Ryan McInerney: Why don’t I talk just contextually about Reg II and then you can answer anything else on Sanjay’s question? So two things going on, obviously, with Reg II, let’s just talk about them both. One is the change that was made last summer that went into effect with regards to routing in the e-comm space. As we mentioned in our prepared remarks there, we haven’t seen any meaningful impact. Having said that, there’s a lot of work happening around the ecosystem and we’re out there talking to clients and partners about our products and our value propositions, making sure they understand the benefits of a Visa transaction, especially in the e-commerce space, where often the merchant holds the fraud liability. So our sales teams are in with merchant clients and acquire clients day in and day out, explaining the value of our product, showing them the value of our products.
And going forward, we feel good about our ability to compete. The second thing that’s going on with Reg II that I’m sure people would have seen is the Fed has announced that they’re going to, I think it’s tomorrow, announce some changes potentially to the debit interchange rate in the US. We don’t know what they’re going to say. We’ll obviously follow it very closely. And when they do publish something, we’ll take a look and see if it merits a response on our behalf. And just as a reminder, interchange is the exchange value between the merchant and the issuer. And I think what’s notable about our business model is we’ve proven that we can be resilient and have a strong business in regulated interchange markets, not regulated interchange markets, in markets that have higher regulated interchange and lower regulated interchange.
So, as you alluded to, a lot going on in the US with Reg II, but we’re all over it and we feel good about our ability to compete.
Chris Suh: Yes, and I’ll just add on from a guidance perspective. Hopefully, we’re very clear on the call, we have not seen any meaningful impact thus far, and therefore, haven’t included any impact of that in our FY 2024 guidance. But it is early days and there’s a lot going on, as Ryan described at length, and so we’ll keep you posted as things evolve in the coming months.
Jennifer Como: Next question Jordan.
Operator: Our next question comes from Dan Perlin with RBC Capital Markets. Your line is open.
Dan Perlin: Thanks. I just wanted to ask a question around tokenization and the implications for just broader-based authorization rate improvements, and this is not just like domestic but like international. It just feels like a lot of your partners are able to drive higher authorization rates as a result of the token. So, I’m just wondering how you’re viewing that in the context of being able to drive incremental transactions back to Visa? Thanks.
Ryan McInerney: Yes, thanks for the question. Just for a reminder for everyone, tokenization is technology that we use that essentially helps protect issuers, merchants and consumers, and to your question, ultimately, drives higher authorizations and lower fraud. I think I said in my prepared remarks, we crossed 7.5 billion tokens as of the end of September. We’re in 198 markets. I think we have 14 billion token transactions in the fourth quarter, which is growing at like 60%. So, this is another example of a platform and a service that we invested in over many years and we’re now scaling broadly around the world. To your question, we are. We’re seeing, on average, somewhere between 4% and 5% higher approval rates across our partners.
And we also see it with a reduction in fraud — a 30% reduction in fraud. So, you say, why do we have 7.5 billion tokens that are now out there in the ecosystem? Well, if you’re one of our partners, as you said, and you can reduce your fraud rates 30% and drive your auth rates four or five percentage points, that is a great opportunity. That’s higher sales, that’s lower fraud, that’s better customer experience. And we continue to invest in that platform as well. We see a lot of benefits to our issuers, to our consumers who ultimately use the products. You’ll see more from us enhancing the platform in terms of using the Fido biometrics and enabling merchants to be able to authorize and authenticate customers across multiple devices and those types of things.
So, yes, higher auth, lower fraud. We love the platform, continue to invest in it.
Jennifer Como: Next question Jordan.
Operator: Our next question comes from Trevor Williams with Jefferies. Your line is open.
Trevor Williams: Great. Thanks a lot. Chris, I wanted to clarify on incentives within the guide. I think you said you’re assuming slightly slower growth than in fiscal 2023. Just want to make sure, is that year-over-year growth in dollars or as a percentage of gross revenue? And then just the second part to that. You’re framing this as a more normal year. Should we be interpreting that as meaning all else equal, a normal year incentive should be going up kind of plus or minus 100 basis points as a percentage of gross revenue? Thanks.
Chris Suh: Hi, Jeff [ph]. Yeah, let me try to clarify a bit. As I said, 2024 is, in many ways, a normal year. It’s still normalizing in some aspects, but in many ways, it is normalizing. And as a result, we’ve made some changes. We’ve returned to pre-COVID practices on a number of fronts. We provided formal guidance as you went through — as we went through in detail, and we talked about on this call, for the full year and next quarter, and we’ll continue that practice. And that guidance is on net revenue guide specifically and directional commentary about the growth in incentives, which to your specific question, it is a dollar year-over-year growth rate that we said will grow slower in 2024 relative to 2023. Importantly, this is very, very consistent and it’s aligned with how we think about the business, how we manage the business going forward.
We haven’t guided on the percentage, which is the other part of your question because, again, this is consistent with how we manage the business. The thing that we do track very importantly is that we look at the yield across our net revenue yield specifically, and that’s remained very stable, and that’s very consistent again with how we think about deal economics.
Jennifer Como: Next question Jordan.
Operator: Our next question comes from Tien-Tsin Huang with JPMorgan. Your line is open.
