Visa results provide insights before the holidays
With reporting season in full swing, one might wonder what the payment networks figuratively and literally have on the cards.
Visa will be the first and will publish its results after the market closes on Tuesday October 26th.
In terms of the headlines, Wall Street sees revenue increasing about 27% year over year to $ 6.5 billion. Profits are expected to increase relatively accelerated by 37% to $ 1.54.
While the general narrative is and will be with banks, and likely the card / payment network giants, that the consumer has been resilient, we could see some puts and takes in the data. After all, nothing is completely straight, and that includes spending.
To this end, as mentioned on these digital pages earlier this month, consumers have pulled back a little from the SMI (Spending Momentum Index), at least in terms of the rate of increase in spending, according to Visa’s latest report.
Continue reading: The spending momentum index is falling again, says Visa
The SMI was 108.5 in September, 1.1 points less than in the previous month. But with an SMI over 100, that’s a sign that consumers are still spending at a higher level than last year. The growth slowdown in discretionary buying was relatively more pronounced from month to month from August to September, declining 80 basis points to 105, while non-discretionary buying declined 50 basis points to 99.6.
Now growth is still growth, and indeed the slight loss of momentum may prove to be a big blunder and the US consumer is just taking a breather before vacation spending begins in earnest. On the other hand, another metric, consumer confidence, is also showing subdued growth, falling to 109.3 in September from 115.2 in August. Confidence – in the economy in the short term, job security, etc. – gives us the ability to pull the trigger, especially on larger purchases.
Double-digit volume growth?
We’ll likely see continued double-digit volume growth in the third quarter as the company continues to ease pandemic pressures. Visa said in its latest earnings report that payment volume rose 34% to $ 2.7 trillion (measured in constant US dollars).
See more: Visa payments increase 34% with debit, the engine behind the digitization of cash
The company said the total loan payment volume was $ 1.2 trillion, up 31% in constant dollars. Debit payment volume was $ 1.4 trillion, 37% higher than last year.
Management said cash continues to displace and debit spending was around 140% of pre-pandemic levels.
“Debit is the engine of cash digitization,” said CEO Al Kelly in July.
The cross-border volume, excluding the intra-European volume, increased by 53%. We may see comments on this metric indicating what is happening down the supply chain and how out of stock may (or may not) affect spending.