The slowdown in consumer spending is depressing the growth of debit purchase volume, once an earnings stronghold for Visa Inc. and MasterCard Inc.

The two companies, which are scheduled to report quarterly results this week, have already suffered from the continuing contraction in credit card purchase volume growth.

Fourth-quarter results of major issuers indicate that U.S. debit purchase volume has also started to slow dramatically and could start shrinking soon.

U.S. debit purchase volumes "could go negative," said Eric Grover, a former Visa executive and the principal of Intrepid Ventures, a consulting firm in Menlo Park, Calif. "I don't think that debit globally goes negative," he said, but "if it's 1% growth, 2% growth, and I'm [Visa CEO] Joe Saunders, that's a pretty bad number."

Sanjay Sakhrani, an analyst with KBW Inc.'s Keefe, Bruyette & Woods Inc., agreed.

"You're definitely going to see a pretty substantial slowdown" in debit purchase volume, he said last week. For Visa and MasterCard, such a slowdown "definitely results in lower top-line growth," he said, which, "all else equal, translates to lower earnings growth."

Debit card spending is traditionally considered less vulnerable to economic downturns than credit card spending, because consumers tend to put more of their nondiscretionary spending — things like groceries or fuel — on their debit cards.

But even nondiscretionary volume can be affected when consumers reduce overall spending.

Analysts said Visa and MasterCard can offset a slowdown in debit purchases by reducing expenses — and by raising prices for banks.

Bruce Harting, an analyst at Barclays PLC's investment bank, wrote in a note to clients last month that MasterCard planned to roll out such an increase at the end of April, and predicted Visa "will follow shortly thereafter."

In an interview Tuesday, Mr. Harting said that, "in exchange for better service levels at this point in the cycle," he expects MasterCard to raise pricing for its acquirers and issuers. "More of the price increases that we believe have happened have been on cross-border activity. … This will be one of the first ones I've seen on the domestic clearing management system."

Neither Visa nor MasterCard would discuss the matter for this article; both cited their quiet periods before their earnings reports. (Visa reports Wednesday after the market closes, and MasterCard is scheduled to report Thursday morning.)

Mr. Sakhrani said both companies have "flexibility on the expense side" to cut "more than what we've seen up to this point."

For Visa, which went public a year ago, "one would think they've got more wood to chop," he said. "We haven't really seen a whole lot of expense control at MasterCard, because they have been growing their personnel." (The company said in November that it had put a cap on hiring.)

Visa and MasterCard shares have been under pressure in recent weeks; Visa's shares have fallen about 7% this year, MasterCard's about 2%. Christopher Mammone of Deutsche Bank AG wrote in a note to investors last week that Visa issuers, including Bank of America Corp., Wells Fargo & Co., JPMorgan Chase & Co., and U.S. Bancorp, posted "an average purchase volume decline of 3%" in the fourth quarter, compared to a year earlier, for credit and debit cards combined.

Two major MasterCard issuers, Citigroup Inc. and Capital One Financial Corp, posted an average purchase volume decline of 13% in the fourth quarter from a year earlier, he wrote.

"While the drop-off in credit card purchases explains most of this decrease, debit volumes have also decelerated more materially than we or the market would have expected," Mr. Mammone wrote.

Philip J. Philliou, a former Amex and MasterCard executive and a partner at the payment consulting firm Philliou Selwanes Partners LLC, said Visa and MasterCard are "not immune to lower consumer spending levels."

After substantial "increases in debit transaction volumes" in previous quarters, "it is shocking to see such a dramatic slowdown," Mr. Philliou said.

But he joined other analysts in reiterating that the companies are well positioned for the long term, as "the global movement away from cash and checks toward electronic forms of payment will continue."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.