All right, so next up we're pleased to welcome Visa, representing from the company. We have Chris Suh, who was appointed as CFO this past August. Prior to Visa, he served as CFO of Electronic Arts and Corporate VP and CFO of Cloud + AI Group at Microsoft. Wow, okay. A lot happening there, huh?
There's a little bit happening there.
Well, thank you for joining us today. I have a lot of questions, so buckle up, all right? We're going to get through these real quick, all right, hopefully. So you've been at Visa for 6 months now. What's your observations about Visa, and how do you think your background is helping you to position Visa for the future?
Yeah, no, great. First of all, hello everyone. Thanks for having me. Super excited to be here. As you said, I've been at Visa now for just over 6 months. It's a great company, great culture, people, the brand, and we have an enviable market position, so I'm super fortunate about that. As you said, Sanjay, I spent almost 30 years working in tech, working at companies that are leading in their respective industries, really focused on how to drive long-term growth at these companies. And as you said, some of them are continuing to do really well. I keep in touch with my colleagues there and happy to see that as well.
Yeah. Maybe we can start with the macro. How would you characterize the macro?
Yeah, we're a little over halfway into Q2, so I could give you a little bit of color of what we're seeing this quarter. In some senses, it's going to sound a little bit like what I said in our Q1 earnings call, which is a couple of things. One is consumer remains, from our point of view, relatively resilient. And two, from underlying health of business, drivers, our drivers, through the 21st of February, which is sort of the most recent data that we have, we're seeing underlying drivers, the payment volumes be the payment volume growth through the February 21st to be relatively stable to what we saw in the first quarter. That's in the U.S. and other major markets outside the U.S. And really the same goes for cross-border too.
The year-over-year growth that we're seeing in our Cross-Border business, again, relatively stable, relatively consistent to what we saw in Q1 through February 21. So all in all, stable is how I would characterize the health of the business.
Yeah, we'll take it. So you guys reported a very strong fiscal first quarter. But if we parse through the results, it was cross-border spending slowed some, and that was picked up by strong value-added services revenue growth. And I know there's a bunch of reasons that sort of if you unpack the spending trends. But maybe we could just talk about the slowdown in U.S. card volumes. Debit led the deceleration, and I know you've got probably a ton of questions on it, but maybe you can summarize and add to your discussion.
Yeah, I could give a little color there. Yeah, as you said, Sanjay, really we're happy. Solid start to the year, solid Q1. Revenue in total came in at the high end of our expected range. But as you point out, as you sort of click into the different pieces of that, you did see U.S. growth, U.S. payment volume grew 5%, which was about 80 basis points lower than in Q4. And the reasons we gave in the earnings call, which is, I think, important to maybe just spend a minute on, we talked about the fact that most of that change in the growth rate was related to the difference in mix of days, and sort of days mix, different weekends, weekdays, they tend to have different spend patterns. That was the primary driver.
And then secondarily, we said sort of in aggregate, the sum of a number of smaller things. Of which included a little bit of weakness that we saw in the month of October. And then modest impact, we called it, of Reg II, and for those not close to it, it's regulation here in the U.S. that went into effect in July. It basically requires issuers put a second unaffiliated network for card-not-present transactions for debit. So that started about 6 months ago. We saw sort of in the first quarter, which is our Q4, in the first quarter of implementation, we saw we called the impact not meaningful. In the second quarter of implementation, our Q1, we changed, we sort of called it modest. We said it happened in October, stayed stable through the month, through the quarter, and we saw modest impact in that.
That did impact the U.S. in part, in addition to the other things that we talked about, concentrated in debit, as you pointed out. And so we continue to see modest impact there. And zooming out a little again through the 21st of February, things look pretty stable.
Okay, good. That's encouraging. You mentioned inflation as a tailwind internationally. Sort of counterintuitive because we're hearing about inflation coming down to the U.S.. Could you just talk about that a little bit?
