Visa Pulls Open Banking Business from US, Shifts Focus to High-Potential Markets

Visa has closed its open banking business in the US and is shifting resources to "high-potential markets" like Latin America and Europe. This move has sent shares down fractionally, with investors concerned about regulatory uncertainty and potential fees charged by banks. However, Visa has received a boost from Lithic, which has integrated Visa Account Level Management into its operations. Analysts have a Strong Buy consensus rating on V stock with a 14.13% upside potential.

Visa Inc. has closed its open banking business in the United States, a strategic move that reflects the company's focus on its core payment processing business. The closure comes amidst increasing competition in the financial data market and regulatory uncertainty surrounding consumer-data rights [1].

Visa's open-banking platform aimed to help banks share customer data with third-party fintech companies, enabling a broader range of financial services. However, the company has now shifted its strategy to prioritize markets with higher growth potential, such as Europe and Latin America [1].

The decision to shut down the US open-banking operations follows a series of regulatory changes and legal challenges. The Consumer Financial Protection Bureau (CFPB) is currently rewriting rules that govern bank fees for customer data access, with some banks planning to charge for this service [1]. This shift in regulatory landscape has made it challenging for Visa to operate its open-banking platform in the US.

Visa's move also comes as a response to increasing competition in the financial data market. JPMorgan Chase & Co., for instance, has announced plans to charge fees for access to customer bank-account information, which has sparked controversy among fintech companies [1].

Despite the closure of its US open-banking unit, Visa remains committed to innovation in the payment processing space. The company has been investing in digital solutions and working on projects related to artificial intelligence (AI) and stablecoins, which could drive future growth [1].

The stock has seen a slight decline following the announcement, with investors concerned about regulatory uncertainty and potential fees charged by banks. However, Visa has received a boost from Lithic, which has integrated Visa Account Level Management into its operations [2].

Analysts have a Strong Buy consensus rating on V stock with a 14.13% upside potential, reflecting optimism about Visa's strategic shift and long-term growth prospects [2].

References:
[1] https://www.ainvest.com/news/visa-exits-open-banking-unit-data-disputes-2508/
[2] https://www.ainvest.com/news/stock-analysis-visa-outlook-technical-neutrality-mixed-analyst-signals-2508-89/