Yeah, good. That's good. Great. Okay, we're gonna start off. Thanks to everyone for being here. I'm Will Nance. I cover payments and fintech here at Goldman, and today we are very fortunate to have Chris, CFO of Visa. Prior to joining Visa, Chris spent over twenty years at Microsoft and held a number of senior roles there. Chris, really appreciate you being here today, and looking forward to the discussion.
Hey, Will. Great to be here. Thanks for having me.
Awesome, so maybe to kick things off, you know, we've got to start a little bit more big picture in terms of what you're kind of seeing out there. You know, the focus on July spending trends at earnings was on some more of the kind of timing-related factors. I think as we got through the summer, the focus shifted more towards employment trends and, you know, some of the crosscurrents in the macro. How are you kind of feeling about the overall environment? Have some of those timing-related things in July kind of faded?
Mm-hmm. Mm-hmm. Yeah, when we talked about our results in July, you know, we did give the three-week update for the first three weeks of July, and we talked about a number of these one-time factors. Weather was one of them. I talked about Hurricane Beryl, and so, you know, it's sort of interesting. You know, I would've never imagined talking about weather as much as I have over the last few earnings calls. But it's also a good reminder, you know, it is three weeks of data, and so small things can impact three weeks that really aren't necessarily material to the-
Yeah
... the quarter in total. And so, like what happened in January, when we also had a little bit of a, a slow start, in some of the numbers, we have seen the quarter-to-date results rebound. And so quarter to date, things are looking generally stable, with Q3, and that's in the U.S. and, and a number of major markets around the world. And I'll sort of give you some numbers. U.S. payment volumes, quarter to date through August, up 5%, which is consistent with Q3.
Yeah.
Cross-border, excluding intra-Europe in total, up 13% quarter to date, which is exactly in line with the expectation that we had for Q4. And within that, also, you know, consistent trends where you see card not present, excluding travel, growth outpacing cross-border travel, again, consistent with a number of the trends that we've been talking about, you know, in Q3. And then finally, processed transactions growth through the end of August, also up 10%, consistent with Q3. So, we'll see. Let's see how September finishes out. We've got a few weeks left, and then we'll share lots of details with you in our earnings call.
That's great. You know, great to hear the consistency, great to hear about the rebound. I wanted to maybe dig in on some of the more recent trends in the U.S. So the Fed is on the verge of cutting rates.
Mm-hmm.
The narrative has been that, you know, they need to respond more swiftly now to what appears to be some mild softening in employment trends, potential stresses on the low-income consumer. When you look at things like the weakness in ticket sizes, lower consumer confidence, what do those things say about how the consumer is dealing with the economic backdrop?
There's a lot to process. You know, we're not economists, and so like you, we sort of try to digest all the, you know, the interest rates, will they, won't they? Inflation data, jobs data, as you pointed out, lots going on, and we try to process all that, take that into account as we reason over our data, and that's the important thing. At the end of the day, you know, we have access to an incredible, you know, breadth of data, and we are data-driven.
And so, you know, when we look at our data, the thing that we said, you know, the thing I just said and the thing that we've really said through the course of the year is that underlying trends have been stable, which is another way of saying consumer has been held up remarkably well. And in some contexts, take all the things that we just talked about, you know, employment uncertainty, the, you know, things that the average consumer has had to deal with, probably rising loan payments, the price of groceries, you know, all these things. And so in that context, I would almost say the consumer has been remarkably resilient.
And so, you know, we sort of take that all into account, and then we feel pretty good about where, you know, we see consumer health in general. Like I said, we'll see how it plays out for the rest of the year, but we feel pretty good. The consumer's been able to withstand a lot.
Yeah, makes sense. And then just finally, I wanted to discuss maybe some of the trends we've seen out of APAC. I think it's been fairly well telegraphed-
Mm-hmm
... some of the softening trends, particularly in mainland China. You tweaked your volume expectations early in the year as a function of what you're seeing there. Any updates on just APAC trends more broadly?
