Visa Q1 profit rises 16% as card use jumps

The San Francisco-based payments processor posted a notable 10-percent increase in U.S. credit card use, stating much of that growth came from a continued revival in spending by affluent consumers.

But debit card use rose just 6 percent. That's the slowest debit card growth rate in more than a year, and comes during the first three-month period that new rules were in place to limit the fees retailers pay to accept the cards.

The rules also require that starting in April, merchants get a choice on which network handles their debit transactions. In the last few months, Visa has been offering incentives to encourage stores to choose its network.

Debit growth has been slowing over the past few quarters. In January, debit growth slowed further, to 4 percent, said Chief Financial Officer Byron Pollitt during a conference call to discuss results. “We are beginning to see the impact of the new debit rules,” he said.

Edward Jones analyst Shannon Stemm noted that, while it's too soon to determine the overall impact of the new regulations, rival MasterCard Inc.'s results last week showed some debit market share gains versus Visa, which still holds the bulk of the U.S. debit market.

Visa CEO Joseph Saunders acknowledged during the conference call that the regulations will reduce Visa's U.S. debit volumes, and said “the new legal requirements are changing competitive dynamics,” particularly the aspect of merchant choice in networks.

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