Dear Investors,

That companies evolve, reinvent themselves, and grow into new verticals with upgraded and durable advantages is a distinguishing characteristic we look for among our core holdings. As investors know, finding this kind of evolution – which leads to new profit pool creation and a durable economic moat – is a cornerstone of our strategy.

Today, we would like to turn investors’ attention to a company successfully undergoing this exact reinvention: The storied payments network company, Visa. In Visa’s most recent earnings transcript, CEO Ryan McInerney did not position the company as merely a consumer payments company; but rather, a “leading global hyperscaler of payments.” This dramatically broadens the company’s focus beyond just consumer payments, into commercial “business to business” (B2B) money movement, agentic/AI commerce, and Value-Added Services (VAS) across risk, fraud, consulting, and data analytics that now comprise 30% of net revenue.

To help visualize this, imagine a seamless summer vacation. You travel abroad, seamlessly tap your card for a purchase, pay in a foreign currency, and entirely avoid the frustration of a cross-border fraud lockout. Everything about the experience is perfect and easy. Behind the scenes of that relaxing beach day, you are actually indirectly interacting with Visa’s Agentic AI and VAS. Visa’s VAS is run on an AI large transaction model for fraud and risk, which has recently shown a 5 times increase in fraud value capture. This invisible, AI-powered shield protects travelers and enables rapid, confident adoption. The next time you use your Visa card abroad, VAS is the quiet engine safeguarding that seamless experience.

Returning to our original thesis of new profit pool creation, Visa is also looking to the future of payments, positioning itself to handle payments executed by autonomous AI agents. For our clients who are business owners, imagine the efficiency of Business to Business (B2B) AI bots handling automated payment functions – initiating invoices, managing approvals, authenticating payments, optimally splitting purchases, and timing cash outflows. Visa is leveraging its global network, scalability, ubiquity in trust and acceptance, and robust security standards to become the trusted tollbooth for these microtransactions. As the total addressable market of agentic commerce expands, so will VAS, and therefore revenue to Visa in the coming years, a new high-margin profit pool. In fact, Visa believes that agentic commerce will be so big that it will be a paradigm unto itself, much the way the total addressable market for payments transformed with the shift from digital to mobile payments.

Ultimately, the backend technology that safeguards your seamless vacation relies on Visa leveraging its massive scale in AI capabilities. Greater scale drives greater ubiquity in trust and acceptance, which drives higher transaction volumes – the ultimate economic moat. In turn, more transaction volumes lead to more scale, which in turn leads to greater ubiquity and acceptance, a classic network effect.

We hope clients enjoy a truly seamless vacation this summer and we are wishing you well until our next installment.

Warmest regards,

Grace Wang | Senior Portfolio Manager 

Samuel Jang, CFA | Investment Associate

Leslie Mah | Associate Advisor

Katherine Yang | Associate

Steven Bos | Administrative Assistant

Heidi Xu | Administrative Assistant

Grace Wang Portfolio Management Practice of RBC Dominion Securities

Email: gracewangpractice@rbc.com

Phone: 604-257-2483

745 Thurlow Street, 20th Floor

Vancouver BC, V6E 0C5

gracewangpractice.com

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