Sure. You know, we're at the end of our fiscal year. We're like days, weeks away from the end of our fiscal year, and so you know, one of the things I've done is kind of take stock of you know, how the business came in relative to the expectations when we first spoke to what we thought was gonna happen this year in trends, including Asia, and we've you know, kind of taken a moment to do that. Many things have played out as we expected. You know, one of the things that I'm pleased to be able to do was to be able to reiterate our view on consistently throughout the course of the year on revenue and EPS growth, low double-digit revenue growth for the full year, and we reiterated that.
That's on an adjusted constant currency basis. We reiterated that in our last earnings call, as well, and so we feel good about that. You know, what's happened in Asia, that's played out differently than we expected 10, 11 months ago, and it's played out differently in a couple ways. One is, as you referenced, volumes, which really is impacted by domestic volumes. It's impacted by domestic volumes mainly in mainland China. It's been a factor of, you know, macroeconomic conditions that we've seen there. You can kind of see it in the numbers. Payment volumes in AP in the third quarter were almost flat year-over-year, just less than half a point of growth year-over-year, and that was down sequentially from Q2.
But also, the impact of China, you can kind of gauge because ex-China, it was flat from Q2 to Q3. That's also impacting the payment volume as you mentioned, but it doesn't impact processed transactions because we don't process domestically in China. And from a revenue standpoint, you know, that volume didn't have much impact on the revenue for the year. So that's sort of the story of what we're seeing in AP and domestic. And then the other part that's played out differently has been cross-border travel in and out of Asia. You know, at the start of the year, we talked about the fact that AP had been a laggard. Like, all the other regions were pretty well ahead of 2019 levels, pre-pandemic levels of travel, and in Asia, it was a laggard.
Our analysis, our trends, you know, best guess at the time was that it would make up that gap. We'd close the gap a bit, and AP travel would recover. It's continued to recover, not at the pace that we anticipated at the start of the year, and there's been a number of factors. We talked about sort of the macroeconomic weakness, but also, currency, you know, not just... It's been in Japan, like the low exchange rates, Japan, Taiwan, Korea, flight capacity, flight bookings and capacity still well below 2019 levels. That's been, you know, something that we've continued to monitor very carefully. Those are sort of the two parts that I think have played out for the year differently.
But really, if I zoom out, I still think, you know, I just wanna say this, which is, you know, when we look at Asia, we'll get through whatever near-term challenges that presents, and Asia, for us, still represents an incredible growth market. You know, to bring that to life, just last week, I met with, you know, an important client from Indonesia. They brought a number of their senior execs. They came to Visa, excited to work with us, excited to grow together. And, you know, a market like Indonesia, it's a population of two hundred and eighty million people, which is not that far below the size of the U.S.
Right.
It has, you know, their PCE is predominantly in cash, and they have a growing affluent class that's rapidly growing. So, you know, look at markets like that, and there's many such examples around the world. We're, you know, incredibly optimistic that Asia will continue to be a great growth story for us.
Right. So maybe let's zoom out a bit from some of the recent trends.
Mm-hmm.
There's been a cyclical versus secular debate going on in the payments industry around U.S. spending growth, and specifically U.S. card spending growth-
Mm-hmm
... notably at a time when there's been a lot of normalization in spending patterns in the wake of COVID, in the wake of elevated inflation. What do you think is the growth algorithm for U.S. card spend going forward, and where do you see the greatest opportunity for card penetration to increase?
Yeah. Listen, you know, if I zoom back a little bit and just start with what, you know, how I think about the U.S., you know, where the U.S. has come over the last few decades. It's incredible, the modernization of payments, and I think it's kind of important to start with that perspective. The consumer convenience, the simplification, the ease of use, and that's really advanced digital payments throughout. It wasn't that long ago that cash was king. It wasn't that long ago that using a card for everyday transactions was not the preferred way, and I think you all know the feeling today.
Like, if you're standing behind someone in a checkout line, and they're, like, reaching into the wallet to bring cash out, you know, that's not-
Yeah.
You're not-
Let's start that.
