Shares in Visa fell by 3.3% during early morning trading on Wednesday after the credit card company reported its third-quarter revenue that missed expectations. This came after consumer spending slumped as consumers were pressurized by steep borrowing costs. Rival payments processor American Express also missed its second-quarter revenue expectations.
Visa’s net revenue for the quarter was $8.90 billion compared to expectations of $8.92 billion as compiled by LSEG data. The company’s payments volume rose 7% in the quarter, while cross-border transactions in Europe rose 14%, indicating a rise in international travel. The company earned a profit of $2.42 per share on an adjusted basis, thereby consistent with Wall Street expectations.
The payment processor’s decline in revenue came after the US Federal Reserve took its interest rates to their highest level since the 2008 global financial crisis as it sought to combat surging inflation. This largely affected lower-income Americans who generally live month-to-month.
Chief Financial Officer Chris Suh acknowledged this issue, telling analysts: “In the U.S., while growth in the high-spend consumer segment remained stable compared to prior quarters, we saw a slight moderation in the lower-spend consumer segment.”