San Francisco’s Visa Inc. profits shrink as consumers lower spending amid pandemic

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San Francisco’s Visa Inc. profits shrink as consumers lower spending amid pandemic

As a direct hit to credit card processing giant Visa Inc.’s bottom line, the San Francisco, CA-based financial services company said on Tuesday that its second-quarter operational profits were plunged by 23 per cent compared to the same time year earlier, underscoring a histrionic slowdown in spending from consumers and businesses as pandemic uncertainty had forced card holders to keep a lid on their expenses.

In point of fact, since Visa Inc.’s business framework, which profits by slashing down a small percentage from every transaction made through its global-scale payment processing network, remained highly vulnerable to market fluctuation and consumer spending, a nearly three-month stall in business activities between March and May this year due to the pandemic outbreak had led to a sweeping decline in spending on gasolines, movie tickets, in-house dines and many other activities.

Pandemic pummels Visa Inc. profit in Q2, 2020, shares sour

Aside from that, at the quarterly earnings’ report for its fiscal third quarter that ends on June 30, the credit card processor had reported a profit of $2.37 billion, 23 per cent down from a figure of $3.1 billion a year earlier, while on a per-share basis, the payment processing company had earned $1.07 per share last quarter, suggesting a dour outlook on consumer spending.

Besides following the reveal of Visa Inc.’s sunken quarterly profit, NYSE-listed shares’ prices of the California-based credit card, debit card and prepaid card issuer had faltered as much as 1.81 per cent in post-market trading after wrapping up the day flatlined at $196.74 a share.

Notably, the credit card processing giant had also declined to provide a full-year profit forecast amid growing uncertainties regarding the pandemic adding that it had been “difficult to reasonably estimate” what the company’s fortune would be over the coming months as pandemic took hold.

Nonetheless, speaking with the reporters in a post-earnings’ conference call, the Visa Inc. Chief Al Kelly had been quoted saying that the firm had witnessed an uptick in spending at the later part of its fiscal third quarter that ends of June 30 as economies reopened.