Visa Inc.’s V push into tokenization is often seen as a security upgrade, but its strategic value now runs much deeper. What started as a way to swap out sensitive card information for encrypted tokens is now transforming into a powerful tool for improving transaction efficiency, giving more data control and creating a more engaging ecosystem.
At a surface level, tokenization reduces fraud risk by ensuring real card numbers are hidden during transactions. However, V’s initiatives reflect a broader ambition. By integrating AI into token lifecycle management, the company can help reduce unnecessary declines, optimize routing decisions and automate risk scoring in real time. These AI-driven insights, derived from token behaviors across various devices and channels, empower issuers and merchants to minimize friction while keeping security intact.
Visa is extending tokenization beyond physical cards into digital wallets, Internet of Things (IoT) devices and embedded commerce. Recent initiatives with wallet providers and fintech partners focus on standardizing token frameworks, enabling seamless payments across apps, wearables and connected devices. This positions Visa at the center of emerging payment touchpoints where traditional card credentials are less effective.
Visa is using tokenization to boost authorization rates, streamline recurring payments and reduce friction in both digital and card-not-present transactions. Higher approval rates directly benefit merchants from fewer failed payments, and issuers enjoy better customer experience along with lower dispute costs.
Overall, the company's move toward tokenization reinforces its role as a critical payment infrastructure, extending its moat beyond security into efficiency and ecosystem control.
How Are Competitors Faring?
Some of V’s competitors adopting AI to improve operations include Mastercard Incorporated MA and American Express Company AXP.
Mastercard advances tokenization and AI-powered tools that boost the accuracy of authorization and help detect fraud. MA’s initiatives support the changing landscape of digital payments and create smarter transaction processes, all while prioritizing security and preparing for the future of commerce experiences.
American Express is leveraging AI to enhance its risk modeling, gain deeper customer insights and bolster fraud prevention efforts, while deploying tokenization across virtual and mobile payments. This approach supports premium customer experiences and controlled innovation, leveraging AmEx’s direct issuer-merchant relationships.
Visa’s Price Performance, Valuation & Estimates
Over the past year, shares of Visa have jumped 14.5% against the 3.5% fall of the industry.
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From a valuation standpoint, V trades at a forward price-to-earnings ratio of 26.53, above the industry average of 21.18. V carries a Value Score of D.
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The Zacks Consensus Estimate for Visa’s fiscal 2026 earnings implies an 11.7% jump from the year-ago period.
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Visa stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
