Visa revenue growth slows more as tough economy sobers spending

By Mehnaz Yasmin

(Reuters) -Visa Inc’s revenue growth continued to wind back to pre-pandemic levels in the first quarter as the post-lockdown travel craze ebbed and consumer spending slowed in a tough economy.

The world’s largest payments processor still surpassed Wall Street targets for profit, sending its shares up 1.4% to $227.82 in after-hours trading on Thursday.

Cross-border volumes – a key measure that tracks spending on cards beyond the country of issue – jumped 22% year-over-year on a constant dollar basis as a stronger greenback boosted out-of-U.S. travel by softening the hit from inflation and rising interest rates.

Total payment volumes rose 7%.

The growth was, however, far lower than a 40% surge in cross-border volumes in the first quarter of 2021 and a 20% jump in payments volumes.

“Year-over-year growth rates are going to moderate as you get past the big (pandemic) recovery,” Visa’s chief financial officer, Vasant Prabhu, told Reuters.

Visa’s revenue recorded its slowest pace of growth in seven quarters, gaining 12% to $7.9 billion.

The firm’s exit from Russia will impact reported payments volume growth rates in the second quarter, Prabhu said on a post-earnings call.

Earlier in the day, rival Mastercard Inc forecast current-quarter revenue growth below expectations as pent-up demand for travel was seen slowing going forward.

“Growth in the travel sector may be harder to come by in 2023 as some of the pent-up demand that stacked up during the pandemic and was unleashed in 2022 is fading,” said Ted Rossman, senior industry analyst at Bankrate.com.

Visa reported a profit of $2.18 a share, comfortably above the $2.01 estimated by analysts, according to Refinitiv.

(Reporting by Mehnaz Yasmin in Bengaluru; Editing by Devika Syamnath)