Visa Readies a Canadian Debit Debut As Volumes Show Signs of Life

The first Visa-branded debit cards in Canada will be out in 2010's first quarter, Visa Inc. chairman and chief executive Joseph W. Saunders reported late Tuesday. Saunders, reviewing Visa's financial report for fiscal 2009's fourth quarter, also told analysts that signs of recovery from recession are starting to appear in Visa's volume numbers, even though the U.S. credit card sector is still shrinking. The expected entry of the bank card networks, especially Visa, which dominates Canada's credit card market, into debit cards has had Canadian merchants in a fluster for more than a year (Digital Transactions News, Sept. 4, 2008). Merchants are happy with Canada's established Interac Association PIN-debit card, which costs them little to accept and is popular with consumers. But card-issuing banks want to offer more debit products under the Visa and MasterCard logos, in part because of the higher potential interchange. And Visa Canada released a study this month claiming Canadians want debit cards with more features. Thus, when an analyst asked Saunders what was going on in Canada, he said Visa was making progress and “we expect to gain traction and begin issuing cards.” He added that the build-up of merchant acceptance “will take some time, but I believe the die is cast ….” Saunders did not identify any issuers, and a Visa Canada spokesperson could not be reached for comment late Tuesday. The first cards will have the Interac logo as well as Visa's, Saunders said. Visa, which reports most operating statistics on a quarter-trailing basis, says purchase volume in Canada in the third fiscal 2009 quarter ended June 30 was $41 billion, off 1.8% from year-earlier levels on a constant U.S. dollar basis. Visa Canada's third-quarter payment transactions rose 3.4% to 396 million from 383 million in fiscal 2008's third quarter. In the U.S., Visa posted total credit and debit card payment volumes of $412 billion in the June-ending quarter, off 2.6% from $423 billion a year earlier. That slippage occurred despite payment transactions increasing 8% to 8.28 billion from 7.67 billion in fiscal 2008's third quarter. As has been the case in recent quarters, credit cards pulled the totals down. Credit card payment volume dropped 9.6% to $192 billion from $213 billion a year earlier. Credit payment transactions didn't fall as much, off 2.4% at 2.28 billion from 2.34 billion in 2008's third quarter. U.S. debit card payments volume increased 4.6% from $210 billion a year ago to $220 billion. Debit payment transactions surged 12.6% to a hair over 6 billion from 5.33 billion in fiscal 2008's third quarter. The figures include the signature-based Visa check card and the Interlink PIN-debit card. Visa said its VisaNet network processed 10.5 billion transactions in the fiscal fourth quarter, up 9% from 9.59 billion a year earlier. For the full fiscal year, processed transactions hit 39.9 billion, up 8% from 37 billion in fiscal 2008. “We're beginning to see some signs of improvement, both domestically and internationally,” Saunders said. Visa reported $514 million in net income for the fourth quarter compared with a $356 million loss a year earlier. Net income for fiscal 2009 was $2.35 billion, up 193% from $804 million in 2008.