Thursday, February 3, 2011

Visa CEO, Saunders: Consumers "Thrown Under the Bus" with Durbin Amendment

Digital Transactions reports that Visa, Inc., CEO, Joseph W. Saunders believes that the Durbin Amendment is bad news...(for consumers)  A .12 cent interchange cap for debit will have "unintended consequences" including higher DDA fees, less rewards and probably higher credit card APR's.  
Asked by an analyst at Visa’s quarterly earnings call about whether delaying the Durbin Amendment’s provisions is possible, Visa chief executive Joseph W. Saunders noted that banking interests are lobbying Congress to reconsider the measure’s “unintended consequences.” Many banks have said they will raise demand-deposit account fees, cut debit card rewards programs, or take other steps to replace their lost debit revenues. “In our opinion, consumers have been thrown under the bus in this legislation,” Saunders said.


The Fed is proposing 12-cent interchange caps that would affect large debit card issuers, caps that could cut their debit revenues by 70% or more. The interchange provisions won’t affect Visa directly, though they could reduce debit card usage, which would mean fewer revenue-producing transactions flowing over Visa’s networks. And Dodd-Frank’s provisions that will give merchants more transaction-routing choices will break up the exclusive arrangements Visa has with many issuers in which their debit cards offer the Visa brand for signature debit and only the Visa-owned Interlink network for point-of-sale PIN debit.

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Visa Inc. Posts Strong Fiscal First Quarter 2011 Earnings Results

