Debit Growth Is Still the Story As Visa And MasterCard File Results

The bank card networks have weighed in with their latest earnings reports, and operating statistics within them show debit continues to boom while the unprecedented, recession-induced credit contraction over the past year may be nearing its end. At Visa Inc., which reported late Wednesday, U.S. debit payment volume hit $238 billion in the first fiscal 2010 quarter ended Dec. 31, 2009, up 15.4% from $206 billion a year earlier. Debit payment transactions rose 17.1% to 6.38 billion from 5.45 billion in fiscal 2009's first quarter. At the same time, payment volume on U.S. Visa credit cards declined 1.1% to $201 billion from $203 billion, and credit payment transactions fell only 0.4% to 2.37 billion from 2.38 billion. At a conference call with analysts, Visa executives indicated that credit trends turned positive in December. (In a break from past practice, Visa is now reporting most operating statistics on a current rather than quarter-trailing basis, making comparisons with MasterCard and the other card networks easier.) For the 12 months ended Dec. 31, Visa posted U.S. debit payment charge volume of $883 billion, up 7.9% from $818 billion in calendar 2008. Respective debit payment transaction volumes were 23.9 billion, up 13.8% from 21 billion. On the credit side, payment volume fell 7.3% to $764 billion from $824 billion, and transactions declined 2.4% to 9.04 billion from 9.26 billion in calendar 2008. At MasterCard Inc., which reported early Thursday, U.S. payments showed similar patterns, although the No. 2 network's credit decline was steeper and its debit increase was not as great as Visa's. U.S. credit card purchase volume came in at $123 billion in the fourth quarter ended Dec. 31, off 7.8% from $133 billion a year earlier. Credit card purchase transactions fell 4.9% to 1.52 billion from 1.59 billion in 2008's fourth quarter. Debit card purchase volume rose 9.9% to $85 billion in the fourth quarter from $77 billion in 2008's last quarter while debit purchase transactions jumped 12.5% to 2.16 billion from 1.92 billion. For all of 2009, MasterCard reported U.S. credit card purchase volume of $477 billion, down 12.9% from $547 billion in 2008, on 5.91 billion transactions, down 5.8% from 6.27 billion. On the debit side, purchase volume rose 5.8% to $327 billion from 2008's $309 billion on 8.34 billion transactions, up 11.7% from 7.46 billion. With transaction growth rates outstripping dollar volume growth, average tickets declined for both Visa and MasterCard in 2009. At Visa, the averages fell by about 5% for both credit and debit in the calendar year to $84.54 and $36.93, respectively. MasterCard's average credit card purchase slipped 7.5% to $80.72 in 2009 and its average debit card sale fell 5.3% to $39.20. On an international basis, processed transactions on the VisaNet network in the quarter ending Dec. 31 hit 10.9 billion, up 11.5% from 9.80 billion a year earlier. MasterCard reported processing 5.86 billion transactions on its global network in the fourth quarter, up 6.7% from 5.50 billion a year earlier. Both networks reported hefty profit increases. Visa posted net income of $763 million in the first quarter of fiscal 2010, up 32.9% from $574 million in the year-earlier period. At MasterCard, net income rose 22.8% to $294 million from $239.4 million in 2008's fourth quarter. But MasterCard recently ramped up marketing expenses and customer rebates and incentives (Digital Transactions News, Jan. 14), which helped to pull its profits down below analysts' predictions. Consequently MasterCard's stock was down more than 10% in mid-day New York Stock Exchange trading from Wednesday's close. Visa's was up not quite 1%.