Visa Inc. says its business "remains solid" in the face of pending restrictions on debit card interchange fees.
The payment network said June 24 it plans to file with the Securities and Exchange Commission on July 6 an update on its financial outlook for fiscal 2011 in light of the restrictions.
Visa executives also will hold a conference call that day to discuss the impact on its business from rules set by the Federal Reserve, which was charged with establishing "reasonable and proportional" interchange fees for debit card transactions under the so-called Durbin amendment to the Dodd-Frank Act.
The Fed in December proposed capping the rate at 12 cents per transaction compared with a current average of 44 cents. Such a reduction could lower the revenue banks earn from interchange by as much as $13 billion annually, some observers say.
Intense efforts by banks and card networks such as Visa to delay the start of the caps and other debit card rules set to take effect July 21 have failed, though industry experts say the Fed could increase the initial cap when it releases its final rules on June 29.
Visa and other networks, such as MasterCard Worldwide, set interchange, which merchant banks pay card issuers, and pass the expense along to merchants as part of the discount rate. Analysts say a reduction in those fees could cause the banks to pressure Visa and MasterCard to lower membership and switch fees the banks pay to them, hurting the networks' revenue growth.
Visa and its competitors could also be affected by another provision in the regulation that prohibits exclusive network routing deals with banks. Under two different proposals, banks would have to add additional networks to their cards to give merchants more options for how they route transactions.
Some banks today are in exclusive relationships in which transactions their customers authorize with a signature or a PIN are routed over networks operated by a single company, such as Visa. Analysts say Visa, which owns the Interlink PIN-debit network, would be affected most by the provision because it has more exclusive deals with banks.
Visa said in a press release June 24 that it "will continue to be a growth company."
"Our global network, strong client relationships, product and service offerings, and global brand underpin our ongoing success," the company said. "As we have done throughout our history, we will continue to adapt our strategies to ensure our long-term success, including aggressive investments to grow our global presence and the introduction of innovative new products and services" for ecommerce and mobile payments.
