While everybody points out how well the Visa (V) deal is doing, they seem to be missing one point — and it’s a point my colleague, David Weidner, appears to have been alone in having pointed out in a recent piece: The trend is not currently Visa’s friend. (At least not based on its most recent SEC filings.)
Bob Pisani and I went back-and-forth on this while on CNBC’s Power Lunch today. His point was that Visa officials are saying that more people are using plastic for ease, not because they’re going deeper into hock, which is good for a company like Visa, which makes money by processing transactions.
While that may be true, especially once this economy gets squared away, the point David made is also true: According to the “statistical data” in Visa’s filings, growth in year-over-year payment volume for the 12 months ended last June is down, and not by a small amount: 13% vs. 18%.
A better view can be seen by looking at Visa U.S.A, which generates the lion’s share of revenue. Payment volume in fiscal 2007 grew by 9.6% compared with 17% the year earlier and 18.2% the year before that. The trend is similar for the growth in transactions.
In other words, even though Visa doesn’t have credit exposure, it still has exposure to the economy, which it also warns about in its filing. (I know, standard boilerplate, but still…)
Just something to keep in mind, especially given the timing of the deal, which was great for the banks which sold into the offering.
Time will tell whether it was just as good for everybody else. (Cliche, yes, but it’s true.)