Is Visa's AI Strategy the Key to Defending Its Payments Dominance?
V is using cutting-edge tools, expert knowledge and robust processes to spot and tackle fraud, pouring more than $10 billion into technology over the past five years. In the past year, it blocked $40 billion in fraudulent payment attempts, stopped 80 million fraudulent transactions and saved more than $122 million in potential e-commerce fraud through malware detection. Visa also enhanced its Visa Account Attack Intelligence (VAAI) offering with the VAAI Score, a new tool that harnesses generative AI to pinpoint and evaluate enumeration attacks.
In the second quarter of fiscal 2025, V processed 60.7 billion transactions, which grew 9% year over year. AI is playing an important role in each transaction. Their real-time risk assessment engine reportedly analyzes more than 400 attributes for each transaction in just milliseconds. This capability has allowed the company to bring fraud rates down to historic lows, even as digital threats continue to evolve and become more complex. It also acquired Featurespace, which specializes in cutting-edge real-time AI technology designed to protect payments.
AI is also driving Visa's growth into new value-added services. With its cutting-edge data models, the company is helping banks and merchants get a better grip on consumer behavior. Its AI investments are more than just defensive — they're shaping its evolution into a tech-enabled network.
How Are Competitors Faring?
Some of V's competitors adopting AI to improve operations include Mastercard Incorporated MA and PayPal Holdings, Inc. PYPL.
Mastercard is making significant investments in AI, particularly for cybersecurity and fraud detection. Its Cyber & Intelligence unit powers real-time risk analysis and authentication. To improve AI capabilities in financial data and fraud, the company purchased Brighterion and Finicity. Additionally, Mastercard introduced Decision Intelligence Pro and collaborated with Microsoft to use AI to combat scams.
PayPal is actively integrating AI to enhance various aspects of its platform, making everything from checkout processes smoother to creating more dynamic workflows for developers. These AI-driven tools reflect PayPal's commitment to boosting efficiency, tailoring interactions and enhancing security for both businesses and consumers.
Visa's Price Performance, Valuation & Estimates
Shares of Visa have jumped 10.9% in the year-to-date period compared with the 2.5% growth of the industry.
From a valuation standpoint, V trades at a forward price-to-earnings ratio of 28.13, above the industry average of 21.88. V carries a Value Score of D.
The Zacks Consensus Estimate for Visa's fiscal 2025 earnings implies a 12.9% jump from the year-ago period.
Image Source: Zacks Investment Research
Visa stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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Mastercard Incorporated (MA): Free Stock Analysis Report
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