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Lessons from Visa’s earnings

By Janna Herron · Bankrate.com
Thursday, October 27, 2011
Posted: 3 pm ET

Poring through company earnings statements and reading transcripts of their investor calls isn't fun. But invariably, valuable nuggets are revealed.

On Wednesday, Visa announced its fiscal fourth-quarter financial results, which, by the way, left investors lukewarm because its profit beat expectations but its revenue did not. But that's not what you're reading for. So here are the three things that a regular Joe or Jane (like me) may like to know.

No. 1: Growth in credit card spending outpaced debit card spending growth for the first time in a long time.

Analysts were quick to blame the new debit card usage fees many banks announced. Right now, according to the tally kept by fellow Bankrate.com blogger Claes Bell, five banks have introduced or will roll out a monthly fee.

But Visa execs don't buy it. In fact, they don't expect the card payment landscape to shake up too much because of the fees. (Although the CEO says there is more interest in prepaid cards.) Right now, 64 percent of U.S. Visa card transactions are debit and 36 percent are credit.

"I don't believe that anything that's happening is going to substantially alter the macro debit volume in the United States," Joseph Saunders, the company's chairman and CEO said during the earnings call. "I don't think it's going to go away."

No. 2: Credit card growth since last year is actually because of the rich.

"This is a credit recovery that is primarily in the U.S. affluent driven," Byron Pollitt, Visa's chief financial officer and principal accounting officer, said on the call. "… and we haven't really seen a broadening of the credit base yet."

Sadly, the only ones of us who feel confident in spending more are those who make the most money. And that's not a recipe for a recovery. Visa's results also echo the fact that luxury retailers -- such as Nordstrom, Saks and Burberry -- all posted sizable increases in sales last month.

Credit card companies realize this, too. That's why we've seen a lot of new and enhanced credit cards that cater to well-heeled travelers.

No. 3: Get ready for another way to pay for online shopping by mobile phone or computer.

Visa is ready to roll out an online shopping payment method called "Click-to-buy." The program will be available on mobile phones and on computers. Basically, Visa shoppers supply a user name and password at checkout to click and purchase a product (or touch and buy). Visa says its "highest levels of security" will be maintained.

The introduction begins next month with pilot programs. After that, the company expects to release the program in the first three months of 2012. It plans to expand it to loyalty programs after that.

So that's all. MasterCard earnings and investor call are scheduled for next month, and I'll dish the neat nuggets I find then.

Which Visa tidbit interested you?

Follow me on Twitter: @JannaHerron

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