News

Visa introduces new network participation fee

August 1, 2011

According to Reuters, Visa Inc.'s Chief Executive Joseph Saunders, in a conference call with analysts, said the payment processor would introduce a network participation fee in the United States for all of its debit, credit and prepaid card services.

As part of the new policy, Visa will also lower the variable rate charged for transactions. Saunders did not disclose what the participation fee will be, but said it will be based on a merchant's size, and the merchants' number of locations.

Due to the new fee caps imposed by the Durbin Amendment, Saunders said 2012 will be a "low point" for debit card processing fees.

"We won't do as well as we have," he said.

The new program comes as Visa reported better-than-expected fiscal third quarter results, in which quarterly profits rose by 40 percent, and plans to buy back an additional $1 billion in shares over the next year.

Financial report

Visa reported fiscal third-quarter net income of $1 billion, or $1.43 per Class A common share, up from $716 million, or 97 cents per share, a year ago.

Excluding the one-time, noncash gain on its Visa Europe put option, Visa earned $883 million, or $1.26 per share.

Total operating revenue increased 14 percent to $2.3 billion from a year ago. Total payment volumes increased 17 percent to $941 billion from $802 billion.

The $422 billion in payments outside of the U.S. accounted for 44 percent of Visa's third quarter volume, up from 41 percent a year ago, when payments totaled $333 billion.

For more information on this topic, visit our transaction processing research center.