Visa Posts 25% Profit Increase as U.S. Credit and Debit Volumes Climb

A tepid world economy didn’t stop Visa Inc. from posting an 8% increase in global transaction volume and a 25% jump in net income for the quarter ended June 30.

The leading payment card network on Thursday reported operating revenues of $3.52 billion for the third quarter of fiscal 2015, up 11.5% from $3.12 billion a year earlier. Net income hit $1.7 billion, up 24.8% from $1.36 billion in fiscal 2014’s third quarter.

“Most of our results were in line with our expectations going into the quarter, with a few highlights and exceptions,” chief financial officer Vasant Prabhu told analysts in a conference call. One of those exceptions was a one-time, $280 million tax benefit from the resolution of some tax-related issues.

Prabhu and Visa chief executive Charles W. Scharf said the economy was lackluster in many countries, and lower gas prices held down charge volumes. But total payment volume in the U.S. still managed to grow 8.7% to $683 billion from $628 billion a year earlier. Credit card payment volume again posted strong growth, up 11.6% to $339 billion on 4.07 billion transactions, an increase of 13.9%. Debit card payments volume totaled $344 billion, up 5.9%, on 9.24 billion transactions, up 6.8%.

The VisaNet network processed 18 billion transactions worldwide in the quarter, up 8.2% from 16.6 billion a year earlier.

Scharf said Visa’s newer digital services are gaining acceptance. The revamped Visa Checkout online-payments service has more than 270 financial-institution participants worldwide, 160,000-plus accepting merchants, and 5 million registered users, and is generating $50 billion in annual volume, according to Scharf. New merchants in the U.S. include Under Armour, Dunkin’ Donuts, Taco Bell, Williams Sonoma, and Eddie Bauer. “We continue to see great reactions from our merchant clients,” said Scharf.

Meanwhile, some 2,300 financial institutions are using Visa’s token service, dubbed the Visa Digital Enablement Program, in addition to Apple Inc.’s Apple Pay mobile-payment service in the U.S. and Google Inc.’s payment services worldwide, according to Scharf. The program will be expanded internationally later this year.

Visa Inc. is in talks to buy its European licensee, the London-based Visa Europe bank card association, with Scharf saying discussions might conclude by October. But he cautioned that reaching a deal, which could cost Visa Inc. at least $15 billion, is not guaranteed. Visa Europe has a so-called put option that, if exercised, would require Visa Inc. to buy the association.