Visa Profit Slips But Beats Estimates; Reform Impact Unclear

VisaVisa Inc., the top credit and debit card payment network, posted its third-quarter profit at $716 million, or 97 cents a share, slipping 2 percent compared to a year ago but beating Wall Street estimates.
For its quarter ended June 30, the transactions processing giant exceeded analysts’ expectations of 93 cents per share.
Revenue jumped 23 percent to $2.03 billion from $1.65 billion a year ago. Total processed transactions totaled 11.7 billion, a 14 percent increase over the prior year.
But uncertainty dominates the outlook for Visa and smaller competitor MasterCard as first-ever regulator oversight of “interchange fees” looms under a provision of the recently-enacted Wall Street reform bill.
The Federal Reserve will now determine if those fees charged merchants for every debit card transactions – and whose costs are passed on to consumers – are “reasonable and proportional.” Banks will assume most of the regulatory scrutiny under the new law, but Visa and MasterCard is expected to feel an indirect impact.
“It goes without saying, the United States debit market will undergo changes following implementation of the Wall Street Reform and Consumer Protection Act next year,” said Joseph Saunders, Visa’s chairman and CEO. “While it is too early to fully and accurately gauge the impact of the legislation, Visa has demonstrated an ability to manage our business through periods of change.”
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