April 20, 2017
By Jim Daly
Boosted by the addition of two big U.S. credit card programs and its June 2016 acquisition of Visa Europe, just about every operational metric that matters increased by 20% or more for Visa Inc. in the quarter ending March 31. The major exception was U.S. debit, which grew in only the low single digits, according to data Visa reported Thursday.
Visa’s revenues grew nearly 24% in the second quarter of fiscal 2017, and the company announced a $5 billion share buy-back plan.
Visa posted U.S. credit card purchase volume of $404 billion in the quarter, up 20.7% from $334 billion a year earlier. Credit payment transactions jumped 19.4% to 4.86 billion. Besides organic growth, the 2017 volume reflects charges on Citigroup Inc.’s new cobranded Visa card for Costco Wholesale Corp., a portfolio that belonged to American Express Co. until last June. Also new to Visa is the former Mastercard-branded USAA credit card program.
In contrast, Visa’s U.S. debit payment volume grew only 3.2% to $371 billion from $359 billion a year earlier. Debit payment transactions increased 1.5% to 9.7 billion. Excluding Visa's Interlink PIN-debit network, debit volume grew 7%.
Visa’s worldwide credit and debit payment volume hit $1.73 trillion, up 37.2% from $1.25 trillion on a constant-currency basis. Visa Europe accounted for $335 billion, or 19.4%, of that volume.
Transactions processed on the VisaNet network jumped 42.1% to 26.3 billion from 18.5 billion in fiscal 2016’s second quarter. Including Visa Europe in prior-year results, the growth was 12%. Cross-border volume grew 132%, and 11% when including Europe in the year-earlier results.
“In the face of geo-political uncertainty, Visa continues to execute well against our operating plan and strategic priorities, delivering sustained growth across nearly every part of our business,” Visa chief executive Alfred F. Kelly Jr. said in a statement. “Robust growth in payments volume, cross-border volume, and processed transactions drove better than expected results. Looking ahead, we are continuing our efforts across the globe to electronify commerce and digitize economies to the benefit of consumers and societies alike.”
Client incentives to induce financial institutions to issue Visa-branded cards and merchants to encourage volume on Visa cards totaled $1.03 billion in the second quarter, up 30.7% from $789 million a year earlier.
Visa reported operating revenues of $4.48 billion, up 23.5% from $3.63 billion in the year-earlier quarter. Net income fell 75% to $430 million from last year’s $1.71 billion mainly due to a one time, $1.5 billion income-tax charge related to the Visa Europe acquisition.
In a regulatory filing, Visa said the Ohio attorney general's office issued a civil investigative demand to Visa in January asking for documents related to “the acceptance of Visa debit cards, as well as cardholder verification methods and the routing of Visa debit transactions.” Visa said it is cooperating with the attorney general.
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