Just when it looked like the long battle over payment fees between the U.S. card networks and merchants was nearing a conclusion, a recent court decision has sent the litigants back to the drawing board.
“We strongly disagreed with the decision” to reject the settlement, said Ryan McInerney, Visa’s CEO, during Tuesday’s earnings call, adding that the judgment did not factor in the complexity of payment transactions. “The decision failed to take into consideration a number of things.”
For the quarter ending June 30, Visa reported earnings per share of $2.42, up 20% from about $2 the prior year. That was slightly better than the analyst forecast of $2.41 per share for the quarter, according to
McInerney was questioned about the interchange battle between Visa, Mastercard and merchant plaintiffs. Visa and Mastercard have been fighting with merchants over payment fees for
But a federal judge in June notified
Analysts from Aristotle Atlantic said the lingering dispute could weigh on Visa’s financial performance.
“Uncertainty surrounding the possible outcomes of the litigation has created an overhang for Visa’s shares, even though interchange fees are charged by card-issuing financial institutions, not networks like Visa and Mastercard,” Aristotle analysts said in a research note.
McInerney did not address a potential future settlement on interchange during Tuesday’s earnings call.
‘”It’s too early to speculate on what a settlement could be,” McInerney said. “It could happen at any time including before a trial.”
Beyond the legal battle, Visa reported a relatively strong quarter, maintaining a recent series of steady earnings reports as investors look for signs that softer consumer spending is hurting financial performance of payment companies.
Visa’s total payments volume was $3.95 trillion, better than analysts’ estimates of $3.42 trillion, and up from $3.81 trillion the prior year. Operating expenses totaled $2.96 billion, down from $3.42 from $3.10 billion the prior year.
Visa may additionally get a boost from the upcoming Paris Olympics. Visa has long been an Olympics sponsor and uses the games as a way to showcase new payment technology. The card network is focusing on new contactless payment features, artificial intelligence and
Visa’s stock fell about 2.7% after the market closed Tuesday. In a prepared statement before the call, McInerney said key business drivers were “relatively stable.”
For the full fiscal year, which for Visa ends in September, analysts are projecting EPS of $9.94, up from $8.30 per share the previous year. Full-year revenue is expected to be $35 billion, up from $33 billion. In its earnings release, Visa projected full-year EPS growth in the “high end” of the low teens, which would be roughly in line with analysts’ projections.
For the prior quarter ending March 31, Visa reported revenue of $8.8 billion, up 10% over the prior year and net income of $4.7 billion, up 10% from the year earlier. While payment-focused technology companies have struggled during the period of inflation and small business duress that followed the pandemic, Visa,
Amex, which reported earnings July 18, said its higher-end consumer base is mostly shielded from higher prices, adding that it is investing for long-term growth in the small-business segment. Mastercard reports earnings July 31.