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One drawback to managing a monthly magazine is that often the deadlines bump heads with when information becomes available. Fortunately, there's an issue the next month that enables us to catch up if needed.
When Visa Inc. in late April released its 2007 credit and debit card data, it was after we sent the May issue to press. As such, we had to estimate Visa's credit card sales and cash-advance data. Fortunately, our estimates were not far off from what Visa reported.
Because our readers expect Cards&Payments to provide the most accurate information possible, we're compelled to inform how incorporating Visa's actual data affected the outcome of our annual Bankcard Profitability Study, which published in the May issue.
So here goes:
Visa says holders of its U.S. issuers' consumer and commercial credit cards last year made purchases totaling $807 billion and initiated cash advances that totaled $136 billion. Plugging this data into our profitability formula, U.S. issuers of MasterCard and Visa credit cards last year posted a collective after-tax profit/return on assets of $18.25 billion, or 2.82% of average outstandings. That represents a 0.67% drop from the previous year's collective profit of $18.37 billion, or 2.97% of average receivables.
Adding the revised Visa data, bankcard issuers last year earned $23.98 billion in combined interchange revenue, $5.45 billion in cash-advance fees and $118.03 billion in total revenue. As for expenses, fraud totaled $1.05 billion, and total combined expenses were $89.95 billion.
No other revenue or expense data noted in the profitability chart posted with last month's cover story were affected. Moreover, the revised information had no impact on the overall trends noted in that story.
We apologize for any inconvenience this may have caused our readers. We just did not know when, or even if, Visa was going to release card data since it went public earlier this year.
Hopefully Visa and MasterCard will continue to provide pure credit card data to help issuers gauge how they compare against their peers.
Signature-debit issuers, however, are not so fortunate, as both brands no longer are providing pure signature-debit data to help Visa check card and debit MasterCard issuers gauge where they stand competitively. Seems both believe incorporating PIN-debit data–sometimes not even their own– is something investors instead would find more valuable.