SAN FRANCISCOFeb. 2, 2011 /PRNewswire/ --


  • GAAP quarterly net income of $884 million or $1.23 per diluted class A common share
  • Company effectively repurchases approximately 15.3 million shares at a total cost of $1.1 billion
Visa Inc. (NYSE: V) today announced financial results for the Company's fiscal first quarter 2011 ended December 31, 2010. GAAP net income for the quarter was $884 million, or $1.23 per diluted class A common share. The weighted average number of diluted class A common shares outstanding was approximately 719 million.  
GAAP net operating revenue in the fiscal first quarter of 2011 was $2.2 billion, an increase of 14% over the prior year and driven by strong double-digit growth in service revenues, data processing revenues and international transaction revenues. Currency fluctuations contributed a positive 1% towards quarterly net operating revenues.
“Visa’s first quarter was a great start to our fiscal 2011 as evidenced by strong earnings fueled by continued growth in payments volume, cross border volume and processed transactions globally – our core business,” said Joseph Saunders, Chairman and Chief Executive Officer of Visa Inc.
“Visa is in a strong position to continue to accelerate the migration to electronic payments, particularly in economies where cash and check remain predominant. We are intensely focused on growing Visa’s revenue globally, working alongside our financial institution, merchant, technology and government partners. In parallel, we are aggressively investing to expand Visa payment services through new technology platforms, like mobile, eCommerce and money transfer, to extend the reach and value of our global network.”
Fiscal First Quarter 2011 Financial Highlights:
Payments volume growth, on a constant dollar basis, for the three months ended September 30, 2010, on which fiscal first quarter service revenue is recognized, was a positive 14% over the prior year at $829 billion.
Payments volume growth, on a constant dollar basis, for the three months ended December 31, 2010, was a positive 15% over the prior year at $897 billion.
Cross border volume growth, on a constant dollar basis, was a positive 15% for the three months ended December 31, 2010.
Total processed transactions, which represent transactions processed by VisaNet, for the three months ended December 31, 2010, were 13 billion, a positive 15% increase over the prior year.
For the fiscal first quarter 2011, service revenues were $1.0 billion, an increase of 22% versus the prior year, and are recognized based on payments volume in the prior quarter. All other revenue categories are recognized based on current quarter activity. Data processing revenues rose 10% over the prior year to $844 million. International transaction revenues, which are principally driven by cross border payments volume, grew 14% over the prior year to $630 million. Other revenues, which include the Visa Europe licensing fee, were $161 million, a 15% decrease over the prior year. Client incentives, which are a contra revenue item, were $405 million and represents 15% of gross revenues.
Total operating expenses on a GAAP basis were $872 million for the quarter, a 17% increase over the prior year.
Cash, cash equivalents, restricted cash, and available-for-sale investment securities were $6.5 billion at December 31, 2010.
Visa's GAAP effective tax rate was 36% for quarter ended December 31, 2010.
Notable Events:
During the three months ended December 31, 2010, the Company effectively repurchased approximately 15.3 million shares at an average price of $72.08 per share, for a total cost of $1.1 billion. Of the $1.1 billion$800 million of shares were effectively repurchased through the October funding of the litigation escrow account previously established under the Company's retrospective responsibility plan. On an as-converted basis, 11 million shares of class A common stock were effectively repurchased at $72.74per share. The balance of the repurchase, $306 million of class A common stock, was executed in the open market and totaled 4.3 million shares at an average price of $70.40 per share. These purchases were made under the previously announced $1.0 billion share repurchase plan, as authorized by the Company's board of directors. At December 31, 2010, the share repurchase plan had remaining authorized funds of $694 million.
As previously announced, on January 26, 2011, the Company's wholly-owned subsidiary, Visa International, sold its 10 percent stake in Visa Vale issuer CBSS to Banco do Brasil and Bradesco.  CBSS will continue to issue Visa Vale prepaid cards in Brazil and Visa expects no disruption to cardholder service as a result of this transaction. Visa's proceeds from the sale were $103 million. The sale is subject to regulatory approval by Brazil's Conselho Administrativo de Defesa Economica.
On January 27, 2011, the Company held its 2011 annual meeting of stockholders. Among other proposals, stockholders approved the immediate declassification of the Board of Directors, approved implementation of a majority vote standard in uncontested elections of directors (effective at the 2012 annual meeting), approved compensation of the Company's named executive officers as described in the Company's proxy statement (on an advisory basis) and selected an annual advisory vote on executive compensation (on an advisory basis).  
In addition, the Company announced that its Board of Directors had approved a class C share release program, in which all remaining 55 million class C shares will become eligible for sale on February 7, 2011. Class C shares sold in the public market upon release will automatically convert to class A common stock. The release of the class C shares will not increase the number of outstanding shares on an as-converted basis of the Company's common stock, and there will be no dilutive effect to the outstanding class A common stock share count on an as-converted basis. Also, the Board of Directors declared a quarterly dividend in the aggregate amount of $0.15 per share of class A common stock (determined in the case of class B and class C common stock on an as-converted basis) payable on March 1, 2011, to all holders of record of the Company's class A, class B and class C common stock as of February 11, 2011.
Financial Outlook:
Visa Inc. affirms its financial outlook for the following metrics through 2011:
  • Annual net revenue growth: 11% to 15% range;
  • Client incentives as a percent of gross revenues: 16% to 16.5% range;
  • Marketing expenses: Less than $900 million;  
  • Annual operating margin: About 60%;
  • GAAP tax rate: 36.5% to 37% range;
  • Annual diluted class A common stock earnings per share growth of greater than 20%;
  • Capital expenditures: Between $250-$275 million; and
  • Annual free cash flow in excess of $3 billion.


Fiscal First Quarter 2011 Earnings Results Conference Call Details:
Visa's executive management team will host a live audio webcast beginning at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) today to discuss the financial results and business highlights All interested parties are invited to listen to the live webcast at http://investor.visa.com. A replay of the webcast will be available on the Visa Investor Relations website for 30 days. Investor information, including supplemental financial information, is available on Visa Inc.'s Investor Relations website at http://investor.visa.com.
About Visa
Visa is a global payments technology company that connects consumers, businesses, financial institutions and governments in more than 200 countries and territories to fast, secure and reliable digital currency. Underpinning digital currency is one of the world's most advanced processing networks—VisaNet—that is capable of handling more than 20,000 transaction messages a second, with fraud protection for consumers and guaranteed payment for merchants. Visa is not a bank and does not issue cards, extend credit or set rates and fees for consumers. Visa's innovations, however, enable its financial institution customers to offer consumers more choices: pay now with debit, ahead of time with prepaid or later with credit products. For more information, visit www.corporate.visa.com.
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Shell Oil Retail Customers Hit with $12 Million in Duplicate Payment Card Charges, AT&T Outage Blamed, StorefrontBacktalk Reports

This is yet the latest case of a chain getting burned because the payment industry has no consistent way to deal with in-progress credit and debit charges when systems crash. Does store-and-forward need to be tweaked to be made more crash-proof?

