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Visa exceeds expected profits, but the travel category remains slow to go back



Visa Inc. led fiscal revenue in the third quarter and revenue expectations on Tuesday, but the COVID-19 crisis continues to drive mixed spending trends with strong e-commerce growth but a stable weakness in travel-related transactions.

The amount of payments in Visa V,
-0.08%
has decreased by 10% recently, although cross-border payments or the value of transactions between buyers and traders from different countries have fallen by 37%. Visa said that the border volume has decreased by 47%, excluding transactions between European countries, where international travel is declining.

Shares fell 1

.6% in extracurricular trading.

In the US, Visa saw a “steady improvement” in personal spending during the June quarter, but the recovery stopped moving in July amid a more cautious approach to economic recovery due to the COVID-19 surge. Chief Financial Officer Vasant Prabhu said the reimbursement of personal expenses, known as the amount of cards available, was quite similar in different states.

Wedbush analyst Moshe Katri told MarketWatch in an email that the July trends reflect “20+ states returning business recovery plans and benefits of incentive checks ending”, although he said the company’s overall e-commerce strengths helped overcome weaknesses in other areas. as travel expenses.

The company also saw that the lack of cards in the US, or the cost of online transactions, has increased by more than 25% weekly since the beginning of April, which is twice the growth rate before the outbreak of COVID-19. .

Don’t miss: Visa sees “massive” digital acceleration for the first time, millions of which are trying e-commerce

Some U.S. spending categories, including landscaping and grocery stores, have seen an overall increase above their pre-pandemic levels during each week since mid-April, Prabhu said, while others, including retail and health services, have seen declines between 10% and 50% in April, but now show positive growth compared to a year ago.

Entertainment, fuel, and restaurant spending are still declining, improving slightly as their 50 percent influx declined in April, but the U.S. travel category remains more than 50 percent.

Executives have sounded confident that while the pandemic is putting pressure on certain spending categories in the short term, it is also accelerating the adoption of payment habits that could help Visa in the long run. In the US, the number of Visa credits involved in e-commerce purchases increased by 12% in June compared to January, and trends were much more pronounced in countries such as Argentina and Romania, where online shopping was less visible before the crisis.

Read: Visa claims COVID-19 crisis could help change $ 100 billion in debit cards annually

Visa also added more than 80 million new contactless cards in the United States in the first six months of 2020, with CEO Al Kelly noting that a number of the company’s partner financial institutions have accelerated their plans for contactless issuance. The visa expects tap payments to gain momentum in the United States due to increased awareness of the spread of germs, and Kelly said that once people start returning to their offices, they can increasingly use contactless payment methods for food and beverages, as well as state, transit tariffs.

The company pushed for the growth of contactless acceptance in the United States even before the COVID-19 crisis hit, hoping that payment payments such as contactless credit cards and mobile wallets on smartphones could help convince people to use their cards for smaller transactions that they could usually processed in cash.

Visa’s net income for the quarter was $ 2.4 billion. US dollars, or 1.07 dollars. USD per share, down from $ 3.1 billion. US dollars, or 1.37 dollars. US per share, for the previous quarter. Adjusted earnings were $ 1.06 per share, while analysts surveyed by FactSet expected $ 1.03 per share. The company’s revenue fell to $ 4.84 billion. Of the $ 5.84 billion, while the FactSet consensus demanded $ 4.82 billion.

The company did not provide a forecast for the entire financial year, given the uncertainty surrounding COVID-19.

Barclays analyst Ramsey El-Assal wrote that Visa’s profit was driven by greater cost savings as the company was able to cut advertising, marketing and advertising costs by 39% compared to a year earlier, “which is likely to help delay the Summer Olympics.”

Visa has started a busy week of payments from PayPal Holdings Inc. PYPL,
-0.96%
report after closing the call on Wednesday and MA Mastercard Inc. MA,
-0.81%
next on Thursday morning.

Visa shares have gained 15% over the past three months as the DJIA Dow Jones Industrial Average,
-0.77%
, of which Visa is a component, increased by about 9%.


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