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Earnings Preview: Visa reports fiscal 1Q earnings

LOS ANGELES (AP) -- Visa Inc. is expected to report higher net income for the last three months of 2012, when consumers traditionally ramp up credit and debit card transactions as they tackle holiday-season shopping. The credit-card processor will report its fiscal first-quarter results after the markets close on Wednesday.

WHAT TO WATCH FOR: Whether Visa saw an increase in transactions during the quarter, and whether the company sees any signs of spending on the part of consumers waning so far this year.

Visa makes money from processing charge card transactions, so it benefits from heightened consumer spending.

The company has said that transaction volume growth was generally higher in October than in the previous quarter.

In a research note published Monday, Sterne Agee analysts Greg Smith and Jennifer Dugan said that major credit-card issuers and payment service PayPal reported an average annual increase in volume of 9 percent for the last three months of 2012.

That points to a likely increase in transactions for Visa.

Even so, investors will be listening for any signs of a slowdown in consumers' transactions since the holiday quarter.

Data reported last month by the U.S. government show retail sales, excluding autos, rose 0.3 percent in December after falling 0.1 percent in November.

But some economists are concerned that consumer spending could slow this year as a result of higher Social Security taxes. Most paychecks have been reduced because Congress and the White House allowed a two-year reduction in Social Security payroll taxes to lapse at the end of December.

WHY IT MATTERS: Visa, based in San Francisco, is the world's largest processor of debit and credit-card payments. Its results reflect the health of the consumer.

WHAT'S EXPECTED: Analysts, on average, expect net income of $1.79 per share on revenue of $2.82 billion, according to FactSet. The Sterne Agee analysts have forecast that Visa will report earnings of $1.80 per share.

LAST YEAR'S QUARTER: Visa's net income was $1.03 billion, or $1.49 per share. Revenue was $2.55 billion.