Visa Inc (NYSE:V) just announced a partnership with Viewpost, a company that provides invoicing and payment services. However, Visa will not just be processing invoices on behalf of small- and medium-sized businesses (SMB). Instead, this partnership could help it change the commerce world on a much larger scale.
Through the partnership, Visa is looking to leverage its scale and relationship with banks to accelerate electronic bill payments. Viewpost is looking to leverage V’s brand and size to maximize its market potential.
It’s a classic win-win. Visa is able to team up with a company that has an excellent product and great technology. Viewpost can get a lot further, a lot faster by working with V. And Visa stock holders win thanks to the enormous opportunity.
The New World Order
Consider what Visa has done to cash over the past few decades. We’ve gone from a commerce society hinged on cash and check to one where credit and debit cards dominate.
Cards are perfect for small consumer purchases like groceries, gas and clothes. It’s simpler, easier and more convenient for shoppers. This simplicity has made Visa and MasterCard Inc (NYSE:MA) two of our Future Blue Chip stocks. Their tollbooth-like businesses give the companies huge margins and a wide moat.
As credit cards replace cash, other methods like check and ACH transfers still dominate large purchases and transactions for SMBs. That’s where Viewpost comes in and its partnership with Visa can accelerate its solutions.
In a nutshell, the Visa-Viewpost partnership will look to do to B2B checks what credit/debit cards did to cash. For instance, when a company buys new appliances, sends money or pays contractors, they often use checks and ACH transfers. Not only is Visa and Viewpost’s solution simple, it’s also safer too.
Here’s how it works, per Visa:
“With Visa virtual commercial cards, Viewpost’s SMB customers will be able to benefit from Viewpost electronic payment capabilities and use of a secure, one-time Visa virtual account number that includes payment date and amount. Once a virtual card payment is made through Viewpost, the supplier will receive a one-time card number for posting funds to its merchant account.
Viewpost will then deliver data-rich remittance information to both businesses, such as which invoices were paid, the amount paid and the due date. In case a supplier is not currently setup to accept virtual commercial card payments, an invitation is extended through a proprietary automation method that makes supplier enrollment quick and simple.”
The service will be available this year, according to Viewpost CEO Max Eliscu. He also told us that “this underserved section of the market is massive.”
Visa is on the same page. Taira Hall, vice president, global business solutions at Visa told InvestorPlace, “Visa’s partnership with Viewpost is an important milestone for our B2B business, and we see tremendous opportunity for continued market growth in B2B.”
What It Means for Visa Stock
So what does this mean for investors?
In the short-term, not much, actually. V shareholders likely won’t even see a pop today on the news. But it’s an encouraging sign that Visa’s management still has its sights set on long-term growth as well. It’s not taking its foot off the gas.
In Visa’s previous conference call, management talked enthusiastically about India. When the government announced the demonetization of its 500- and 1,000-rupee notes, Visa noticed a spike in transactions. But India isn’t a developed market, so V had to respond differently. The company came up with a digital solution that has seen rapid transaction growth over the past few months. This may not be a needle-mover right off the bat, it has big potential down the road.
The Visa-Viewpost partnership can be viewed the same way. This technology may be a home run if it becomes the go-to way to handle such transactions.
In doing so, investors can consider it one more way for Visa stock to widen its moat.
Bret Kenwell is the manager and author of Future Blue Chips. He can be contacted on Twitter via @BretKenwell. As of this writing, Bret Kenwell held positions in V and MA and has no plans to alter said positions.
