Debit Drives Visa Earnings Surge
SAN FRANCISCO – Visa reported a 24% increase in second quarter earnings yesterday, as its debit transactions continued to grow at double digit rates.
The first quarter net of $881 million was fueled by a 19% increase in worldwide debit transactions on Visa cards (13% in the U.S.), and a 17% increase in dollar value of debit transactions (also 13% in the U.S.).
The growth in debit helped Visa charge ahead to a 15% increase in revenues, to $2.2 billion for the quarter, representing an increase in the processing activity for the card giant.
The surge in Visa profits comes as the battle over debit fees merchants pay banks and credit unions to use Visa cards is coming to a head, with banks and credit unions lobbying to delay a Federal Reserve rule that would cap debit fees at lower rates.
Earlier this week both MasterCard and payments processor First Data Corp. reported they have profited substantially from the rapid rise in debit transactions too. The fees merchants pay on debit transactions are shared three ways, with the merchant acquiring bank, the processor, and the card-issuing credit union or bank.
For the first six months of the fiscal year Visa reported a 14% rise in revenues, to $4.5 billion, and a 20% increase in profits, to $1.8 billion.