... you're not loving that experience-
Yeah
... right? And so I offer that because I think it's, you know, sort of important to say, like, structurally, fundamentally, the way transactions and commerce happens is just different, and it's a permanent different. And so, you know, digitization in modern payments is the new normal. But I know that's not the question you're asking. You're sort of saying, "Hey, but now, you know, now that we can admire sort of stuff in the rearview mirror, but where are we now? And, you know, is that music sort of slowing or stopping?" And from where I sit and where we sit, from Visa, the answer is absolutely no, it's not stopping. Let's talk about sort of the opportunity ahead. Recently, we shared an updated view of the consumer payments opportunity globally.
It's a $20 trillion opportunity still in front of us, and that $20 trillion is comprised of cash and check, which is roughly half that volume, half that addressable opportunity. ACH and other forms of digital payment, as well, make up, and other domestic schemes make up sort of the remainder of that. About a quarter of that. $20 trillion is a ginormous number.
Right.
And about a quarter of that opportunity is still in the U.S., by our estimation. So how do we go after that? How do we continue to grow, you know, at or above, PCE levels? We continue to go after the remaining cash through focused efforts around engagement and acceptance, things like tap-to-pay, where the U.S. is now at 50%, which is roughly 30%, 30 points below the rest of the world, which is roughly about 80%. And that's taking place in an environment where, you know, 80% of face-to-face transactions take place at merchants that are enabled for contactless. And so, you know, you could easily see sort of the path there.
Focused acceptance strategies like transit has been a key unlock in that, so hence a city like New York has gotten to 75%, the first major city in the U.S. to go do that. E-commerce is another way that we continue to... You know, e-commerce really took off over the last few years, especially with the pandemic accelerating. Obviously, cash isn't an option in an e-commerce world, and we do this by continuing to innovate in solutions and products and services that make that, you know, e-commerce experience even better. We talked about a number of things at our Visa Payments Forum back in May, flexible credentials, payment pass keys, data tokens, things like this. All continues to make the e-commerce experience even greater.
So that's sort of the cash story, but then, you know, you could zoom out and say, "Okay, there is a lot of flows that are traditionally not carded.
Right.
Whether that's rent, whether that's loan repayments, and we have great solutions that we're going after to continue to penetrate into that addressable opportunity. Then the third thing I'd say is, you know, you can think more expansively then and think about our business as really diversifying at a pretty rapid clip. You know, I know we're focused on consumer payments quite a bit, but you have a large and growing, you know, value-added services business. You have new flows that are outside of the traditional consumer to payment business, consumer to merchant business. And so that all, you know, sort of affords us the opportunity to continue to see healthy growth in the U.S.
And then maybe the last point I'd make is, you know, there's plenty of examples as well of markets that are even further penetrated than the U.S., and they continue to see very healthy growth for a lot of the reasons that I talked about. So, you know, when you add that all up, you know, our optimism about the runway ahead for the U.S. remains, you know, very high.
So given what you're expecting in terms of spending growth and cash penetration for the next several years, you just talked about the trends in the U.S., but if we broaden it out to the entire world-
Mm
... do you still see runway for Visa to be a double-digit top-line grower for years into the future?
Yeah, I mean, we'd like. You know, we've talked consistently about kind of the components of our growth story, and we like, you know, we like those components. It's consumer payments, it's value-added services, and it's new flows. I talked a little bit about consumer payments in the context of the U.S. already, which I said was a quarter of the $20 trillion.
So, you know, maybe the simple way to think about that globally is you sort of multiply that by four, and take all the things that I said about, you know, things that we do in the U.S., but then also add on to the fact that there's many markets in you know in Africa, in Asia, in the Middle East, and Latin America, where cash is still, you know, predominantly the bigger portion of the total PCE. And so there's you know they're much earlier in the cash digitization life cycle, and so globally feel really good about the consumer payments opportunity around the world, in the U.S., and outside the other markets.
Okay.
So then there's our value-added services and new flows opportunities. And, you know, both those businesses have continued to grow really healthy. We got good momentum. I think we have good strategic focus and good execution along all of it. For value-added services, Q3, you know, $2.3 billion, growing 20, you know, 20-plus% again. For the... You know, every quarter this year, we've grown north of 20%. And so there's durable, consistent growth in a business that's, you know, at $2.2 billion was 25% of our business in Q3. So, we feel really good about that.
