Visa CEO Ryan McInerney told analysts on Tuesday, when announcing the firm's latest quarterly earnings, that Visa has not yet seen any market share erosion from the Federal Reserve's enforcement of
"We haven't seen any meaningful impact [from Regulation II]," McInerney said, though he acknowledged ongoing uncertainty about the rule's long-term impact and several other interchange-related issues.
"There is still macro uncertainty, but just like in fiscal year '23, I am confident that we can manage through it," McInerney said.
For example, the
"I think what's notable about our business model is we've proven that we can be resilient and have a strong business in regulated interchange markets, unregulated interchange markets and in markets that have higher regulated interchange and lower regulated interchange. … We feel good about our ability to compete," McInerney said.
Visa has also been working for years to diversify its revenue sources by expanding the range of services it offers for commercial payments and virtual cards, with recent growth in corporate travel-and-expense management and cross-border payments, all of which helped drive a 9% increase in global payments volume during the quarter, McInerney said.
Visa's net revenue for its fiscal fourth quarter was $8.6 billion, up 11% over the same period last year, while net income for the same period rose 19%, reaching $4.7 billion. For the full fiscal year, Visa's net revenue rose 11% to $32.7 billion and net income for the year rose 15% to $17.3 billion.
Visa Direct, the card network's instant-payments service, drove a 19% increase in transaction volume during the quarter that ended Sept. 30, propelled by expanding use cases for the card network's global instant-payment service used for
Revenue from Visa's Value Added Services also grew 19% during the quarter, which includes data, security, identity, acquirer and seller solutions, the company said.
Contactless payments adoption continues to fuel Visa's momentum, with nearly 150 new transit systems worldwide adopting contactless technology over the last year, Visa said.
Visa also continues to win new card business in traditional and new verticals and regions, with international payments volume growth up 11% in the recent quarter, driven by expansion in Latin America, Europe, the Middle East and Africa.
Costco agreed to have Visa manage all of its U.S. and Canadian e-commerce transactions through Visa's card-acceptance arm CyberSource, and Visa also won a contract for IBM's commercial card business spanning travel, entertainment and purchasing in 60 countries, with Citigroup as the issuer, McInerney said.
McInerney added that Visa will be the card network for a co-branded credit card Universal Studios theme park is launching, to be issued by First National Bank of Omaha.
Travel also continued to drive strong payment volume for Visa in nearly all geographies during the recent quarter, said Visa chief financial officer Christopher Suh. Outbound U.S. travel soared to 150% of pre-pandemic levels, and for the first time since the pandemic, inbound travel to the U.S. surpassed 2019 levels, he said. Visa's international cross-border travel grew 26% during the recent quarter compared to the same period a year earlier, with strong volume coming from Latin America, Europe and the Mideast, Africa and Asia regions. China remains the outlier, with its cross-border travel improving, but still below 2019 levels, according to Suh.
Looking ahead, Suh said Visa expects the coming year to be "as close to a normal year as we've had in a while," but net revenue growth will likely be slower during the first half, due to high volatility in currency markets and heavier expenses from Visa prepping for its role as a sponsor of the Paris 2024 Olympics.
Visa's stock briefly dipped after announcing its earnings, then recovered in after-hours trading, reflecting investor disappointment about a weaker outlook for the first half of 2024.
"We think earnings per share growth could be quite resilient even in a slowing macro environment, as Visa has demonstrated historically that it can pull back on operating expenses when top-line growth slows," analysts at Autonomous said in a Tuesday note to investors.
