Visa Sees ‘Beginning of the End’ of Pandemic Spending Woes
(Bloomberg) -- The third round of stimulus checks has been a boon for Visa Inc.
The network saw volume on its U.S. debit cards climb 31% to $806 billion as consumers shopped online and the U.S. government began sending direct payments to millions of Americans during the first three months of the year. Visa’s stock climbed in late trading.
“People are starting to use debit more often than they did before in terms of the point of sale, and in more categories than they did before and for smaller transactions than they did before,” Vasant Prabhu, Visa’s vice chairman and chief financial officer, said in an interview. “And as time goes on it becomes a habit.”
The better than expected results from the firm’s debit business helped boost overall spending on the firm’s cards to $2.4 trillion during the quarter, topping estimates.
Visa shares climbed 1.3% to $232.80 at 6:42 p.m. in late trading in New York. The stock has increased 5.1% this year, compared with the 9.7% advance of the 75-company S&P 500 Information Technology Index.
A pick-up in certain overseas travel has also helped Visa, which has otherwise been plagued by lower spending on its cards throughout the coronavirus pandemic as governments around the world advised consumers to stay inside and avoid leisure travel.
The firm saw spending by U.S. consumers in Mexico and countries in the Caribbean soar past pre-pandemic levels during the quarter, Prabhu said.
“Consumers do want to travel,” Prabhu said. “Remarkably, U.S.-to-Mexico, U.S.-to-Caribbean is not only back to where it was, it’s getting the benefit of the fact that it is one of the only places you can travel right now.”
Overall revenue at the firm dropped 2% to $5.7 billion, a smaller decline than the 5.1% decline analysts in a Bloomberg survey were predicting.
Visa Chief Executive Officer Al Kelly said the firm saw a return to positive growth for credit-card transactions during the first three months of the year, as well as in-store spending.
“The Covid-19 pandemic certainly has turned the world upside down in the last year, but we believe we are starting to see the beginning of the end,” Kelly said in a statement announcing the results. “The recovery is well underway.”
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