NEW YORK — Visa reported sluggish U.S. card spending in April and May as new regulations eat into its market share.

U.S. payments volume, which measures the dollar amount of transactions made with credit and debit cards, was down 3% in April and flat for the first four weeks of May compared with a year earlier, Visa said in a regulatory filing.

The sluggish performance was driven by declines in debit-card purchases, which have taken a hit in recent months from new regulations governing how card networks such as Visa and MasterCard (MA) handle debit transactions. The rules were expected to have a bigger effect on Visa, which has the dominant debit-card network in the U.S.

In response to the regulations, San Francisco-based Visa rolled out pricing changes earlier this year intended to entice merchants to continue routing their debit-card transactions over its network. Earlier this month, Visa disclosed that the U.S. Department of Justice is probing the strategy for potential violations of anticompetition laws.

The April decline was driven by a 12% decline in U.S. debit-card spending volume; in May, debit-card spending volume declined 8%. However, credit-card spending was a bright spot, increasing 8% in April and 10% in May.

"The most resilient and encouraging part of our business has been the growth of credit, not just in the United States...but globally," Byron Pollitt, Visa's chief financial officer, said at an investor conference Wednesday.

Improvements in credit-card spending, which took a nose dive during the recession as many consumers tried to rein in debt, have been driven by "mass-affluent portfolios," Pollitt said, adding that banks are "beginning to emphasize credit as opposed to debit" for everyday spending.

Visa's cross-border volume, which measures transactions made with cards issued in one country at a merchant in another country, was up 13% worldwide in both April and May on a constant-dollar basis. The volume of transactions Visa processed was down 1% in April, but up 1% in May globally.

The fact that declines in debit spending, which Visa was expecting, slowed in May from April is "incrementally encouraging," said Jason Kupferberg, an analyst with Jefferies Group Inc. April appears to have been the "trough" for U.S. debit declines, Kupferberg added.

Visa's shares are a "safe haven" for investors given its "lack of European exposure," Darrin Peller, an analyst with Barclays, wrote in a research note Wednesday. Visa Europe is a separate bank-owned card association that pays licensing fees to Visa Inc.

"We believe this morning's update further demonstrates the strength in Visa's fundamental drivers," Peller wrote.

Visa and MasterCard don't lend or issue cards to consumers; rather, they operate payments networks that help process card transactions for consumers' banks and merchants' banks.

U.S. banks are expected to promote credit cards over debit cards in response to the same regulations affecting Visa's business. The new rules, known as the Durbin amendment, cut nearly in half the amount of fees that large banks such as Bank of America (BAC) and JPMorgan Chase (JPM) can charge merchants every time a consumer swipes a debit card. Visa and MasterCard set those fees, known as interchange fees, which are collected as revenue by the banks that issue their cards.

A separate provision, which took effect April 1, requires all banks to have at least two unaffiliated processing networks on their debit cards to give merchants a choice over which payment system to use.

In the past, a bank might have used Visa to process debit-card transactions authorized with a consumer's signature and Visa's Interlink debit network to authorize transactions made with a PIN. Such deals are no longer allowed, meaning that the same bank must either add a PIN debit network that isn't operated by Visa, such as MasterCard's Maestro network, to its cards or replace Interlink entirely with a different provider.

More than half of Visa's U.S. debit cards were under what are known as exclusive agreements prior to the regulation, Pollitt said.

Earlier this year, Visa rolled out a new pricing strategy — intended to protect its market share — that includes a fixed fee that must be paid to plug into Visa's network, variable fees on each transaction and incentive payments to merchants. The net result is intended to be a price decline for merchants, though Visa said earlier this month that the Justice Department issued a "civil investigative demand" for information about the new strategy.

"There was no way to respond to the new legislation without surrendering market share and with merchants now making the routing decision at the point of sale...it made all the sense in the world to re-adjust our approach to pricing since the retailer is going to be most sensitive...to the price," Pollitt said.

The company sends information to the Justice Department "every two weeks validating that our market share is, in fact, down," Pollitt said.

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