We grow that business in a way that helps our clients be successful, helps our clients protect their business, and when they do that, and when we do that well, it, you know, it creates a tailwind for the whole ecosystem, which then in turn is good for, it's good for Visa as well, and then new flows. New flows for us is maybe the biggest addressable market opportunity. It's early days, but it's really one of the biggest. We've sized that at $200 trillion. And at $200 trillion of addressable opportunity, that's ten x the consumer payment, you know, opportunity that I just talked about.
My partner and friend, Chris Newkirk, who's the leader of our new flows business at Visa, you know, he likes to point out that $200 trillion, that's 44 times the total US federal tax income in a year. So think about all the tax revenues collected in the U.S. in a year and times that by, like, 44, and that's the size of the opportunity-
Yeah
... that new flows represents. If I just take one sliver of that, so the most mature piece of that opportunity is our carded B2B business in,
Right
... VCS. That's $20 trillion as a market, so it's 10% of the total opportunity. And that $20 trillion opportunity, in 2023, our payment volume was $1.6 trillion of that. So it's less than 10% of a sliver of... That is less than 10% of the whole opportunity. And so when we look forward, obviously, like I said, it's early days, and there's lots of work to do, but the greenfield opportunity here in new flows is really exciting. And so again, looking at consumer payments, you know, this is the business we've been in for many years, and we know how to operate there and continue to grow value-added services, the execution, the size, the breadth, the momentum, and the opportunity of new flows.
When you put all that together, you know, you can see sort of the reason why I'm bullish about our growth.
Yeah. Makes a lot of sense. I wanted to round out the discussion on some of the recent events. The litigation headlines around the networks have remained in focus since earlier this year, and I think one question that we've got a lot recently is around credit interchange reductions as a potential remedy to what's been happening. And so the question goes, you know, if banks have to absorb less revenue from credit cards, does that bleed over to the economics that the networks get and that you're able to charge? Can you maybe address that specifically?
Mm-hmm.
And then anything else that you'd like to touch on, on the recent topics around litigation?
Yeah, sure. So I'll get to your question. I'll start with a little bit of our perspective on litigation. We are obviously disappointed with the judge's ruling to reject the settlement. We thought the settlement was fair and provided for meaningful relief to all merchants. And we think the decision actually, you know, failed to take into full consideration the complexity of the multi-sided ecosystem that we operate in. So we're gonna continue to pursue settlement. We think that's the best course of action. At the same time, we'll continue to explain and educate our point of view on, A, the complexities of the ecosystem that we operate in.
B, the key components of the settlement agreement, and C, you know, the fact that we think the terms were good for merchants of all sizes. And finally, that, you know, an agreement of this nature is good for the U.S. payments ecosystem broadly and continues to ensure that it remains the most advanced in the world. So we'll continue to do those in sort of parallel. A couple other points. We can and will, a settlement can be pursued and negotiated and agreed upon, you know, before any potential trial, during a potential trial, even after a potential trial. So settlement is on the table, you know, consistently. It's also a non-opt-out class, so that means we negotiate with the merchant class counsel.
And then finally, to your question, while I can't comment on specifics about, you know, a settlement in discussion, the thing that I'd offer is that, the Durbin Amendment on debit has something called an anti-evasion clause, and there was similar language in the agreement that we had put forth for review. And what that really means is that, you know, we can't do anything programmatically to, you know, systematically transfer network fees that we collect from acquirers or merchants and pass those economics along to issuers. And so that's prohibited by the anti-evasion clause, and there was, again, similar language like that in the proposed settlement. And like I said, most importantly, we're gonna continue to pursue settlement, and we, you know, we're committed to that.
Got it. Appreciate that. I know it's nuanced, but, you know, it is important, so I appreciate you-
Yep
... going through that. Okay, let's switch gears to something much more exciting, value-added services. Big picture, can we talk higher level about strategy around the importance of value-added services to the long-term story?
