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Visa 3rd-qtr profit leaps 40 with greater card use
EILEEN AJ CONNELLY
(The Associated Press)



03:15:23AM (DST) Thursday,July 28,2011.

NEW YORK (AP) — Visa Inc. will offer a new menu of incentives to retailers and their banks as part of its effort to offset the impact of new regulations on debit card use.

The San Francisco-based payments processor said Wednesday that it will use a series of strategies like reducing certain fees charged to handle debit purchases, and fixing other fees that are now variable, to make its network more appealing to merchants.

Under the new regulations, stores will have the option of choosing which network handles transactions, whereas in the past that was mainly determined by contracts. Giving retailers a choice in routing could mean a big hit to Visa's revenue. The strategies are designed to encourage merchants to choose Visa to process their sales.

"We expect this will help us win routing decisions and maintain debit in the new environment," said CEO Joseph Saunders during a conference call to discuss the company's fiscal third-quarter results. "With these actions, we are resetting our baseline economics for debit in the United States and positioning Visa to grow from here."

Visa, which holds a significant lead in debit card market share over rival MasterCard Inc., has said the new rules will hurt a stream that currently accounts for about 20 percent of the company's revenue. The regulations also include a cap on so-called interchange fees that is expected to average about 24 cents per transaction, down from an average of 44 cents now, starting Oct. 1.

The company accordingly forecasts slower growth in revenue and earnings per share for its next fiscal year, which starts the same day.

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