Visa's Incentive Spending, International Business Boost Profit

(Bloomberg) -- Visa Inc. is staying out of the rewards war in cards.

The company spent less on client incentives than analysts expected during its fiscal fourth quarter, showing the world’s largest payment network is resisting pressure to ramp up efforts to get banks and retailers to route more spending its way.

Key Insights

• Credit-card lenders are upping rewards for consumers and payment networks are boosting incentives for merchants as the battle intensifies in the $90 billion swipe-fee industry. Visa’s 12 percent jump in client incentives to $1.5 billion fell short of the $1.65 billion average analyst estimate.
• President Donald Trump’s trade war is no match for profits at Visa. Cross-border volume, a measure of spending abroad, climbed 10 percent in the period. The San Francisco-based company cited its acquisition of Visa Europe two years ago as well as a shift to commercial client contracts.
• Total spending on Visa’s network climbed 4.5 percent to $2.09 trillion. That missed the $2.15 trillion average of three analyst estimates compiled by Bloomberg.

Market Reaction

Visa’s stock rose 1.1 percent to $135.79 in extended trading. It had rallied 18 percent this year in regular trading before the report, compared with the 6.6 percent gain of the 66-company S&P 500 Information Technology Index.

Know More

• Profit in the quarter ended Sept. 30 was $2.8 billion, or $1.23 a share, beating the $1.20 average of 33 analyst estimates compiled by Bloomberg.
• Visa estimated that revenue for its next fiscal year may rise by the low double digits.
• Read more about Visa’s fourth-quarter results here.

To contact the reporters on this story: Jenny Surane in New York at jsurane4@bloomberg.net;Claire Ballentine in New York at cballentine@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Dan Reichl

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