Mm-hmm.
You've made, you know, for so long, Visa's made so much money with this very simple, high-margin way of taking a very small percentage of a very large and growing number.
Mm-hmm.
How do you think the mix shift of the business towards value-added services and away from the base card network means, you know, means for the business? How does that change the economics and the way that the participants in the ecosystem derive value from the network?
You're right. This is a much, much more interesting question, and topic, and much more exciting. It has been, you know, one of the bright spots in our, in our company's, performance and results. I talked about the momentum, and the strategy. I mean, why it's so strategically important for us is, A, you know, when we do a good job of providing value to our clients, through innovative products and services, it really deepens and strengthens those client engagements, and it helps them grow and protect their business. And B, you know, it's a great pipeline for innovation. So, you know, it's, it's our innovation pipe, new products, new services. It lets us, you know, reach new addressable TAM. It also gives us the opportunity to expand geographically in a much more expansive way.
And when we do both of those things right, it ensures that Visa remains the best way to pay and be paid, and it really has the sort of virtuous cycle effect you know, when a client is more successful, when they're growing their business, when their business is more secure, it increases volumes, and it you know, in turn, becomes this sort of flywheel effect, and so that's why it's so strategically important. The second part of your question, where you talked about sort of the mix of business, and I think you used the word, you know, shifting away from, and our network, you know, sort of the traditional network part of the business. That's you know different than the way that I think about it, certainly-
Yeah
'Cause I don't think about it as a shift away. I don't think about it as an or. I think about it as an and. It's much more complementary in that nature, 'cause I talked about the flywheel and the symbiotic nature. If you look at the composition of our VAS business and growth, I think that maybe that's a way to maybe highlight this a little bit. Today, the composition of VAS revenue, you know, it's the most significant contributor to VAS revenue is our VAS services or value-added services that we provision on top of Visa transactions. And so, think about it again.
Like, if we're successful there, we have the ability to you know, improve the whole ecosystem and ensure that Visa continues to do that. Now, a couple of examples. Like, we do that with something in a traditional sense, like, something called Visa Deep Authorization, which is our you know, AI-powered risk-scoring tool for card-not-present transactions. That looks a lot like a traditional sort of network product. And then you have something that looks very different, like, card benefits, which you know, we provide the issuers so that they can differentiate the value proposition of their cards over their competitors. And so we're helping them grow their business through these variety of services.
We also can then continue to grow across all transactions, not just Visa, but non-Visa as well, and so think about CyberSource, think about DPS, which is our issuer-processor for debit in the U.S. These you know continue to grow on, you know, sort of volumes that are outside Visa and non-Visa. And then the third leg of growth for us is really unrelated to a payments network altogether. It's where we bring our deep expertise in payments, and we provide consulting and advisory services and marketing services, and that lets us, again, continue to grow the ecosystem. So all of this sort of is this great virtuous cycle. It adds to the, you know, the health of the ecosystem.
It grows the ecosystem, and as a result, we all sort of all the players in the ecosystem benefit, and that feels really good.
You know, these have become a much larger piece of the story over time.
Mm-hmm.
You know, over $8 billion run rate business, annually growing, you know, over 20%, as you mentioned earlier. Since we're asking more kind of CFO-type questions, could you kind of help us break down and think about that $8 billion? What are some of the main components in the business today?
Yep
You know, how do we kind of see that from it flowing through the P&L as we see it externally?
Okay. Yeah, let's get CFO-like here. So I talked about, you know, sort of all the strategic reasons and the, and the flywheel, but let's talk about sort of what the business looks like today, and the way that we manage the business. We look at the business across five service lines, effectively. The first one is issuing solutions, which, you know, per its namesake, they're services targeting our issuing clients. Bucket two is acceptance solutions, so these are services for our acquirers and merchants on the other side of the aisle. Helps them optimize, receive digital payments, et cetera.
Three is risk and advisory services, so this really, you know, looks after fraud and helps secure the network, secure and protect the network. And then the fourth one is the advisory and consulting services. That's the one that I talked about being sort of non related to any particular network. It's consulting, it's advisory, it's marketing services.