Yeah, sure. Well, let's talk about the U.S. as well because I think there's sort of a couple of things and maybe I'll talk about both and how to think about it in terms of the impact on our business. In the U.S., if you kind of go back a year in the second half of fiscal 2023, we saw our payment volumes in total were impacted a bit, in part due to declining fuel prices and moderating levels of inflation. That was half two of our fiscal 2023. We're seeing a more stable environment now. It's kind of settled a little bit at a certain inflation rate here in the U.S. And then internationally, we continue to see high inflation in a number of markets, Argentina and Venezuela, come to mind, but certainly parts of Africa, other parts of Europe, we continue to see inflation remain at elevated levels.
So when you sort of add that up and we're sort of getting near the end of our first half, and if we look into the second half of the year, more stable inflationary environment in the U.S. with easier comps from a year ago and high inflation in international markets continue to be part of our key assumptions as we look into the second half of the year. It's just going to churn total average ticket size from what's been a bit of a headwind in aggregate to neutral to positive in the second half of the year. That's part of our key planning assumptions for the year.
Great. Cross-border, APAC and inbound to U.S. are still recovering. But you said many of the other regions have normalized at higher levels than pre-pandemic levels. Could you just talk about the sustainability of above pre-pandemic levels? Do they grow off of that? Because we've seen this reversion on e-com, etc. And then maybe when we get back to pandemic, pre-pandemic levels for these other markets, which haven't gotten there yet. Yeah, what's the trend line? What's the path?
Yeah, yeah, yeah, it's been, we've used the word normalize. I think what we called FY 2024 at some levels is the most normal year as we've had in a while, but it's not fully normalized. Cross-border is an area that you see that sort of most acutely. Let's start with the markets that are sort of above the trend line, let's say, historic trend line. Europe, CEMEA, LAC, they're all at, let's say, 145%-175% of 2019, which is how we index that travel number within the overall context of a strong cross-border business. As you pointed out, APAC, it's still continuing to recover, not just in and out of China, but we talked about Japan and Australia this quarter as well. And inbound to the U.S., those have been kind of the laggards, if you will. I think importantly, they do continue to improve.
Like in Q1, we saw them improve again versus Q4. The rate of improvement can be a little bit inconsistent, as we saw in Asia in particular between Q4 and Q1, but they do continue to improve, and that is part of our, again, our planning assumptions for the full year in terms of healthy cross-border business. Zooming out a little bit, as you remarked, we had a strong cross-border business overall in Q1 where travel was growing 19%. E-commerce actually was doing better than we anticipated. So when we look at the totality of the business in cross-border, seeing APAC and inbound to the U.S. improve will be key, but also it's nice to have e-commerce doing better than we anticipated. So when we look at the cross-border business in aggregate, it continues to do well.
What's holding back people inbound to U.S.?
There's multiple theories, and certainly we look at the data quite a bit. In and out of APAC into the U.S. is one of them. So we're continuing to see improvement. I think that's the key, and we'll continue to monitor that track closely. We do try to be transparent about our performance and what we see in and out of these corridors every quarter. So we'll have an update for you in about 2 months, I guess.
Fair. I talked about value-added services. That was obviously a standout 20% growth in the quarter. There's so many different services inside all of that, but maybe you could just unpack where the growth areas are today and how that evolves over the next several years.
Yeah. Super excited. Value-Added Services has been a real tailwind to our total growth. Our approach with Value-Added Services has been to continue to focus on deepening engagement with our existing clients. To continue to expand geographically into new markets. And to continue to bring new innovation, services, and products to market. And so when you look at the health of the business overall, I think those three approaches are resonating. It's a sizable business now. It was a little over $2 billion in the first quarter, growing at 20%. And so a healthy business for us. And it's been at those levels, growth levels for some time, and we anticipate it continuing to be a tailwind to growth, growing faster than consumer payments. You sort of asked about what's driving the growth, and we talk about Value-Added Services often like if it was one business.
