Credit Card Spending Continues to Rise

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Visa, the world’s largest electronic payments company, reported better than expected fourth-quarter earnings as credit-card spending jumped.

The San Francisco-based company reported a 14 per cent increase in net income to $880m for the three months to September 30, or $1.27 a share, beating consensus forecasts of $1.25 a share.

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The company said it saw the seventh consecutive quarter of growth in its US credit-card business, driven by affluent cardholders. Its shares rose 1.5 per cent to $92.02 by the market close in New York.

“Visa continues to deliver strong results, with fourth-quarter and full-year performance reflecting a business that is both resilient and flexible enough to adapt and flourish in a changing business environment,” said Joseph Saunders, chairman and chief executive.

“We have been diligent in our efforts to grow our core business, while successfully unlocking new revenue opportunities through strategic investments, both in our core business and into innovations that will ensure our foundation for future growth remains strong,” he said.

Mr Saunders also announced a $1bn increase in its share repurchase programme.

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Visa and MasterCard have been grappling over regulations on debit-card transactions that prevent banks from setting exclusive deals with payment networks. As of October 1, the Federal Reserve capped debit fees at 21 cents per swipe, higher than the 12 cents proposed by regulators. It is thought that the rules may limit processors’ revenues, increasing the importance of the industry’s shift towards electronic and mobile payments.

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Total processed transactions, which represent transactions processed by VisaNet for the year to September, totalled 51bn, a 12 per cent increase year on year.

Visa, which generated about 59 per cent of revenues from the US in the 2010 fiscal year, aims to generate more than half its earnings from international markets by 2015.

The company affirmed its 2012 financial outlook, saying that it expects high single to low double-digit net revenue growth for the next year. Visa announced a 47 per cent increase in its quarterly dividend payment to 22 cents a share on October 19.

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