Visa Says It’s Spending More to Please Banks After JPMorgan Deal
(Bloomberg) -- Visa Inc. had to shell out more money to entice banks to issue their cards on the company’s network.
- The firm set aside $1.69 billion in incentives for banks during its fiscal fourth quarter, a 13% increase from a year ago, that topped the $1.51 billion average of analyst estimates compiled by Bloomberg.
- The world’s largest payments network -- which earlier this year inked a 10-year deal with JPMorgan Chase & Co. for the lender’s cards -- had warned that it will spend more pursuing such agreements.
- The company offered fresh guidance for its fiscal year that began on Oct. 1. Investors can expect client incentives to be 22.5% to 23.5% of gross revenues while net revenue may grow by a percentage in the low double digits.
- Visa has seen a slowdown in cross-border spending this year as trade tensions and a stronger U.S. dollar hindered foreign consumers’ spending in the U.S. That showed signs of continuing: Overseas spending on the firm’s network climbed by 7%, missing the 7.5% average of analyst estimates.
- The stock had climbed 34% this year through the close of trading on Thursday, compared with the 32% advance of the 68-company S&P 500 Information Technology Index.
- Visa said spending on the firm’s cards climbed 9% to $2.27 trillion, missing the $2.28 trillion average of analyst estimates compiled by Bloomberg.
- To read the full statement announcing Visa’s fiscal fourth quarter results click here.
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