It's actually, as you well know, Sanjay, there are many businesses. There's many products and services within the category that we call value-added services. I think the simplest way that we think about it is there's 5 lines of business. And each of them have slightly different sort of drivers, and hence the way that we've even named them, I think, reflects that a little bit. I'll start with our issuing solutions business. This has been, again, a source of strength. In Q1, card benefits revenue was a real standout driving the growth in issuing solutions. Two on the acceptance solution side of the house, the other side of the business. CyberSource, our disputes business, they continue to be tailwinds to growth, driving acceptance solutions. We're in over 100 countries now with our acceptance solutions, and so that's part of our geo expansion strategy. Three, risk and identity services.
Risk and identity services, really the standout has been what we call VAA and VRM, so Visa Advanced Authorization and Visa Risk Monitoring. These businesses together, we did a study recently. It's prevented about $30 billion of fraud between mid-2022 to 2023. And so we've seen great pickup globally, and these are new services that we bring to market. And the fourth one is advisor services. And so you think of consulting services, marketing services. We're seeing great demand. We had over 3,000 engagements in FY 2023 alone. And then the fifth one is open banking with Tink. And so it's a holistic business across issuing, acceptance, risk, consulting. So it's a large TAM when you sort of add up all those. We're seeing broad-based strength. These are sizable businesses, and we're seeing double-digit growth in all 5 of those categories. And so healthy.
Well, I appreciate that thorough response. I still remember going over all of that with Jennifer once upon a time. That was a lot of stuff to go over. So maybe we could shift gears and think about the future growth drivers. And first one, I want to start with this pricing. That was a key part of the growth algorithm historically. To what extent does it remain a growth driver? Is it less of a growth driver? Where would it be a growth driver? Maybe just contextualize that.
Yeah. Yeah. At the end of the day, pricing is a function of value, of the value we provide. We've invested significantly over many years in really building the most secure, the most reliable, the most sort of most stable network on the planet. We continue to invest in that. We continue to invest in security and fraud detection, and we continue to invest in bringing new services in value-added in the value-added services space as we just talked about. All of those give us opportunity to continue to price for that incremental value. From that standpoint, we feel good about our ability to have a good balance there between value and pricing. In 2024, our expectation is that pricing continues to be a benefit that's similar to what we saw in 2023. There's sort of consistency and stability there as well.
Got it. Maybe talk about U.S. growth, I guess. A lot of people think that a lot of the secular shift has been realized over the pandemic because a lot moved over to electronic. Maybe you could just talk about how you guys look at the growth opportunity in the U.S. and maybe just even contextualize a little bit of the slowdown that we saw this last quarter in the U.S.
Okay. Yeah, it's 2 parts. Let me start with sort of the bigger picture.
Sure.
Question that you raised around the U.S. or markets like the U.S. There are markets like the U.S. where we've seen great progress in terms of card penetration. So that's great. That's fantastic. It continues to provide a great base for us to see more transactions, more transaction growth, volume growth. That's all sort of goodness from our perspective. That said, there's still ample cash and checks still left in markets like the U.S., in the U.S. and other markets that are like that, and we continue to see opportunities to digitize that. You do think about growth holistically, not just in consumer payments, but value-added services and new flows. We continue to be focused on the same levers that we've talked about, which is growing credentials, growing acceptance, and growing engagement, and we're seeing good traction across all of those.
And then trends like Tap to Pay in the U.S., which sort of lags the rest of the world. We're at 45% penetration in Tap to Pay versus 77% in the rest of the world, ex-U.K. or ex-U.S. And as studies have shown, when you tap more transaction volume, more payment volume. E-commerce, obviously, that's a carded business. E-commerce continues to grow faster than face-to-face. And so those continue to be tailwinds to overall growth, even as markets are seeing greater penetration, as you described it as. And so we're optimistic about continuing to grow in the U.S. and other markets of the like. The second part of your question, in terms of Q1 performance. I talked about this in our earnings call, but sort of connecting the dots.
