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Visa profit jumps, lower cross-border volume weighs on shares

 Visa profit jumps, lower cross-border volume weighs on shares

(Reuters) - Visa Inc reported higher expenses and lower spending by people using its cards abroad on Wednesday even as increased overall consumer spending drove quarterly profit 14 percent higher.

Shares of the company were trading lower after the bell as investors worried over a slide in cross-border volume growth, which measures the value of transactions made on a Visa card outside a customer's home country.

The company and its rival Mastercard had recently come under fire for charging high fees on tourist cards in the European Union.

The payment processors have now offered to cap the fees to stave off regulatory fines and end an EU antitrust investigation into their practices.

Excluding the impact of currency fluctuations, growth in cross-border volume shrank to 4 percent from 11 percent a year earlier.

Total transaction volumes in Europe fell to $536 billion in the reported quarter from $558 billion a year earlier.

The company also spent more on rewards and incentives such as airport lounge access, roadside assistance programs and travel insurance, which pushed up operating expenses by 7 percent.

However, overall revenue rose 8 percent to $5.49 billion, beating analysts' average estimate of $5.47 billion, largely helped by higher transaction volume in the United States, its largest market.

Growth in the United States for the world's biggest payment processor was spurred by higher wages, which led more consumers to swipe their credit- and debit-cards on the company's extensive network.

U.S. retail sales rose to their highest in one and half years in March, with almost all sectors including autos, electronics, appliances, and food and beverages registering growth.

The company said payments volume, which represents the dollar amount of purchases made with cards carrying Visa's branding, were strong across all regions on a constant-currency basis. In the United States, payments volume rose 7.9 percent.

Visa's net income rose to $2.98 billion, or $1.31 per Class A share, in the second quarter ended March 31, from $2.61 billion, or $1.11 per Class A share, a year earlier.

(Reporting By Aparajita Saxena in Bengaluru; Editing by Arun Koyyur)

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Updated Date: Apr 25, 2019 04:05:29 IST