Visa says it's spending more to please banks after JPMorgan deal

Visa Inc. had to shell out more money to entice banks to issue their cards on the company’s network.

The firm set aside US$1.69 billion in incentives for banks during its fiscal fourth quarter, a 13 per cent increase from a year ago, that topped the US$1.51 billion average of analyst estimates compiled by Bloomberg.

Key Insights

• The world’s largest payments network -- which earlier this year inked a 10-year deal with JPMorgan Chase & Co. for the lender’s cards -- had warned that it will spend more pursuing such agreements.
• The company offered fresh guidance for its fiscal year that began on Oct. 1. Investors can expect client incentives to be 22.5 per cent to 23.5 per cent of gross revenues while net revenue may grow by a percentage in the low double digits.

• Visa has seen a slowdown in cross-border spending this year as trade tensions and a stronger U.S. dollar hindered foreign consumers’ spending in the U.S. That showed signs of continuing: Overseas spending on the firm’s network climbed by 7 per cent, missing the 7.5 per cent average of analyst estimates.

Market Reaction

• The stock had climbed 34 per cent this year through the close of trading on Thursday, compared with the 32 per cent advance of the 68-company S&P 500 Information Technology Index.

Read More:

• Visa said spending on the firm’s cards climbed 9 per cent to US$2.27 trillion, missing the US$2.28 trillion average of analyst estimates compiled by Bloomberg.