U.S. payments volume trends turned up slightly at Visa Inc., the company reported.
After shrinking at a year-over-year rate of 9.7% in the quarters that ended in March and June, the rate of contraction for credit cards fell to about 9% in the quarter that ended Sept. 30. In the first three weeks of October, the rate of contraction was 4%, the San Francisco company said in its fiscal fourth quarter report Tuesday.
In debit, volume grew about 7% in the quarter, from the year earlier, after the rate of growth had fallen to 4.7% in the quarters that ended in March and June. In the first three weeks of October, debit volume was up 11% from the same period a year earlier.
On a conference call Tuesday, Byron Pollitt, Visa's chief financial officer, said it is still "too early to call an inflection point." But chief executive Joseph Saunders said, "We are feeling more positive about trends for the first time in a long while."
After collapsing 10.5% in the second half of 2008, seasonally adjusted retail sales have edged up almost 1% during the first three quarters of this year, according to government data. As the calendar moves past the anniversary of the crash, year-over-year comparisons are getting progressively easier.
Visa swung to a profit of $514 million in the quarter, which ended Sept. 30, as revenue grew 9.9% from the year earlier, to $1.9 billion. Visa lost $356 million the year earlier after setting aside $1.1 billion for litigation, compared to $1 million in the most recent period.
The company introduced a net income forecast for fiscal 2011, predicting that earnings per share would continue to grow at a better than 20% rate.
Visa also projected that rebates it gives issuers and others to encourage the use of its brand and network would total 16% to 17% of gross revenues in its current fiscal year.
This compares to 15% to 16% in the previous two years. The rebates are driven in part by volume incentives, and Pollitt said the expected increase is based on anticipated transaction growth.
As it did its March 2008 initial public offering, Visa projected that rebates would amount to 16% to 18% of gross revenues, partly reflecting the cost of concessions required to secure longer-term client contracts.