Yep.
And the fifth one is the newest. It's the most nascent. It's open banking, and primarily powered by Tink. And so you have five lines of business. They're distinct. They have, you know, sort of different attributes to them. They're all growing well. We're seeing good, healthy growth across, you know, all five lines of business. The second part of it is then, you know, sort of how does it show up in our financials? I talked about, you know, $2.2 billion, growing, you know, at the, which is 25% of our business, and growing at the rate that it does. It shows up in a couple ways. One is about 60% to roughly two-thirds of the business revenue, and this does vary from quarter to quarter.
Okay
... depending on, you know, different growth rates. But let's say up to two-thirds of the business will show up as data processing revenue because it is related to a transaction, and then the remainder is split, historically, at least typically, about fifty-fifty, between service revenue and other, with service revenue capturing, for example, card benefits that are sold as part of a package, and, and other including, market- you know, marketing and advisory, as well as, you know, some card benefits, like lounge access.
Yeah.
Now, again, this can vary from quarter to quarter, especially when we see strong growth like we saw, you know, in Q3, where other grew 31% with strong advisory, strong marketing, and Olympics-driven marketing-
Mm-hmm
... and a little bit of pricing as well, and so that can vary, from quarter to quarter.
Got it. Okay, maybe we can pivot to new flows.
Mm-hmm.
Still early innings here, you know, I know building scaled networks takes time. What are the largest opportunities that you are focused on, and what are some of the biggest challenges that you face in kind of adding non-traditional payment flows to the networks?
Yeah. It is early days. I like the way that you early innings. I like the way that you said that. But we're very optimistic about the opportunity here. I you know, I talked about the very significant addressable opportunity, the $200 trillion, and by early days, you know, like the example I gave, you know, the 10% of the 10% means the vast majority of that $200 trillion is still in front of us, which is great. But the second part that gives me confidence is that there are real legitimate. You know, this isn't just sort of a theoretical exercise.
There are real pain points and real problems to be solved, and Visa's in a unique position to help solve them, especially as you get into sort of the bigger B2B, AP/AR, and things like this. You know, if you really sort of click into that, you see that processes are manual, they're inefficient, they haven't benefited. If you look at what's happened on the consumer payment side, it took decades, right? To get to where we are today, which is this seamless, modern, simple experience. You know, the commercial side has none of that.
Right
... today, and so, you know, it is a long game to get to that point, but, you know, you look at all the sort of manual nature of... You know, just take an example, like a supplier, you know, they have to match an invoice to a payment. They have to reconcile it. They have to get it into their ERP system. I mean, these are all manual processes, and clunky, and hard, and so any solution that Visa brings to the market will have to really modernize that, and if we do so, I think there's a lot to be unlocked.
You know, the third thing I'd point to, so, one, the addressable opportunity. Two, real problems, real pain points to be solved. And three, you know, we do have great product, product market fit already, and we continue to innovate to grow that. Take, you know, you take our VCS business. I talked about, you know, sort of the one point six trillion in commercial carded business, and I'll use that example because it's, you know, it tends to be the most developed today. In one aspect, it looks like, you know, the motions look a lot like consumer payments. We grow credentials, we work on growing acceptance, and we work on growing usage and engagement.
So that kind of feels like a parallel, but we have to do things for commercial customers in a different way, right? Growing issuance, for example, when there's a you know a different product that serves a need, and in this case, the example I'll use is virtual cards. And so virtual cards is a very useful tool, and it's very useful for commercial clients because it does a bunch of things. It, it's more secure. It's a single-use scenario, and so you know you could issue that virtual card to an employee, they could use it for a single purpose, and then can't be reused again, very secure. It can be tailored, it can be customized.
There's a lot of control, so you can set it, set a spending limit, you can set it to a type of transaction. There's working capital benefits, there's flexibility in how and when you pay. It works on cross-border, and so there's all these sort of a great virtual card. We have tools that enable, you know, our issuing clients to be able to issue virtual cards. And then on the other side, for a supplier, for merchant, there's Visa AR Manager that lets you automate the acceptance of virtual cards. So you can really complete the scenario end to end, and that's the way that you go about, you know, solving these things. Maybe the last thing I'll point to is that, you know, it's execution. It's...
