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The specter of regulation cast a pall of uncertainty over Visa Inc.’s latest financials, but the U.S. operating statistics the world’s largest payment network reported on Wednesday bespoke a transaction machine shifting in high, or least a higher, gear. U.S. debit card payments volume broke the trillion-dollar mark in fiscal 2010 and credit continued its recovery.
Visa reported combined U.S. credit and debit card payment volume of $473 billion for the fourth quarter ended Sept. 30, up 13.4% from $417 billion a year earlier. Payment transactions grew 16.1% to 9.76 billion from 8.40 billion in fiscal 2009’s fourth quarter.
As it has in recent years, debit again led Visa’s U.S. growth. Debit payment volume jumped 19.6% in the fourth quarter to $266 billion from $223 billion a year prior, and debit payment transactions increased 20% to 7.32 billion from 6.10 billion. The average debit ticket came in at $36.32, off not quite 1% from a year earlier.
The change in credit card purchase volumes, while far behind debit’s, remained positive for the third quarter in a row after shrinking for five quarters beginning in late 2008. The fourth quarter’s volume of $207 billion was up 6.4% from $195 billion in 2009’s final quarter. U.S. credit payment transactions jumped 9.1% to 2.43 billion from 2.23 billion a year earlier. With growth in transactions outstripping dollar-volume growth, the average credit card purchase slipped 2.7% to $85.15 from $87.48 in fiscal 2009’s last quarter.
For all of fiscal 2010, Visa reported U.S. payments volume of $1.81 trillion, up 11.8% from fiscal 2009’s $1.62 trillion. Credit payment volume grew 3.6% to $794 billion and debit payments increased 19.2% to $1.01 trillion. Debit transactions totaled 27.3 billion, up 18.9%, and credit transactions increased 2.5% to 9.27 billion.
The VisaNet network processed 45.4 billion transactions in fiscal 2010, up 13.9% from 39.9 billion in 2009. With transaction growth healthy, Visa reported net income of $774 million for the fourth quarter, up almost 51% from $514 million a year earlier. Visa posted a profit of $2.97 billion for the full year, an increase of 26% from $2.35 billion in fiscal 2009.
The glowing operational numbers didn’t stop analysts at Visa’s quarterly earnings call late Wednesday from asking the top brass about how impending debit card interchange controls and debit transaction-routing provisions of the Dodd-Frank financial-reform law might affect Visa. As a network, Visa sets interchange rates but doesn’t receive the resulting revenue. Instead, it gets fee revenue based on volume. The transaction-routing provision, meanwhile, threatens to divert volume from Visa’s Interlink PIN-based network to competing electronic funds transfer networks. The law could affect about 20% of Visa’s U.S. revenues, according to chief financial officer Byron H. Pollitt Jr.
Visa chairman and chief executive Joseph Saunders said Visa has had “open and constructive” meetings with staff of the Federal Reserve, which is developing a regulation regime that some banks predict could slash their debit interchange revenues by up to 80% after it takes effect next year (Digital Transactions News, Oct. 12). “I think we’ve done it in a way that they at least trust the data we are giving,” Saunders said. But he added that how the Fed digests that data “remains to be seen.”
