U.S. Bancorp may reduce or eliminate debit card reward programs and offset actions in its acquiring business in response to financial reforms that likely will reduce debit card interchange revenues, Andrew Cecere, vice chairman and chief financial officer, told analysts July 21 during a conference call to discuss second-quarter earnings.
The company previously indicated “total debit interchange revenue in 2009 was approximately $500 million on about $37 billion of total sales volume,” Cecere explained. Under the financial reform law President Obama signed into law today, the Federal Reserve Board will evaluate and set most debit card interchange rates next year.
U.S. Bancorp reported $266 million in credit and debit card revenue for the second quarter ended June 30, up 2.7% from $259 million during the same period last year and up 3.1% from $258 million in the previous quarter.
The Minneapolis-based issuer’s net credit card charge-off rate was 7.79%, up 10 basis points from 6.89% a year ago.
Revenue from corporate-payments products increased 6%, to $178 million from $168 million. Merchant-processing services rose 15.1%, to $320 million from $278 million, and revenue from ATM-processing services totaled $108 million, up 3.8% from $104 million.
As a company, U.S. Bancorp reported $766 million in net income for the quarter, up 62.6% from $471 million during the same period last year. Net revenue totaled $4.5 billion, up 7.1% from $4.2 billion.
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