Visa’s third-quarter earnings exceed expectations—again

Don't worry, folks, Visa's not going bankrupt anytime soon. The company, which manages the largest payment interchange network in the world, reported higher-than-expected earnings for its third fiscal quarter of 2010. This is the tenth straight quarter in which the company exceeded most Wall Street expectations, according to Bloomberg. The results were achieved partly because of increased use of debit and credit cards to pay for transactions.

Visa reported the results of its fiscal third quarter, which ended June 30, 2010, on July 28. The company reported $716 million in net income or earnings of 97 cents per share. Bloomberg said earnings of 93 cents per share was the Wall Street consensus, based on an estimate of 31 analysts.

Visa CEO Joseph Saunders said during the company's earnings conference that "it goes without saying, the United States debit market will undergo changes following implementation of the Wall Street Reform and Consumer Protection Act next year." He added, "It is too early to fully and accurately gauge the impact of the legislation."

Saunders is referring to new debit card regulations, which will place a cap on the fees charged to merchants for swiping customer cards. Visa and MasterCard set interchange fees on transactions made through their networks of cardholders and merchants and pass money from consumers' banks to merchants' banks. The impact of the legislation could be significant. Bank of America's Chief Financial Officer said the consumer protections could the amount of revenue it gets from transactions by up to $2.3 billion. The new laws also are intended to increase competition among debit networks, Bloomberg said.

Despite the potential speed bump to future corporate profits, Saunders asserted that Visa has always adapted its business to changes, including the transition from cash and checks to debit and credit cards.

For instance, because so many more people are using debit cards now, the impact of the new restrictions could be minimized on Visa's future earnings.

According to Bloomberg, Visa saw the number of processed Visa card transactions increase 14 percent compared to 2009. During the quarter, spending on Visa debit and credit cards rose to $803 billion. This and future growth could lessen the impact of federal regulation.

-Chris Meehan