What I talked about was how we had certain non-recurring one-time items that affected our New Flows business. That showed up in the growth rate in New Flows. Those were all in the U.S. And so you sort of got to connect the dots a little bit and say, okay, those one-time items, non-recurring items that impacted growth rate in New Flows also impacted the growth rate that you saw reported in the U.S. Those, by definition, one-time shouldn't recur.
We're going to see a big acceleration going forward. I'm joking. I don't want to put words in your mouth.
Yeah, correct.
Strike that. So internationally, maybe you could just take us a walk, give us a walk around the world. Where are the greatest opportunities? And then maybe just touch on the emerging markets where people feel like maybe there's a lot more disruption happening and governments are getting involved in the payment systems. Just maybe you could compare and contrast the international markets.
Yep. Yep. International for us has been a great source of growth. In the first quarter, so many of our regions, SAMEA, Latin America, Europe, ex-U.K., growing at 20% levels, which is really healthy for us. A few things that you touched on there, so let me try to sort of unpack that a little bit. A, from an emerging market standpoint, we continue to be very enthused about our opportunity there. And we'll talk, and I'll sort of dive into that here in a second. And then second, your point around alternative payments, maybe nationalism in some certain cases. I mean, those are all. Those are not new from our standpoint. As a network of networks, we've worked alongside in many cases these other payment schemes for some time, and we've done it successfully.
LAC, I think, is a great example, Latin America, where the headlines have been around the growth of PIX in Brazil. So let's sort of diagnose LAC and break it down a little bit. So since 2019, we've grown credentials by over 1.5 times in LAC. We've grown acceptance locations by more than 2.5 times in LAC. In Brazil, where we've seen PIX grow, we've grown alongside it. We're growing with traditional FIs like Itaú and Santander and also through Fintech. So that's where we're seeing good growth there. Colombia has been another great sort of example of what we're doing in Latin America. So you go back a few years and we effectively had 0% processing share in Colombia, I think, in 2019. And this year we'll exit. We're anticipating exiting this year with 80% share of domestic processing in Colombia.
We've grown processing share. This last quarter we announced the intent to acquire a majority stake in a company called Prosa, which gives us the ability to process domestically in Mexico. When we process transactions, we also have the ability to attach more value-added services and other parts of the business as well. As you can see, sort of holistically, even in markets like LAC, where there's sort of growing other alternative payments, we're continuing to grow. We're continuing to grow share. It's been a great growth market for us.
It's great. New Flows. That's expected to be a bigger growth driver than consumer payments in the future. Can you go rank so the various buckets in order of investment priority and momentum?
Okay. Yeah. New Flows, it is one of our, we talked about consumer payments, New Flows, and Value-Added Services, with the latter 2 being tailwinds to growth, growth faster, expectations for growth than consumer payments for the foreseeable future. For us, new payments is an enormous market opportunity. We sized it. We gave an updated sizing. Just this last quarter, we sized it at a $200 trillion market opportunity, which is a lot of zeros. Within that, there are sort of 2 big businesses. We think of B2B commercial card business and our Visa Direct business. B2B is the biggest piece of that. It's about 145 billion trillion. Sorry. To confuse my B's and T's. 145 trillion TAM of that 200 within the B2B space. We have a few different ways that we think about it. The carded business, as you know, acts like our traditional business.
We focus on credentials and issuance, acceptance, engagement. That's about a $20 trillion of the, again, of the $145 trillion TAM. We're continuing to see strong growth there. Commercial payment volumes, which we talk about every quarter, continue to grow. The second part, sort of a more of a medium-term opportunity for us in terms of investment priorities, is the cross-border B2B business. We're focused on B2B Connect. That's also about a $20 trillion opportunity. And so you have sort of two $20 trillion opportunities there. And then maybe as we look longer at the B2B space, there's the accounts payable, accounts receivable space, which we sized at about $105 trillion of that opportunity, and we continue to take a long-term view on that opportunity, but we are excited about that over the course of time.
