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Visa Global Payment Volumes Impacted by Strong Dollar

Robert Karr

Visa Finishes Strong in 4Q15, Announces Visa Europe Acquisition

(Continued from Prior Part)

Global payment volumes

Visa (V) posted strong 4Q15 earnings backed by 12% growth in global payment volumes on a constant dollar basis. Nominal growth rate was 4%. International growth was impacted due to a strong dollar. International payments volume declined 2% compared to US payment volume growth of 9.7%.

US credit card growth was recorded at 10% compared to the same quarter last year. The strong US dollar has also negatively impacted cross-border volume growth.

US Debit expanded at a faster pace of 9% compared to the previous year. It was a rise of 1% compared to the previous quarter. The company’s payment volume has been negatively impacted by almost 2% due to the fall in gasoline prices. Savings from the fall in fuel prices are expected to be used in debt repayment and investments by consumers.

International payments

Visa saw an expansion in the international payments volume of 15% on a constant dollar basis mainly due to spending in the Middle East, Sub-Saharan Africa, and Mexico. The growth was modest compared to the March quarter. In October, US credit payments’ volume growth was 9%. The US Debit growth was at 10% compared to the previous year.

Cross-border volumes

Visa’s global cross-border volumes fell 5% compared to 8% growth in the prior three quarters. The company saw lower outbound commerce from Russia, Canada, and Brazil due to lower commodity prices. The strong dollar in the past few quarters has continued to depress inbound commerce into the United States. Overall, the company’s international revenues grew by 16% mainly due to pricing action and high currency volatility.

Visa achieved net profits of $6.3 billion in the last fiscal year ending September 30, 2015. Here’s how some of Visa’s peers in the payment processing industry fared with their net profits in the last fiscal year:

  • MasterCard (MA) – $3.6 billion
  • American Express (AXP) – $5.9 billion
  • Fidelity National Information Services (FIS) – $718 million

Together, these companies account for 2.3% of the Technology Select Sector SPDR ETF (XLK).

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