Al Kelly, the American Express lifer who is now CEO of credit-card giant Visa, was supposed to be in Tokyo right now, attending the summer Olympics his company had planned to sponsor. “I would have flown yesterday,” he told me Thursday.
He’s not alone in measuring what we’ve lost by cancellations on our calendars. Earlier in the week, Visa reported fiscal third-quarter results that told the tale of a shutdown. Revenues declined 17% from the previous year. Earnings fell 22%. Cross-border volume, excluding that of payments inside Europe, where borders are porous, was off 47%. “It’s not a matter of ‘travel is slowed,’ says Kelly. “Travel is stopped.” Visa tracks 189 of 217 countries that are completely or partially closed to visitors.
Visa, with its vast global consumer business, offers a broad view on the economy. Kelly says that while credit-card use has plummeted, debit-card use has held up. In other words, consumers are spending what they have rather than borrowing what they don’t. What they have, by the way, has been vastly affected in recent months by stimulus and relief programs around the world. Kelly says 89 million U.S. households got about $2,000 each in mid-April. They apparently spent it on food and drugs—and video games.
A few other insights:
- Most of the decline in spending is coming from higher-income households. This makes sense: Everyone bought staples to shelter in place; rich folks can’t buy an overpriced bottle of wine in a restaurant that’s closed.
- Visa’s spending on personnel rose 8% in the quarter because the company continued to expense hiring from late last year. Kelly vowed no COVID-related layoffs this year, but says, “We’re doing very little hiring now.”
- The acceleration of digital commerce is a win for Visa. Kelly says Visa gets about 15 cents from all face-to-face commerce, but 43 cents of all e-commerce transactions. Tap-to-pay, where the U.S. is a laggard, is ramping up quickly around the world. This germ-free transaction method accounts for 90% of credit-card payments in 12 countries.
Kelly says working from home has gone well for Visa, though about 10-15% of surveyed workers—the company has 20,000 employees—want to go back, mostly young people and parents of young kids. He envisions an eventual return to the office, but with many electing to come in less frequently, and with offices reconfigured to include more collaboration areas for visiting workers. “I still expect our company to grow, though real estate per employee will change,” he says. “We’re not automatically re-signing leases.”
Adam Lashinsky
This edition of Data Sheet was curated by Aric Jenkins.
NEWSWORTHY
Microsoft is moving ahead with discussions to acquire TikTok’s U.S. operations following a weekend conversation between CEO Satya Nadella and President Donald Trump, the company said Sunday. The deal’s not yet a done one, but news on its completion is imminent: "Microsoft will move quickly to pursue discussions with TikTok's parent company, ByteDance, in a matter of weeks, and in any event completing these discussions no later than September 15, 2020," the company said in a statement. Now the question is less of if the deal is happening, but why? And what’s President Trump got to do with it, anyways?
For the first time since 1975, NASA astronauts landed in the water—though this time, they were in a SpaceX capsule. The Crew Dragon spacecraft with astronauts Robert Behnken and Douglas Hurley aboard gently parachuted into the Gulf of Mexico on Sunday afternoon. It marked a safe end to a historic two-month mission that saw the first commercially built and operated spacecraft carry people to and from orbit. The successful journey now clears a path for another SpaceX launch later this year and potentially tourist flights beginning in 2021. CEO Elon Musk remarked that "this is the result of an incredible, incredible amount of work from people at SpaceX, people at NASA.”
The results of advertisers’ July boycott of Facebook are in, and as expected, they did not result in significant financial damage to the social media giant. Organizers maintained from the start that the #StopHateForProfit boycott was intended to harm Facebook more on a reputational standpoint than on the bottom line. The boycott garnered public support from more than 1,000 advertisers out of a total pool of more than 9 million. Facebook’s top 100 spending advertisers in the first half of the year spent $221.4 million from July 1 through July 29. That’s 12% less than the $251.4 million spent by the top 100 advertisers a year earlier, advertising analytics platform Pathmatics revealed to the New York Times.
Authorities on Friday arrested the mastermind of last month’s major Twitter hack that infiltrated the accounts of Elon Musk, Bill Gates, former president Barack Obama, and many, many more. The genius behind the plot? A 17-year old Florida boy. Despite the age, Graham Ivan Clark is being charged as an adult following his arrest in his Tampa apartment. Clark faces 30 felony charges, including fraud. A new piece outlines his background, and how he got his start in the online hacking world. Minecraft scams were an early proving ground.
FOOD FOR THOUGHT
Movie theaters in the U.S. remain closed for now, but Universal’s theatrical window deal with AMC will be a gamechanger when they open back up. Bloomberg reporter Lucas Shaw on the significance:
AMC, the largest theater chain in the U.S., will allow Universal to rent new movies at home just 17 days after they debut in theaters, a momentous shift from how the movie business has operated. When major studios release movies now, they need to wait a few months before making them available at home. (Netflix makes its movies available at home sooner, which is why its movies aren’t shown by the biggest theater chains.)
[Jeff] Shell, the CEO of NBCUniversal, has pushed for years to condense this lag time. Studios spend a fortune marketing a new title, collect most of the revenue in the first few weeks and then need to sit on their hands and wait. Movie theaters have resisted changing the model, arguing it would destroy their business.
But when the coronavirus shut down theaters around the world, Universal released several movies once-planned for theaters at home. AMC squawked, vowing to never play Universal movies again, only to come around and make a deal in exchange for a cut of the online sales.
Rival chains are irate, though their fury will likely be mollified in the same way as AMC: money.
IN CASE YOU MISSED IT
The U.S. and EU’s key data-protection deal is dead. How one of the world’s biggest data brokers is adapting By David Meyer
Apple pledged $25 to iPhone users over battery problems. Why is it so hard to collect? By Jeff John Roberts
‘Forcibly taking’ ByteDance’s ‘child:’ How Chinese media sees Microsoft’s possible deal for TikTok By Naomi Xu Elegant
Gen Z is struggling to be productive working from home By Lance Lambert
NBCUniversal’s Peacock hits 10 million signups By Gerry Smith
Instacart shoppers are battling order-grabbing bots By Lizette Chapman and Kartikay Mehrotha
(Some of these stories require a subscription to access. Thank you for supporting our journalism.)
BEFORE YOU GO
The Nickelodeon cult favorite Avatar: The Last Airbender returned to Netflix in May and dominated the streaming platform’s Top 10 list for a record 61 days. More than a decade after the show’s finale, the show’s reemergence has inspired a new generation of fans young and old. They’re making cool new creative content like this 3D reimagination of the show’s opening sequence. Go ahead and show the kids, or enjoy it yourself—you know you want to.
Aric Jenkins
