Visa Inc., the world's largest payments network, posted fiscal third-quarter profit that beat analysts' estimates as customer card spending accelerated. The company said it will buy back as much as $5 billion of its shares.
Net income for the period ended June 30 dropped 76 percent to $412 million, or 17 cents a share, from $1.7 billion, or 69 cents, a year earlier, the San Francisco-based company said Thursday in a statement. Profit excluding one-time items, including costs tied to its purchase of Visa Europe, was 69 cents a share, beating the 67-cent average estimate of 33 analysts surveyed by Bloomberg.
"We are delighted to have closed our purchase of Visa Europe and remain confident that operating as a unified global business will quickly bring meaningful value to our clients and the economies in Europe," Chief Executive Officer Charlie Scharf, 51, said in the statement.
Visa has been pursuing co-brand deals with merchants as it seeks to increase fees and accelerate customer spending. The company replaced American Express Co. as the exclusive card network accepted by Costco Wholesale Corp. at its U.S. stores in June, a deal that gave Visa and Citigroup Inc. 11 million new cardholders.
Also on Thursday, Visa reached a deal with PayPal Holdings Inc. over fees and data-sharing, according to a separate statement. Under the agreement, PayPal said it won't encourage Visa cardholders to link their PayPal accounts with a bank account -- a practice known as steering. Visa executives had complained it allowed PayPal to process those payments via the cheaper, bank-owned automated clearing house network, cutting Visa out of transactions.
PayPal also said it will provide better data about its transactions to banks that issue the cards, while Visa agreed to offer PayPal incentives on some purchases.
Visa completed its $18.2 billion purchase of Visa Europe Ltd. in the third-quarter, bringing the two firms together after eight years as separate companies. The deal is part of Scharf's strategy to increase the company's presence in the region and improve Visa's global digital offerings to better compete against smaller rival Mastercard Inc.
Visa shares fell 57 cents to close Thursday at $78.79.
Business on 07/22/2016