WHIPPANY, N.J.Feb. 3, 2011 /PRNewswire/ -- On Saturday (Jan. 29), a telco outage at Shell Oil stations directly caused more than $12 million in duplicate charges for its retail customers, according to a report in today's edition of StorefrontBacktalk.  The full story can be read at http://storefrontbacktalk.com/securityfraud/12-million-in-duplicate-charges-from-shell-oil-telco-crash/.
"This is yet the latest case of a chain getting burned because the payment industry has no consistent way to deal with in-progress credit and debit charges when systems crash. Does store-and-forward need to be tweaked to be made more crash-proof?" the story said.
First Data circulated a confidential memo on Monday (Jan. 31) that said it was reversing some 401,120 transactions-totaling$12,135,608.19-of Shell's retail transactions from the weekend, the story said.
"The problem of large retailers charging customers multiple times for a single purchase is getting worse and part of the problem is that the payment industry has no clean, consistent and effective method for dealing with payments that are in progress when any kind of an outage hits, whether it's a power blackout, the telecom connection dying or a Web server crashing," saidStorefrontBacktalk Editor Evan Schuman. "We've seen this hit Starbucks-which double-charged more than a million transactions several months ago-Macy's, Best Buy and Hannaford and those are the only the largest ones that we know of. For every one we know of, there are far more that are kept quiet."
About StorefrontBacktalk
StorefrontBacktalk® is an editorial site that tracks retail technology, E-Commerce and Mobile issues for retail chain IT executives and those who need to understand retail trends. With more than 50,000 subscribers to its monthly newsletter -- in addition to visitors to its Web and various mobile sites --StorefrontBacktalk is a widely respected independent watcher of retail technology issues. It's been quoted in more than 100 media outlets, including BusinessWeek, Wall Street Journal, Reuters, CBSNews, CNN, FoxNews, Computerworld, Wired, The Los Angeles Times, ConsumerReports.org, CNET, U.S. News & World Report, Austin American-Statesman, USA Today, The Boston Globe and The American Banker. More background is available at http://www.storefrontbacktalk.com/who-is-storefrontbacktalk.
CONTACT: Evan Schuman, 973-993-8098, eschuman@storefrontbacktalk.com
SOURCE StorefrontBacktalk
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MoneyGram and Visa Extend Remittance Service to World’s Largest Remittances Corridor



U.S. consumers now have the option to send funds from MoneyGram agent locations directly to Visa account holders in Mexico, bringing the security and reliability of Visa digital currency to consumers on both sides of the border.

DALLAS & SAN FRANCISCO--(BUSINESS WIRE)--MoneyGram International (NYSE:MGI), a leading money transfer services company, and Visa Inc. (NYSE:V) announced today the launch of MoneyGram’s first cash-to-Visa account program for remittances from the United States to Mexico.
“This is an exciting development in our push to deliver solutions to help our customers send and receive money any way they want anywhere in the world. We are bringing added convenience and choice to our customers in the U.S., Mexico and around the world”
The program, which is built off of the success of MoneyGram’s cash-to-Visa service in Guatemala, allows consumers to visit any of the 35,000 MoneyGram locations in the U.S. to quickly and reliably send funds directly to eligible Visa accounts in Mexico. Recipients in Mexico receive the funds directly to their Visa credit, debit, or prepaid accounts, giving them convenient access to their funds through Visa’s global network of millions of merchant acceptance locations and ATMs.
“This program is an excellent example of the power of Visa’s network, and our ability to extend Visa’s processing capabilities to more people around the world,” said Jim McCarthy, Global Head of Product at Visa Inc. “It brings Visa one step closer to realizing our vision of extending the value of fast, secure, reliable and cost-effective payment tools to more consumers in more places. We believe that access to Visa digital currency can be a vital first step towards financial inclusion and a catalyst for economic growth.”
According to data from the World Bank, Mexico is the top remittance market in Latin America with an estimated $22.6 billion received in 2010, while claiming the third spot globally after India and China, respectively. As a remittance origination country, the U.S. is the largest in the world, with $48 billion being sent abroad in 2010. The U.S.-to-Mexico corridor is key for MoneyGram and the company has seen transaction volume in the corridor return to growth during the second half of last year.
“This is an exciting development in our push to deliver solutions to help our customers send and receive money any way they want anywhere in the world. We are bringing added convenience and choice to our customers in the U.S., Mexico and around the world,” said Pamela H. Patsley, MoneyGram International chairman and chief executive officer. “Our relationship with Visa and ability to leverage its extensive global network provides MoneyGram with access to Visa account holders around the world, and enables us to offer our valuable services to a new segment of customers.”
Transactions are initiated by MoneyGram agents and processed through Visa’s secure global network, VisaNet. Funds are deposited directly to a recipient’s eligible Visa debit, credit or prepaid account in Mexico, with minimal action required by the recipient. Once funds are received in the Visa account, recipients can access the money conveniently anywhere Visa is accepted or withdraw cash at any Visa ATM.
About Visa Inc.
Visa is a global payments technology company that connects consumers, businesses, financial institutions and governments in more than 200 countries and territories to fast, secure and reliable digital currency. Underpinning digital currency is one of the world’s most advanced processing networks — VisaNet — that is capable of handling more than 20,000 transactions a second, with fraud protection for consumers and guaranteed payment for merchants. Visa is not a bank, and does not issue cards, extend credit or set rates and fees for consumers. Visa’s innovations, however, enable its financial institution customers to offer consumers more choices: Pay now with debit, ahead of time with prepaid or later with credit products. For more information, visitwww.corporate.visa.com.
About MoneyGram International
MoneyGram International, a leading global money transfer company, enables consumers who are not fully served by traditional financial institutions to meet their financial needs. MoneyGram offers money transfer services worldwide and bill payment services in the United States through a global network of more than 207,000 agent locations — including retailers, international post offices and financial institutions — in more than 190 countries and territories around the world. To learn more about money transfer or bill payment at an agent location or online, please visitwww.moneygram.com or connect with us on Facebook.

