Visa boosted by increase in card spending

CREDIT and debit card network Visa last night announced strong income growth as increasing numbers of people across the globe pay for goods using plastic.

Adjusted net income rose 10 per cent to $1.1bn (£700m) for the third quarter, ahead of Wall Street expectations. Shares in the firm were up 1.5 per cent in after-hours trading.

But although the adjusted earnings pleased investors, the company posted a net loss of $1.8bn after it set aside $4.1bn to cover the costs of a class-action case which has plagued its US operation.

At the start of the month Visa, along with rival Mastercard and several banks, agreed to a settlement with US retailers in a lawsuit over the fixing of debit and credit card fees.

“We are pleased that we were able to come to a resolution in the merchant litigation which was acceptable to most parties while ensuring the long-term health of the US payments industry,” chief executive Joseph Saunders said in a statement yesterday.

But reports suggest that some retailers are threatening to turn down the settlement, posing the risk that Visa could be hit with further costs.

Meanwhile the total value of payments handled by Visa in the three months to the end of June rose six per cent to $979bn, a sign of slowing consumer spending. Payment volumes have made double-digit gains for the last nine quarters.