Lots of trillions of volume.
I know. They're big numbers.
Absolutely. Maybe we could talk about Visa Direct. What does the mix of use cases look like today? And is there the potential for Visa Direct revenue growth to trend faster than volume as use cases like cross-border remittances gain traction?
Yeah. Visa Direct, again, for those that aren't close to it, historically our business was built on the back of the consumer to business, sort of a one-way money movement for consumers to purchase from merchants. With Visa Direct, it really enables money to move always to endpoints in the network. And so our focus in the early days has really been to build out the ecosystem. And so we have this very significant ecosystem now. It's a network of network strategy. And so we work with 70+ domestic schemes, dozens of other networks, card networks, RTP networks. As a result, now we have over 8.5 billion endpoints that are enabled to see money movement via Visa Direct. That's really supported by this other ecosystem.
So we have sort of the layer of all the networks that we work with, and then you have enablers that create use cases. We have 500+ enablers now. We have 65 use cases, thousands of programs. And so it really is like this ecosystem that's built up. And we're seeing sort of great fundamentals and infrastructure and sort of the foundational elements are in place. Use cases, you asked about, Sanjay. P2P has still been the sort of the predominant use case. But we're seeing expansion into others as well. We have sort of merchant marketplace settlement with Airbnb and Poshmark that we've talked about. We have gig economy worker payouts. Most recently, this last quarter, we talked about creator content payouts with Meta. We've partnered with them to support that. And so we're seeing sort of great growth in different use cases.
Cross-border is the one that you talked about, and that is a focus area for us to grow. We've announced partnerships with Western Union Remitly most recently, and you pointed out cross-border for us is a premium business and would be good for yields as that business continues to grow. And so there is lots of activity, lots of use cases. It's growing both in sort of domestic use cases and cross-border as well. And it's an opportunity we're incredibly excited about.
It's really early stages there, right?
It's fairly early stages. But the foundation is there, like 8.5 billion endpoints. It really has enabled, and we're seeing great transaction growth. I mean, you can see the transaction count. We publish that on a quarterly basis. We're seeing high growth there. And so sort of all the elements are there. It's a great growth opportunity for us over time.
That's great. You talked about B2B Connect a little bit in terms of the opportunities, I believe, as you were going through the trillions of dollars. But I'm just curious, maybe you could just walk us through that specific opportunity set and sort of where we are right now in terms of adoption and growth.
Yeah. It is a great example. One of the things that I found in my early days at Visa is we are very customer-centric. We're very client-centric. And I think B2B Connect is a great example where we listen. We listen to our clients and we partner with them and we work on solutions together. One of the pieces of feedback in the cross-border space is that there are some challenging sort of historically moving money and significant dollar volumes cross-border is sort of challenging. It was hard to predict exactly when the money would come and land. There was lots of things. You couldn't track it through the various stages of movement. And so we took kind of a holistic approach. We said, okay, can we sort of build a better solution, a better mousetrap, if you will? Hence the birth of B2B Connect.
It's a multilateral network as opposed to sort of a traditional bilateral network. It really attaches rich data to the payment so that you could track the payment through the various stages. You can manage it better. It enables more predictability, better management for companies that want to track large dollar cross-border movement. And so that's sort of important technical foundation. The second step in that is, again, to build. I talked about infrastructure layers or foundational layers with Visa Direct. There's an analogy there. Bringing on banking partners that enable that can transact with B2B Connect. That's been an important next step in that. In 2023, we saw 70% growth in the number of banks that are now signed on to transact. With B2B Connect, we saw 100%, more than doubling the number of banks that actually transacted in B2B Connect.
