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On Feb. 1, Visa chief executive Al Kelly will hand over the reins at the credit card giant to Ryan McInerney, Visa’s current president and move to a position as executive chairman of its board. Under Kelly, who has been CEO for six years, Visa has increased its revenue by 90%, more than doubled the average daily number of transactions and grew its employee base by 85%, according to the company’s figures. But the company is facing an increasing number of challenges, including new regulatory pressures, compliance issues and legal battles. In 2022, as the country emerged from the shutdowns brought on by the pandemic, Visa had a particularly eventful year, with proposed legislation seeking to provide more competition in the industry, new gun store purchase protocols that raised the ire of Second Amendment activists, and a ruling from a judge about its role in facilitating questionable practices in the online porn industry.
“We’re not moral arbiters. We’re not lawmakers,” Kelly tells TIME. “My view is that I speak out when it directly impacts the company. When it doesn’t, it’s not my position to speak out.” However, there have been cases, like the killing of George Floyd, that have prompted Kelly to be more vocal.
Kelly spoke with TIME about how he has navigated these issues over the past year, and reflected on his tenure leading the credit card giant.
This interview has been condensed and edited for clarity.
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In March, both MasterCard and Visa suspended operations in Russia. Has that made any difference to your bottom line or the situation in Russia?
It was a big decision for us. Russia was our third largest market in the world—Russia plus Ukraine was 4% of our revenue. We don’t have any more revenue in Russia. Our hope is we’ll make it up in different places over time, and our business in Ukraine has actually held up quite well. We offered our Russian employees a job outside of Russia with the company and about three quarters of them took us up on that, which is great. They’re doing other jobs, mostly out of Dubai. We also offered all of our Ukrainian employees passage out of Ukraine, and about half left. It was not a very hard decision, but a decision that even till today has a lot of implications for us as a company. I think it’s had some effect on Russia. I think it’s definitely hurt them in terms of their citizens getting a good option for spending outside of Russia.
In July, a new bill was introduced into the U.S. Senate and House, which suggests that some people in D.C. believe that the big credit card companies are stifling competition by limiting where transactions can be processed. Is there enough competition in the credit business?
Absolutely. I’ve been in and around credit card businesses since 1997 and there’s more competition than there’s ever been; there’s more ways to pay than there’s ever been. The underlying thesis that there’s not enough competition is flawed.
Except that Visa’s net profit margin is 51%. And the U.S. does have the highest swipe fees in the world—
Well, every market in the world is unique. This happens to be a market where reward points, for example, are extremely valued. And the amount of credit extended in this market is about as large as you’ll see anywhere else. It’s the market with the most co-branded cards, and with the most benefits available to consumers on credit cards. One of the ways those things are funded is through swipe fees. If there’s more incentives for people to use cards, that’s good for the entire ecosystem, including for merchants, who will almost always earn higher sales on a credit card than they ever would from the somebody buying using cash.
And the profit margin?
We’re in a technology business, where we get incredible economies of scale so that’s why our margins will tend to be higher; I don’t have a lot of extra technology cost until I reach a threshold where we have to buy a new server. The reality is that we get a very small yield on every transaction. Our profit margin is tied to the dynamics of not just our revenue, which comes from that yield, but the fact that our expense base is such that we get economies of scale from our technology. There’s enough things the government can work on without getting in the middle of price controls of the private sector.
If Visa eliminated swipe fees, others wouldn’t be able to have their rewards. But doesn’t that mean people who struggle financially are paying for those with fancy cards?
Absolutely not. Back in 2010, when two networks were required on debit cards, that was the end of free checking. Debit cards that had rewards: gone. And every study that we’ve done suggests that merchants haven’t passed a single penny of savings on to consumers. That’s exactly what will happen if this happens with credit cards as well.
Also in July, a judge declined to dismiss a case against Visa for servicing payments that could have facilitated sex trafficking on Pornhub. What’s your position on this ruling?
We think the judge’s judgment was wrong. We were not a party to that [case] at all. That said, if what’s alleged in the complaint is correct, it’s abhorrent. Obviously, no children should be involved in anything has anything to do with sexual exploitation. But we have no idea what happened in this particular case back eight or nine years ago, and we had nothing to do with it. That was our case to the court; the judge disagreed. So we move forward from here.
At the beginning of last year, after Nicholas Kristof wrote a column about Pornhub and its owner MindGeek, Visa did withdraw the ability for customers to use its cards on that site—
That’s correct. We withdrew it for user posted content, but not the professional aspect of the site.
What about TrafficJunky [the subsidiary of MindGeek that sells advertising]?
One of the judgments that came out of the judge’s ruling that mentioned TrafficJunky as being associated with his decision, and we decided, in the spirit of being as careful as we can, to suspend TrafficJunky from acceptance on our networks. By the way, most of the advertising that appears on the sites are things like products for men to grow hair. I haven’t read the Nick Kristof article so I can’t make a judgment. We would never support something that was illegal.
So you haven’t looked into these claims at all, that people have against Pornhub?
First of all, we don’t have a relationship with Pornhub, or Mindgeek, just to be clear, it’s through acquirers [the institutions that connect merchants to credit card companies], and they have looked into it and have attested to us that they have not identified any cases where there is an issue.
