Visa said it will dole out annual raises for more-junior employees earlier as it seeks to help staffers battling once-in-a-generation levels of inflation.
The payments giant will award the pay increases to employees at the level of senior vice president and below during its fiscal fourth quarter, which ends Sept. 30, Chief Financial Officer Vasant Prabhu told analysts Tuesday on a conference call. The move will cause personnel costs to climb and will likely add 3 percentage points of growth to operating expenses during the quarter, he said.
“We tried to do things that helped us address concerns people have about inflation,” Prabhu said in an interview. Annual raises will be “a little bit higher” than they were historically to account for inflation levels that reached a 40-year high in June.
Prabhu’s comments came as Visa reported payments volume that climbed to $2.93 trillion in the fiscal third quarter ending June 30. While that was below the $2.97 trillion average of analyst estimates compiled by Bloomberg, results were helped by a bigger-than-expected increase in overseas spending on the firm’s cards.
Cross-border travel volume surpassed 2019 levels for the first time since the pandemic began in early 2020, a key metric for investors since those transactions are especially lucrative for Visa. In all, overseas spending climbed 28%, topping the 27% average of analyst estimates.
“We continue to see a strong recovery in consumer and commercial travel,” Chief Executive Officer Al Kelly said on the call. “In cross-border, of course, the recovery has continued to strengthen.”
For now, Visa’s revenue — most of which comes from a slice of the fees merchants pay banks each time one of the firm’s cards is used at checkout — is benefiting as U.S. consumers continue to spend on travel, goods and services. Still, investors have grown wary that a slowdown is on the horizon: Walmart slid as much as 9% on Tuesday after warning that it expects U.S. shoppers to increasingly shy away from purchasing big-ticket items and to focus on less-profitable groceries.
Visa’s net revenues jumped 19% to $7.3 billion, topping the $7.09 billion analysts were expecting, even after the payments giant set aside $2.57 billion in incentives to lure banks and merchants to use its network. In all, profits soared 32% to $3.4 billion, or $1.60 a share.
Kelly said U.S. transaction growth is strong and the size of purchases remain about 15 percentage points above 2019 levels as they have for much of the pandemic. He also said Visa may be immune to some of the worst of inflation.
“Consumers just don’t buy homes or used cars with their Visa card,” he said. “Based on our numbers, we haven’t seen any evidence of consumers pulling back spending in our markets.”
