The credit card giant Visa, one of the world’s largest credit card payment processors just reported its earnings for the first fiscal quarter related to its financial conditions today, February 2, 2011.
So what does it say? The banks that deal with credit card distribution claim that purchases made using cards increased in the last three months of 2010. This is a much higher growth rate compared to the third quarter of the same year. This statement was made by Moshe Orenbuch who is a Credit Suisse analyst.
Debit cards also contributed to the growth and with this taken into consideration, the growth level of credit card and debit card usage was around 16% compared to the number of transactions that were processed by Visa located in San Francisco.
According to Jason Kupferberg, he believes the company will have an increase in payments and a growth in other products such as prepaid credit cards and mobile device use instead of standard plastic cards. He also expects an increase in online sales using the Visa card in new markets and those that are still emerging. The planning for the growth will revolve around government regulations which have changed and will change in the future. Government laws have and will continue to affect the credit card industry.
Credit card companies have suffered due to strict regulations that have emerged in the past year.
Some of the aspects that are more controlled now are related to overdraft fees caused by the use of debit cards. Because of the new rules, fees will be lowered. This means credit card processor revenues will take a substantial hit for the worse.
Credit card processors are now trying to merge or work with card networks in order to bring back some of the lost income. Banks may lean toward lowering the amount of usage of a debit card or get rid of the reward programs they have. Since Visa has distributed a high number of debit cards, this would mean a risk of loss on debit cards.
Because of the risk of loss, stocks for Visa fell almost 20 percent for 2010 and have been up and down at the beginning of 2011. The company and financial analysts do expect to make a profit on stocks. They claim the company will make approximately $1.20 per share. This is based on data from FactSet.