Contacts

Visa Inc.
Elvira Swanson, 415-932-2564
globalmedia@visa.com
or
MoneyGram International
Lori O’Briant, 214-999-7509
LO’Briant@moneygram.com
Permalink: http://www.businesswire.com/news/home/20110202006889/en/MoneyGram-Visa-Extend-Remittance-Service-World%E2%80%99s-Largest
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MasterCard Incorporated Reports Fourth-Quarter and Full-Year 2010 Financial Results

 

  • Fourth-quarter net income of $415 million, or $3.16 per diluted share
  • Fourth-quarter net revenue increase of 10.7%, to $1.4 billion
  • Fourth-quarter gross dollar volume up 11.0% and purchase volume up 10.8%
  • Fourth-quarter operating income increase of 21.6%
PURCHASE, N.Y.--(BUSINESS WIRE)--MasterCard Incorporated (NYSE:MA) today announced financial results for the fourth quarter 2010. The company reported net income of $415 million, up 41.2%, and earnings per diluted share of $3.16, up 41.1%, in each case versus the year-ago period.
“Importantly, our strategic investments—including the acquisition of DataCash, our pending acquisition of Travelex's program management business and the Telef√≥nica joint venture—will continue to enhance our e-Commerce, prepaid, and mobile capabilities, positioning us at the forefront of global payments innovation.”
Net revenue for the fourth quarter of 2010 was $1.4 billion, a 10.7% increase versus the same period in 2009. On a constant currency basis, net revenue increased 13.0% compared to the same period in 2009. Net revenue growth was driven by the impact of the following:
  • An increase in cross-border volumes of 18.7%;
  • An 11.0% increase in gross dollar volume on a local currency basis, to $752 billion; and
  • Pricing changes of approximately 5 percentage points.
These factors were partially offset by an increase in rebates and incentives primarily due to new and renewed agreements and increased volumes.
Worldwide purchase volume during the quarter was up 10.8% on a local currency basis versus the fourth quarter of 2009, to $567 billion. The number of processed transactions increased 6.3% compared to the same period in 2009, to 6.2 billion. As of December 31, 2010, the company’s customers had issued 1.6 billion MasterCard and Maestro-branded cards.
“2010 proved to be a good year for MasterCard. Our business momentum was fueled by products and solutions that create efficiencies for cardholders, businesses and governments while driving future growth,” said Ajay Banga, MasterCard president and chief executive officer. “Importantly, our strategic investments—including the acquisition of DataCash, our pending acquisition of Travelex's program management business and the Telef√≥nica joint venture—will continue to enhance our e-Commerce, prepaid, and mobile capabilities, positioning us at the forefront of global payments innovation.”
Banga continued, “We are pleased to have ended the year with a strong fourth quarter. Our net revenue was up almost 11%, with underlying growth showing quarter-over-quarter improvement in all regions, and our operating income grew nearly 22%.”
Total operating expenses increased 4.6%, to $869 million, during the fourth quarter of 2010 compared to the same period in 2009. Excluding currency fluctuations, operating expenses were up 6.1%. The increase in total operating expenses was driven by:
  • A 6.8% increase in advertising and marketing to $305 million, primarily due to customer-specific initiatives and sponsorships. Advertising and marketing spend grew 8.2% on a constant currency basis.
  • A 2.3% increase in general and administrative expenses, primarily due to increased investments in support of strategic growth initiatives and the inclusion of DataCash’s expenses, partially offset by lower severance costs. General and administrative expenses grew 3.9% on a constant currency basis.
In the fourth quarter of 2010, operating income increased 21.6% over the year-ago period and the company delivered an operating margin of 39.6%.