You know, all this will tap into the power of Visa, our scale, our distribution, the power of our network, our trust, our brand. All that, when you put it together, is a really exciting opportunity for us.
Got it. So we're about four years post the start of the pandemic. I think investors are still weighing the cadence of sort of post-COVID cross-border normalization-
Mm.
-in particular. The normalization of travel has been in focus. I, with the business running at sort of mid-teens, you just gave us an update of where you're running-
Yep
... so far in the third quarter. How are you thinking about the trajectory of cross-border volume growth going forward and the mix between e-commerce and travel?
Yeah, really good question, and one that, you know, we've stared at a lot, 'cause you can imagine, 'cause cross-border for us is, it's, you know, it is impactful to our P&L, and so it's super important for us, and we're very focused on that. Let's, you mentioned sort of pre-COVID, post-COVID, so let's kind of do the walk a little bit. So pre-COVID, total cross-border volume growth, ex intra-Europe, the growth was, let's say, high single digits to low double digits, depending on, you know, a period. And within that, the e-commerce piece grew a little bit faster, and travel, cross-border travel grew a little bit slower. And the e-commerce piece was about a third of the business in total.
Obviously, the pandemic happened, e-commerce kind of took off, travel kind of went, you know, away for a bit, and today, what do we have today? So today, when we look at the business, there's been sort of a permanent structural shift. We have e-commerce that is now about 40% of the business, and it's continuing to grow at a very healthy clip. It sort of continues to grow at the pre-COVID levels. It's sort of normalized. It's the most normal year, I think we called it, that we've had in a while. It's normalized, and in fact, it's even outperformed that in recent quarters a little bit. So we've kind of found what we feel like is a new normal for e-commerce, and it's a bigger portion of the business, total.
Travel's the one, you know, that has been harder to predict. Like, it's, you know, it's continuing to be elevated in a bunch of regions. It's lagging in AP. We talked about that. I think anyone who's been in an airport recently, you see, you know, it's busy.
Yeah.
Travel doesn't look like it's abating, but it's kind of difficult to know exactly where that's gonna fully settle out. We think AP will continue to improve at its lower pace, and when that all settles out, you know, we'll certainly share with you the results when we see it, but net-net, when you sort of add it together, you have now a bigger portion of the business that's weighted toward e-commerce, cross-border, and that's, you know, a tailwind to the total cross-border growth, and that's kind of how we see it, and that's how we've been explaining it in each quarterly call.
Got it. We're about to hit time here. I wanna just maybe -
Sure
... turn over to incentives. These have been hanging in the 27%-28% range as a percentage of gross revenue for a while now. We're a little elevated in the first part of the fiscal year. You're calling for that to kind of slow in terms of the year-over-year growth exiting the year. What is your outlook for incentives over, you know, over the longer term, and then shorter term, are there any kind of chunkier renewal dynamics to be mindful of in the coming years?
Good. I can answer this one in thirty seconds, so-
Great
... we'll do it. When, you know, when we started the year, you know, the directional guidance we gave was that 2024 growth, year-over-year growth would be below twenty-three. It really had... It was a factor of the renewal, you know, the volumes of renewals that we anticipated. We had a bigger renewal year in 2023. We have less in 2024. You know, but the thing I'll say is, you know, and I get why you ask, you know, there's interest in sort of this percent of gross volumes, but, and I'll say this again, and I've said it before, and I'll say it again, it's just not consistent with how we manage the business.
Sure.
We really think about, you know, how do we align with our clients to grow volumes, to expand into new markets, expand into new geos, to grow net revenue, and if we do that, it'll take care of itself at the end of the day, and that's our world view. We're focused on those things. We're gonna grow volumes, we're gonna help our clients be successful, and we're gonna grow net revenues in the process.
Great. Well, at that, we're out of time. Thank you so much for joining us today. Really appreciate the discussion.
Great. Appreciate it. Thank you, everyone.