But that said, all said, sort of foundational elements. It is early days. It takes a while to build a network of this size and scale, and we're in it for the long haul. We're optimistic about this growth. We think there's a real solution that we bring value to and can solve for customers, but it is early days, and we're happy with the early progress.
So I have one more on value-added services, and I think you kind of answered a lot of the questions around it a little bit, but I want to make sure we leave here feeling really great about your ability to grow that line at a high level as you guys anticipate on a go-forward basis. Just feels like there's a huge market opportunity, right? The TAM is big. And it's about how quickly you can penetrate it, right? And obviously you've done a really good job. Is it how straight is that line? Is maybe the best way I could ask the question? Sorry, I'm improvising a little bit here.
That's okay.
I'm just trying to make sure I understand how. Is there a volatility or variability, or do you feel like there's a good trend line?
Yeah. Yeah, let's sort of parse that a little bit. As I talked about, there's 5 different businesses, and they are kind of different. And so there's one way to think about: is the line somewhat consistent? There's natural diversification, I guess, in a sense as well, because you have advisory, 2 different, very different advisory and consulting and marketing services very different than acceptance solutions as an example. And so you have sort of different things that, and but they're all growing at healthy rates, and they're all pretty sizable businesses today. The TAM question is harder because they are very different. Again, using the examples, consulting and acceptance are different. So here's sort of my mental model around it, and maybe this is helpful. I think about our growth opportunity in maybe 3 or 4 ways. One is our ability to grow on network transactions.
Grow with network transactions and grow penetration into more network transactions. So think of that as sort of the baseline of growth, like if transactions are growing at a certain percentage. Right now, most of our growth comes on our network transactions, but actually the structural design of value-added services is that they could grow on network transactions in a network agnostic way. They can grow on other transactions of other networks as well. So you have sort of a baseline that grows with transactions. Then you have secondarily the thing we talked about, geo expansion and new product and services. In many of those cases, in a related point, you have the ability to price to value.
So as you bring more services, value-added services is an area where we've seen some pricing benefit. And then the last one is then, so you go sort of grow with network activities, grow with geo expansion and market and new services. And then the third one then would be, and then sort of a B2B is pricing. And then the 3 would be growing in consulting and value-added services, which is not related to the network transactions, but it's really related to the demand and the unique value-add perspective that we bring as given the size and scale and perspective that we have. I mentioned the thousands of engagements that we had in 2023 alone. That's continued to grow at a very healthy clip. So that's sort of my growth framework for how to think about value-added services.
If you think about sort of those 4 levers, I think you would, if you do the math on that, I think you'll see why we're as excited as we are and confident as we are about value-added services, the ability to continue to grow.
It would seem like the Pismo acquisition is really great for this issuing solution segment, right? Because it kind of potentially accelerates the monetization potential. If we think about that line that I mentioned figuratively, it gives you a lot of capabilities quick, right? So I'm just curious how we should think about that sort of weighing into the growth rate from here and how quickly can you go to market with it? And what markets?
Yeah.
As best as you can answer it.
Yeah, yeah. I'll first start with the caveats to say it's early.
I understand.
But they're in market today. And so your question about going to market, they're in market. They're in certain markets today. This is kind of like what I talked about with B2B Connect. This is another area where we were listening to our clients. We certainly saw a need. As clients are going through their cloud transformation, they're modernizing their tech stack. There was a need that we recognized in conversations with those clients for a more modern solution. With Pismo, we sort of thought about, can we build something? Is there great tech out there available with Pismo? We think we have best-in-class tech. They're cloud-native. They're modern. They have core banking, issuer processing, issuer processing for credit, debit, and commercial. It complements our business. Our issuer process, DPS, our issuer process is primarily U.S. and debit.
You have now a complementary asset that is both modern and a more comprehensive solution set and what we believe to be best-in-class technology. While it's early, we're optimistic we're going to continue to see. They're a Brazilian company. I think they're sort of the start, certainly with our clients, and their businesses has been in Latin America more, but they were expanding outside of Latin America before and will continue to grow that business alongside Visa.
