Visa Says Spending Improves as Virus Shutdowns Start to Ease
(Bloomberg) -- Visa Inc. is starting to benefit from the slow reopening of cities around the U.S., but executives still aren’t willing to predict what the next two months will bring.
Visa said spending on its network climbed by almost 10% in recent weeks after it struggled for months because consumers stayed home and businesses were shuttered to stem the spread of the coronavirus pandemic.
“Certainly, the future is going to have uncertainty associated with it,” Chief Executive Officer Al Kelly said Tuesday on a conference call with analysts. “But we continue to believe in our strategy.”
The recent improvement wasn’t enough for Visa to offer guidance for its full-year performance. The world’s largest payments network warned it’s still seeing a persistent drop in overseas spending as many countries keep their borders shut to tourists.
Visa fell as much as 2.3% in extended trading after the announcement. It closed at $196.74 earlier in New York, for a decline this year of 4.7%.
Spending on Visa debit cards increased by roughly 25% in the first three weeks of July, compared with a decline of 9% for credit cards. Many consumers received their stimulus payments through a Visa prepaid card or direct deposit into checking accounts, both of which spur spending on debit cards, Chief Financial Officer Vasant Prabhu said.
In-store transactions remained down by almost 10%, while card-not-present activity jumped about 20% in the week ended July 21. A widespread shift to e-commerce works in Visa’s favor because its share of such transactions is three times greater than at the physical point of sale, Kelly said.
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