Visa’s Results Show Rising Consumer Demand

Dive Brief:

• Visa, the largest U.S. card network, disclosed U.S. payments volume statistics from March through May Tuesday that showed credit and debit card payment volume rose in May relative to last year, though not as much as in March and April. Specifically, the combined credit and debit card payment rates at the end of May were about 40% higher than in 2020, though they’d been 70% to 80% higher in late March and early April, according a company filing with the U.S. Securities and Exchange Commission Tuesday.
• The newly disclosed figures from San Francisco-based Visa also showed that in April U.S. credit payments volume growth began to outpace debit payments volume growth, with the trend continuing through the end of May. That was a reversal of debit payment volume rising at a higher rate than credit payment volumes in prior months as the deadly COVID-19 pandemic led to upheaval in the market and American consumers stayed home.
• The rise in payments volume lends credibility to the economists who predicted a surge in economic activity as the U.S. begins to contain the COVID-19 pandemic and to emerge from more than a year of restrictions aimed at preventing the spread of the virus. Supply chain hiccups are keeping a lid on some consumption, but they’re also driving prices higher for some goods, such as lumber.

Dive Insight:

The latest figures from Visa show a continuation of an upward trend in the company’s financial results for the quarter that ended in March. While profit and revenue slid, an 11% rise in the company’s payments volume led it to outperform analysts’ expectations for the quarter.

The overall May increase in Visa’s U.S. payment volumes wasn’t as much as in March and April, but the trend line at the end of May tilted upward again.

The results outperformed at least one financial firm’s expectations. A Baird Equity Research report issued Tuesday said: Visa “processed transactions are well above our modeled pace and US credit is nicely above, while US debit and cross-border are both about in line (with expectations). We think revenue could beat our (fiscal third-quarter) estimate by 2%+ on transaction growth cadence alone.”

Visa’s U.S. payments volume for March through May also tracked higher than in 2019, with May volume 32% higher. Visa offered the 2019 glimpse to compare the trends to the pre-COVID period. By the end of May this year, the combined U.S. credit and debit payments had jumped almost as much relative to 2019 as to 2020.

The rise in consumer payments on their credit and debit cards reflects a rise in purchasing and pricing that economists forecast as the country emerges from the deadliest days of the pandemic with pent-up demand for goods and a willingness to pay higher prices for some that are less available because of supply chain disruptions caused by the pandemic.