You appear to be quite a devoted Catholic. Is this not a problem for you personally, that you might inadvertently be funding this kind of practice?
I run a company. So I leave my personal feelings to myself. We’re not moral arbiters. We’re not lawmakers, we follow the law of the countries in which we do business.
But you are sort of moral arbiters—you withdrew from Russia. That was a moral decision.
It also was driven by the fact that it was getting extremely difficult to operate there.
Is it so bad to be a moral arbiter? You wrote a blog post in 2020, after the murder of George Floyd about how we as a country can’t allow this kind of thing to continue and you made some commitments about what you would do at Visa to do your part; doesn’t it feel like that’s a little bit of moral arbiting?
My view is that I speak out when it directly impacts the company. When it doesn’t, it’s not my position to speak out.
How did the death of George Floyd directly impact the company?
The death of George Floyd was yet another unfortunate clear sign of Black people being treated poorly. We’re a company that believes deeply in diversity; we have a great deal of diversity in our company. And I felt strongly in that particular case it warranted me speaking out.
At the time, you committed to increase the number of underrepresented people at the level of vice president or above and within Visa overall, focusing first on Black employees. How did that go?
I made the judgment that I didn’t want to write a check. So the very first thing we did was announce this Visa Black Scholars and Jobs Program. We’ve got two classes of young people who are studying at 45 different universities in the U.S., they each have a mentor and we partially pay their tuition. And upon graduation, if they’re willing and have done their part, they’ll have a job.
And I decided we’re going to make a real statement about the need to increase underrepresented minorities, both Black as well as Latinx. On both of those metrics we are running ahead of our targets of 50%. I look at these metrics each month, we have a quarterly business review. It’s something we take extraordinarily seriously as a company.
How have you dealt with what people call the pipeline problem?
There are pipeline issues for sure. For instance, California is a state that is 10% Black. We made a commitment about six or eight months ago to put 1000 jobs in Atlanta, Georgia, which is a state that’s about 43% Black. We made a commitment to increase office size in Washington D.C., which I think it’s closer to 50% Black. Sometimes you have to move outside your comfort zone and look to different types of solutions.
In September a new merchant licensing code was introduced that would require credit card companies to give a particular code for gun purchases. Do you support or oppose that idea?
I don’t think the code was necessary. But it doesn’t matter; the code is in place. It’s now an international standard and we adopt international standards.
Some two dozen Republican Attorneys General sent you a letter—
I’ve heard from everybody. I don’t think there’s a senator or member of the House or attorney general in the United States I haven’t heard from. I’m telling them that we will follow the law. Guns are allowed in the United States and we would fully expect that anybody who wants to buy a gun should be able to buy that that gun provided all the other checks are done. On top of that, we’re telling them that we don’t collect [that level of data] for consumers. So if [Visa’s Chief Communications Officer] K.C. Kavanagh goes into a gun store and buys three thermoses and a tent, and you go in and buy a rifle and five rounds of ammunition, all I know is you both went to the same gun store. I know what gun store, I know when you went, and I know how much money you spent. But I don’t know what you bought.
In the second quarter of 2022, the number of credit cards in the U.S. topped 500 million for the first time, up from approximately 465 million according to TransUnion. A lot of the big jumps were in applications among Gen Z and subprime borrowers. What do you think is behind this increase?
I think what’s happening is that during the pandemic, people got very, very shy about using cash. And some merchants stopped accepting cash. Many more people certainly went to look for credit and debit cards as an alternative. Additionally, millions of people around the world during the pandemic went to shop on e-commerce for the first time and many who shopped on e-commerce went to different categories that they had never shopped on for the first time. I haven’t done the research, but it does not surprise me that you would have seen an uptick because of the acceleration of cash digitization that happened during the pandemic.
Is it safe to say that, in general, the pandemic was good for the credit card business?
The pandemic had one relatively significant positive and one relatively significant negative for the credit card business and they probably cancel each other out. The relatively significant positive was this cash digitization and people shopping at home and saying, Oh, my gosh, I need a credit or debit card. On the other hand, travel around the world shut down—air travel, hotel travel, day to day travel, sales conferences, weddings, charity galas —none of those things happened, all of which also generate a hell of a lot of payment volume for us.
Do you think that cash is coming to an end?
Cash will be around for quite a long time. There’s still $15 billion of cash spent annually by consumers around the world. But I think it will continue to go down—and cash by the way, is extraordinarily expensive. It’s a very expensive option for merchants. It costs a lot of money to count cash, transport cash, track it, safeguard it.
What do you regard is your signature achievement?
The job of a CEO probably comes down to a few things. One is putting a fantastic team and culture in place, putting a clear and winning strategy in place, and figuring out how to continue to grow the pie, as opposed to necessarily just market share within a fixed pie. I think that we’ve got a very, very strong group of people; for the first time in Visa’s history, we have an internal person succeeding the CEO, and that’s certainly a great source of pride for me. Below that, we have, I think, a very clear strategy, which is to drive consumer payments around the world, drive new flows, and then sell value added services to our clients.
As you look back on your tenure here, is there anything that you have any regrets about?
I don’t have regrets. I certainly have made mistakes. I expect people to take risks and therefore we’re not going to always get it right. There’s certainly things where I wish I moved faster on something. Probably many CEOs feel that way looking back. I’m also aware that success in business is a team sport.