CHARLOTTE, NC (AP) — Visa Inc said on Wednesday that its fiscal fourth quarter profits dropped 29 per cent due to fewer dollars crossing on its namesake payment network while the world was in the grips of a pandemic-caused recession.
The San Francisco-based company posted a profit of USD2.14 billion, or 97 cents per share, down from a profit of USD3.03 billion, or USD1.34 a share, in the same period a year earlier.
Visa recognises revenue from the quarter before, so the payments activity that ended June 30 is reflected in the profits that the company reported on Wednesday. The April 1 to June 30 period was when the United States (US) and the rest of the world was being hard hit by the pandemic’s outbreak, so payments and transactions plunged sharply.
During the period, Visa had USD2.493 trillion in payments on its network, down 11.9 per cent from same period a year earlier. The number of transactions also plunged sharply, down 23.6 per cent from the quarter before.
Visa earns a fee off of every transaction that runs on its network, be it credit cards or debit cards. It was particularly impacted by a drop in gasoline sales, since debit cards are the most common form of payment method at gas stations.
Visa did see payments volume increase in the July 1 to September 30 period, as the US and the rest of the world started reopening, but those revenues will not be recognised until the end of the year. Travel expenses remain particularly depressed, the company said.
Mastercard, Visa’s biggest competitor, also reported a decline in profits and revenue due the COVID-19 pandemic. It said cross-border payments were down 36 per cent from a year earlier, mostly due to the pandemic bringing travel and other cross-border transactions to a standstill.
Like Visa, Mastercard said it saw modest improvements in payments in the last 90 days, as more governments re-open their economies and people tried to return to normal patterns