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Visa forecasts current-quarter profit below Street

Visa credit cards are displayed in Washington October 27, 2009. REUTERS/Jason Reed

By Amrutha Gayathri

(Reuters) - Visa Inc (V.N), the world's largest credit and debit card company, forecast profit below Wall Street expectations for the current quarter, hurt by continued pressure from lower crude prices and a strong dollar.

The company forecast third-quarter earnings per share 6-8 cents lower than analysts' expectations. Analysts on average are expecting the company to earn 65 cents per share, according to Thomson Reuters I/B/E/S.

Visa earns international transaction revenues through cross-border transactions and currency conversion, making it sensitive to foreign-exchange fluctuations.

The dollar (.DXY) has gained about 22 percent in the past 12 months against a basket of major currencies.

"We expect dollar strengthening and its associated impacts to continue for the balance of the year," Chief Financial Officer Vasant Prabhu said on an earnings call.

Lower oil prices also hurt the company, as customers get more gasoline for the buck, leading to a fall in the value of transactions.

Gas bills account for about 7-8 percent of Visa's U.S. transaction volume, according to analysts.

The company, which expects to return to double-digit revenue growth in the fourth quarter, said higher client incentives will also weigh on third-quarter results.

Shares of the company, a Dow Jones Industrial Average component, fell about 2 percent in extended trading.

The company's net income fell slightly to $1.55 billion for the second quarter ended March 31 from $1.60 billion a year earlier. On a per Class A share basis, earnings were flat at 63 cents.

Analysts on average had expected earnings of 62 cents per share on revenue of $3.34 billion.

Visa's cross-border volume growth, where the issuing country is different from the merchant country, was flat at 8 percent on a constant-dollar basis during the quarter.

The company's operating revenue rose 7.8 percent to $3.41 billion. International transaction revenue grew about 10 percent and accounted for about 28 percent of total revenue.

Speaking about China allowing foreign companies to clear domestic bank card transactions, Chief Executive Charlie Scharf said on a call, "We are not pursuing this for the short-term profit opportunity. This will pay off over the long term."

Visa and smaller rival MasterCard Inc (MA.N) stand to benefit from China's decision.

Warehouse club Costco Wholesale Corp (COST.O) has chosen Visa to run its co-branded credit card starting next year, replacing American Express Co (AXP.N).

Up to Thursday's close of $66.05, Visa's shares had gained about 30 percent in the past 12 months.

(Reporting by Amrutha Gayathri in Bengaluru; Editing by Robin Paxton, Sweta Singh and Sriraj Kalluvila)