Thursday , October 17, 2019

Visa Surpasses $2 Trillion in Payment Volume in Its Third Quarter

With economic conditions generally healthy in most of the world, Visa Inc. racked up $2.1 trillion in combined credit and debit payment volume in the quarter ended June 30, an 11.1% increase from $1.87 trillion a year earlier on a constant-currency basis. 

The United States, by far the largest of Visa’s six regions, posted a respectable 10.5% increase in payment volume—$928 billion versus $840 billion a year earlier. Of that, $493 billion was on credit cards, up 10.5%, and $435 billion was on debit cards, a 10.6% increase.

Visa is moving along in settlement discussions with merchants, according to CEO Kelly.

Part of the U.S. growth came from increasing adoption of Visa Direct, the company’s near real-time payment service for debit cards, chief executive Alfred F. Kelly Jr. noted on a Wednesday afternoon conference call with analysts to review Visa’s results for fiscal 2018’s third quarter. 

Visa Direct also is becoming available in other countries. “Volume has more than doubled in the past year,” Kelly said. 

Meanwhile, Kelly confirmed that settlement discussions are well along in the big credit card interchange court case known as MDL 1720, which is pending in U.S. District Court in Brooklyn, N.Y. Visa recently added $600 million to its litigation reserve that will fund its share of any settlement. Press reports say the defendants—Visa, Mastercard Inc., and some large banks—might settle the 13-year-old class action brought by card-accepting merchants for $6.5 billion.

The merchants are seeking monetary damages as well as so-called injunctive relief regarding card-acceptance rules. Visa has “reached an agreement in principle with the class seeking monetary damages,” Kelly said. He added that discussions with merchants seeking injunctive relief are “ongoing,” but gave no specific estimate on when a formal agreement might be reached.

Beyond the U.S., Europe was the focus of much of the discussion during the call. One topic was the June 1 event that Kelly termed a “partial disruption” in Visa’s network in some European countries. The disruption drew the ire of the press and some lawmakers in the United Kingdom. The glitch happened on the processing platform of Visa Europe, the bank-owned association that Visa Inc. bought in 2016, according to Kelly. 

“It was not an outage, and in fact approximately 95% of unique transactions attempted over the 10-hour period were completed successfully,” Kelly said. He added that the disruption “was completely unrelated” to the ongoing migration of European transactions to the Visa Inc. processing platform. “We remain on track to complete the technical migration by the end of the calendar year,” Kelly said.

Visa processed 31.7 billion transactions in the third quarter, up 11.5% from 28.5 billion in the year-ago quarter. Cross-border volume grew 10% on a constant-currency basis. 

Visa’s net income jumped 13.1% to $2.33 billion from $2.06 billion in fiscal 2017’s third quarter, on net operating revenues of $5.24 billion, up 14.8% from $4.57 billion.

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