MasterCard reported other income of $13 million in the fourth quarter of 2010 versus other expense of $10 million in the fourth quarter of 2009. The change was driven by a decrease in interest expense due to lower interest accretion related to a litigation settlement, lower interest on tax liabilities and an increase in investment income.
MasterCard's effective tax rate was 28.7% in the fourth quarter of 2010, versus a rate of 35.8% in the comparable period in 2009. The decrease was primarily due to a benefit recorded in connection with the repatriation of foreign earnings.
Full-Year 2010 Results
For the year ended December 31, 2010, MasterCard reported net income of $1.8 billion, or $14.05 per diluted share.
Net revenue for the full-year 2010 was $5.5 billion, an increase of 8.6% versus 2009. On a constant currency basis, net revenue increased 9.5%. Cross-border volume growth of 15.2% and gross dollar volume growth of 9.1%, contributed to the net revenue growth in the full-year period. In addition, a pricing contribution of approximately 5 percentage points was offset by an increase in rebates and incentives due to new and renewed customer agreements and increased volumes.
Total operating expenses decreased 1.8%, to $2.8 billion, for 2010 compared to 2009, primarily due to lower personnel costs, partially offset by increased expense related to strategic initiatives, marketing and travel and entertainment. Excluding currency fluctuations, total operating expenses decreased 1.1%.
Operating income increased 21.8% for 2010 versus 2009. The company’s operating margin was 49.7% for the full-year period.
Total other income was $5 million for the full-year 2010 versus total other expense of $42 million in 2009. This was driven by a decrease in interest expense primarily due to lower interest accretion related to previous litigation settlements.
MasterCard’s effective tax rate was 33.0% for the full-year 2010, versus a rate of 34.1% for the full-year 2009. The decrease was primarily due to benefits recorded in connection with the repatriation of foreign earnings.
Fourth-Quarter and Full-Year Financial Results Conference Call Details
At 9:00 a.m. ET today, the company will host a conference call to discuss its fourth-quarter and full-year financial results.
The dial-in information for this call is 866-314-5050 (within the U.S.) and 617-213-8051 (outside the U.S.) and the passcode is 18859734. A replay of the call will be available for one week following the meeting. The replay can be accessed by dialing 888-286-8010 (within the U.S.) and 617-801-6888 (outside the U.S.) and using passcode 31243954.
The live call and the replay, along with supporting materials, can also be accessed through the Investor Relations section of the company’s website at www.mastercard.com.
About MasterCard Incorporated
As a leading global payments company, MasterCard Incorporated prides itself on being at the heart of commerce, helping to make life easier and more efficient for everyone, everywhere. MasterCard serves as a franchisor, processor and advisor to the payments industry, and makes commerce happen by providing a critical economic link among financial institutions, governments, businesses, merchants, and cardholders worldwide. In 2010, $2.7 trillion in gross dollar volume was generated on its products by consumers around the world. Powered by the MasterCard Worldwide Network – the fastest payment processing network in the world – MasterCard processes over 23 billion transactions each year and has the capacity to handle 140 million transactions per hour, with an average network response time of 140 milliseconds and with 99.99 percent reliability. MasterCard advances global commerce through its family of brands, including MasterCard®, Maestro®, and Cirrus®; its suite of core products such as credit, debit, and prepaid; and its innovative platforms and functionalities, such as MasterCard PayPass™ and MasterCard inControl™. MasterCard serves consumers, governments, and businesses in more than 210 countries and territories. For more information, please visit us at www.mastercard.com.
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