It doesn’t matter if consumers charge more on their cards overall for Visa to have strong earnings growth — it just takes more of them using credit and debit cards, or more transactions.
That’s because the world’s largest credit and debit card company relies on volume growth. Visa reported quarterly earnings that topped Wall Street estimates on Wednesday.
Payments’ volume growth, on a constant dollar basis, rose 11 percent, year-over-year, to $1.2 trillion during the quarter, while total processed transactions grew 9 percent, year-over-year, to about $17 billion.
For the period ended Sept. 30, Visa reported a profit of $1.07 billion, or $1.72 per Class A share, down from $1.19 billion a year earlier. Excluding items such as a $450 million pretax litigation provision, earnings were $2.18 a share (beating most estimates). Revenue increased 8.6 percent to $3.23 billion.
Visa and competitor MasterCard don’t issue cards, mostly banks do. They don’t set interest rates either. However, they collect fees from financial institutions for transactions that move through their dominant networks.
And with the growth in mobile payments, including the just-launched Apple Pay and the Walmart-promoted CurrentC app expected next year, consumers are poised to use their credit and debit cards more often, fueling further volume growth for Visa and MasterCard.