can reduce your fraud rates 30% and drive your off rates four percentage points or five percentage points. That is a great opportunity. That’s higher sales. That’s lower fraud. That’s better customer experience. And we continue to invest in that platform as well. We see a lot of benefits to our issuers to our consumers who ultimately use the products. We’ll be — you’ll see more from us, enhancing the platform in terms of using the Fido biometrics and enabling merchants to be able to authorize and authenticate customers across multiple devices and those types of things. So, yeah, higher auth, lower fraud. We love the platform, continue to invest in it.
Jennifer Como — Senior Vice President and Global Head of Investor Relations
Next question, Jordan.
Operator
Our next question comes from Trevor Williams with Jefferies. Your line is open.
Trevor Williams — Jefferies — Analyst
Great, thanks a lot. Chris, I wanted to clarify on incentives within the guide. I think you said you’re assuming slightly slower growth than in fiscal ’23, just want to make sure is that year-over-year growth in dollars or as a percentage of gross revenue. And then just the second part to that you’re framing this as a more normal year, should we be interpreting that as meaning all else equal, a normal year incentives should be going up kind of plus or minus 100 basis points as a percentage of gross revenue. Thanks. Hi, Jeff [Phonetic]. Yeah, let me try to clarify a bit. As I said, 2024 is in many ways a normal year, it’s still normalizing in some aspects, but in many ways, it is normalizing and as a result, we’ve made some changes, we have returned to pre-COVID practices on a number of fronts. We provided formal guidance as you went through that we got there in detail and we’ve talked about on this call for the full year and next quarter and we’ll continue that practice and that guidance is on net revenue guide specifically and directional commentary about the growth in incentives, which to your specific question it is a $1 year-over-year growth rate that we said will grow slower in ’24 relative to ’23. Importantly, this is very-very consistent and aligned with how we think about the business, how we manage the business going forward. We haven’t guided on the percentage, which is another part of your question because again this is — this is consistent with how we manage the business. The thing that we do track very importantly is that we look at the yield across our net revenue yield specifically and that’s remained very stable and that’s very consistent again with how we think about deal economics.
Jennifer Como — Senior Vice President and Global Head of Investor Relations
Next question, Jordan.
Operator
Our next question comes from changing Huang with JPMorgan. Your line is open.
Tien-Tsin Huang — JPMorgan — Analyst
Hi, thanks. I’m actually at Money20/20, is really good energy here. I’m curious, Ryan, if you’d characterize the deal pipeline as being any different than what it was a year ago. How does that feel to you? And if you don’t mind me asking just on the credential side, I think you said up 7%, I’m curious same thing, is pipeline there to support that same high single-digit growth in fiscal 2024, credentials? Thanks. Hi, Tien-Tsin. Glad there’s great energy at Money20/20, and I hope my Visa team members that are there are serving clients, finding sales opportunities growing our business. Yeah, we see a great pipeline. We really do with clients issuing, fintechs, co-brands with opportunities to grow credentials. I mentioned some of the new things on my prepared remarks and we’re having good success. I think just some of the wins on the call, whether it’s Citi or US Bank, FNBO, Fidelity, Shinhan, China Merchants Bank, Shopify, I mean, the list goes on, right? IBM, DBS, Etihad, Saudi. We feel good about the pipeline. We feel good about the way our teams are out there serving clients around the world. We feel good about the wins that we have and feel good about the growth that it’s generating.
Jennifer Como — Senior Vice President and Global Head of Investor Relations
Next question, Jordan.
Operator
Our next question comes from Ashwin Shirvaikar with Citi. Your line is open.
Ashwin Shirvaikar — Citi — Analyst
Hi, Ryan. Hi, Chris. Congratulations on the quarter. Questions on open banking, CFPB obviously proposed a rule to jump-start competition, shift to open banking a few days back. You guys have dealt with open banking frameworks outside the US in many different geographies. Just kind of curious how that translates in terms of products, in terms of acquisitions you made like Tink, Pismo, and so on, to bring that over to the US? Thanks for the question. I think the CFPB rule that they put out is good for Americans. I think it’s great for clarifying the structure and the regulatory framework here in America. I think it’s likely to be a catalyst for growth of open banking in the United States as it gives clarity to all the various different players in the ecosystem. You think about it like it’s, it’s a great opportunity for Americans to be able to put their own data to work in different types of digital tools that will help their own personal financial management, help manage their financial lives better, get a better view of their finances across multiple different providers. And then to your point, we’ve seen different regulatory frameworks in different markets around the world. Our Tink business continues to perform very well in Europe, which obviously was one of the leaders in terms of establishing a regulatory framework for open banking and we look forward to the opportunity to bring Tink outside of Europe. So when we look at the proposed rules here in the US, we welcome that because we want to understand what the regulated regulatory expectations are so that we can build a business that will thrive and serve our clients and serve consumers effectively. So, thanks for the question.
Jennifer Como — Senior Vice President and Global Head of Investor Relations
Last question, Jordan.
Operator
Your final question comes from Harshita Rawat with Bernstein. Your line is open.
Harshita Rawat — Bernstein — Analyst
Good afternoon. As you’re looking into the next fiscal year and beyond, I want to ask about the cash digitization opportunity in your growth to drive [Phonetic] business. As you know, this is always a persistent question for Visa investors, and thinking about it again, given the pandemic moving forward and during inflation tailwinds. So how are you thinking about the runway especially segmenting it between developed markets and also EM a little bit more competition? Thanks. Yeah, thanks for the question. We continue to be excited about the cash, check digitization opportunity around the world. We continue to digitize cash and check around the world, and economies continue to grow around the world. So I think it continues to surprise many people when they look at developed markets like the United States, how much cash and check still exists. And certainly, when you look to the developing world, how much cash and checks still exist? So we continue to be excited about the runway. We think it offers us tremendous growth opportunity and we’re going to continue to work with our partners across the ecosystem to get more credentials into consumers’ hands, get more acceptance out there in the ecosystem, especially among micro and nano merchants, and work with our partners to drive more activation and usage among the credentials and feel good about that entire algorithm.
Jennifer Como — Senior Vice President and Global Head of Investor Relations
And with that, we’d like to thank you for joining us today. If you have additional questions, please feel free to call or e-mail our Investor Relations team. Thanks again, and have a great day.
Operator
[Operator Closing Remarks]