- Visa executives said Tuesday that a resurgence of travel in most parts of the world this year, as the COVID-19 pandemic recedes, gave a boost to its cross-border card transactions. The cross-border payments volume rose 38% for its fiscal second-quarter ended March 31, the company said in an April 26 earnings release.
- Still, the San Francisco-based company's business has been negatively impacted by Russia's invasion of Ukraine, as subsequent international sanctions led Visa to incur $60 million in expenses to shut down its operations in Russia and evacuate employees from the region.
- "The loss of Russia is offset to some degree by the cross border business being stronger," Visa Chief Financial Officer Vasant Prabhu said during a conference call Tuesday with analysts to discuss the company's quarterly earnings results.
Visa and other card companies' businesses have been recovering from the damper that the COVID-19 pandemic put on international corporate and consumer travel and spending. That was evident from results for Visa's fiscal second quarter in which that cross-border activity helped boost the company's revenue by 25% over the year-earlier quarter to $7.2 billion and deliver a 21% net income increase to $3.6 billion, the company said.
"After a short four- to five-week impact of Omicron in December and January in the United States and many other parts of the world, the recovery continues to be robust," Visa CEO Al Kelly told analysts on the call. "At this stage, in terms of volumes, we have seen no noticeable impact due to inflation, supply chain issues, or the war in Ukraine."
The card company had previously disclosed that business running through Russia accounted for about 4% of its net revenue. The Russian business percentage was about the same as its smaller rival Mastercard.
Visa "effectively absorbed the loss of Russia revenue while maintaining its outlook" for future earnings, Cowen Research Analyst George Mihalos said in a Tuesday note to clients regarding the company's results.
Still, that follows a one-time blow in late February when the industry was forced to comply with international sanctions imposed on Russia due to its invasion of Ukraine. Visa's suspension of service there meant transactions initiated with Visa cards issued by financial institutions outside Russia don't work in Russia, and transactions on cards issued in Russia won't work outside the country (Russia runs domestic activity on its own national network).
Visa booked a one-time expense of $35 million during the quarter as it "deconsolidated" its Russian subsidiary and $25 million as it raced to evacuate and otherwise assist several hundred employees in Ukraine and Russia, the company said.
While the ongoing war in Ukraine may not be affecting Visa's overall business in other parts of the world, the shutdown in Russia put a dent in its expanding real-time payments platform. Before the pullback, Russia had been the second-biggest market (the U.S. is the largest) for that Visa Direct business, accounting for 17% of that brand's transactions, the company said.
"This was an unfortunate setback, for the Visa Direct business is ramping fast in other international markets," Prabhu said on the conference call.
Remaining pandemic restrictions on travel through China, Japan, and Korea are still holding back a full recovery of Visa's business in Asia, Prabhu said.