Great. I wouldn't leave you here before asking you a question about the Capital One and Discover deal. Actually, I have Capital One right after you. So I'm just curious sort of how Visa looks at the competitive dynamics on a go-forward basis. With Cap One sort of planning to move their entire debit off of what predominantly is Mastercard, I'm just curious sort of how you think about the credit volume and how it might affect you guys.
Yeah. Another one where I'll start by saying it's early days. It's early days of what conventional wisdom says is going to be a bit of a long process. And so we'll see how everything comes together and plays out. You all know Capital One has been a really great long-term partner to Visa. For a long time, we have a great relationship. They've primarily, as you said, they've primarily been a credit business for us. But they do make up a relatively small percentage of our total volumes in the, let's say, low single digits in terms of volumes and revenues for us. But we continue, right now, we're focused on continuing to be a good partner and continuing to serve the clients, the customers, the cardholders, the businesses that are our joint customers. And at the end of the day, you started by asking about competition.
I'd say we welcome competition. We've invested a lot. We've built fantastic relationships with the entire ecosystem, our clients. We've invested a ton in our network. We think we have the most secure, most robust, most stable network on the planet. We look forward to continuing to operate in this environment.
Most banks can't do what Capital One just did. Is the other thing. So I think. Next question maybe, just sort of moving into the regulatory risks. Is there anything that you're looking out for or watching closely?
It's a.
I know it's always out there.
It's out there. That's one of the things in my first couple of quarters at Visa. I've certainly gotten up to speed and sensitized to the regulatory, the nature of regulatory interaction. There's a lot of things, as you pointed out, Sanjay, around the world, in the U.S. and internationally. Europe has been active as well. Our focus has been to really engage constructively and educate. This is a complex set of issues. I think we have a strong point of view on each of the matters at hand. We're engaged constructively to provide education, provide our perspective, make sure that they understand sort of all sides of any particular regulatory topic. And that's really been our focus. And obviously there's lots to talk about in each one if we wanted to. But let's just say at the highest level, education, engagement, positive engagement has been our approach.
Okay. Kind of a couple more parts under regulation. Reg II seemed like you had some modest impact, but you guys don't expect it to be a material one on a go-forward basis?
Well, let me add a little. There's nuance to that answer. The first place I'll start is maybe just reiterating what Ryan McInerney, our CEO, said in the last earnings, which is since the implementation of Reg II last summer, it's actually given us an opportunity to engage with partners, clients on the merchant side and really highlighting what differentiates Visa. That's been constructive and positive. But ultimately, merchants have to make a choice, and their choices are. There's sort of multiple factors. People think cost is the predominant, but there are other factors. There's actual sort of functionality, there's security, and you think about there's a big difference between what we do and what sort of the pin-based debit networks can do. On the functionality side, dual messaging versus single messaging, it's an important distinction. Dual messaging is when the actual final price differs from the initial price.
Think tipping as an example. Sort of traditional PIN-based networks are single message. It can't support that. In the e-commerce world, when you can't bill till after the goods are shipped, again, in a single message world, you have to wait till sort of all parts of that order are shipped as opposed to being able to bill in increments. So there are important differences in functionality. Also from a liability standpoint, in an e-commerce world, merchants bear the liability of that. Visa's invested more in disputes and chargebacks and all the things that make the network more robust. So from that standpoint, we've continued to have this sort of positive engagement with the merchant side on how we differentiate Visa. Now your question about what do we expect going forward?
I think what we've said is basically look, this is an item that we're going to watch very closely. We're going to monitor it and we're going to tell you what we see each quarter. We recapped quarter Q4 last year and Q1. Then based on what we see in a quarter, we'll kind of give you an update of what we expect for the rest of the year. That's what's embedded. We'll share with you again in a couple of months what we see in Q2. This is something that we monitor very closely.
Okay. I think we'll stop.