Visa, MasterCard profits rise with card use

Increased consumer spending and card use worldwide drove quarterly profits higher for Visa Inc and MasterCard Inc , according to new financial reports from the two payments companies.

Visa, which operates the biggest network for credit and debit cards, said that payments, adjusted for changes in currency exchange rates, grew 6 per cent in the three months through September from a year earlier and maintained the pace from the prior three months.

MasterCard, which has the second-biggest network, said its purchase volume grew 12 per cent in the latest three months from a year earlier.

Both companies said growth in their businesses outside of the United States led the increases in payment volumes. Visa's gains were led by growth in its Asia and Pacific operations and MasterCard, too, showed big gains in its Asia, Pacific, Middle East and Africa segments.

Both companies are trying to capture new business from increasing consumer preferences for cards and digital payments instead of cash. At the same time, they are also experimenting with mobile payments systems partly out of fear of losing business to upstart technology companies.

Visa said profit, in what was its fiscal fourth quarter, rose to $1.7 billion from $880 million a year earlier. But that increase included an unusual boost of $627 million from reversing previously recorded reserves against having to pay additional taxes.

Excluding the one-time gain, Visa earned $1.0 billion, or $1.54 per share, in the quarter. Analysts on average had expected the company to earn $1.50 per share, according to Thomson Reuters I/B/E/S.

Visa also announced on Wednesday that its directors have authorized a new $1.5 billion share repurchase program, bringing to $2.3 billion the amount executives may spend to buy back stock for the company. Buybacks have been an important source of growth in earnings per share for the company.

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