Both Credit And Debit Rise for Visa, Along with Acquirer Fees

(April 29, 2010) Visa Inc.’s U.S. debit card purchase volumes again put on a strong performance in the quarter ending March 31 and the battered credit card sector continued a revival first seen in late 2009. Merchant acquirers, however, are paying more to process Visa transactions, and they can expect another price increase this summer.

The No. 1 payment card network reported late Wednesday that net income rose 33% to $713 million in its second fiscal 2010 quarter from $536 million a year earlier. Operating revenues increased 18.3% to $1.95 billion from $1.65 billion. The VisaNet network processed 10.6 billion transactions in the second quarter from all of Visa’s card brands, up 13.8% from 9.36 billion in the year-earlier period.

Visa gets revenues from card issuers and acquirers through so-called service revenues, data-processing fees, charges for international transactions, and other sources. The charges that affect acquirers the most are transaction-based fees that generate the majority of Visa’s data-processing revenues, which rose 33.8% in the second quarter to $728 million from $544 million a year earlier.

San Francisco-based Visa instituted an acquirer price increase last year (Digital Transactions News, March 17, 2009). In a conference call with analysts, Visa chief financial officer Byron H. Pollitt Jr. attributed the data-processing revenue growth to VisaNet’s 14% transaction increase and “the continuing effect of previously enacted pricing actions,” according to the Seeking Alpha transcript service. (more)