Visa Reports Strong May Volume Growth

Visa said Tuesday global processed transactions on its electronic payments network jumped 15% in May versus the same period a year earlier.
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SAN FRANCISCO (

TheStreet

) --

Visa

(V) - Get Report

said Tuesday that global processed transactions on its electronic payments network leapt 15% in May versus the same period a year earlier.

Visa disclosed the volume jump in a filing with the

Securities and Exchange Commission

, adding that U.S. credit payments volume rose 6% last month, while debit payments volume surged 22%. Cross-border volume (on a constant dollar basis) increased 19% in May over last year.

Visa shares were marginally higher in recent trades, gaining 7 cents to $71.96. Volume of 3 million was less than half the issue's trailing three-month daily average. The stock is down roughly 18% so far in 2010, but it's dropped around 26% since hitting a 52-week high of $97.19 on April 26.

The recent sell-off was mainly driven by news that the U.S. Senate had tacked amendments onto the larger financial reform bill that could curb

debit card fees

. The stock is down about 16% since May 13, the day before the amendment was introduced. Some observers are worried that

Visa

and its rival

MasterCard

(MA) - Get Report

would see reduced profits if the reform were to pass in its current state, although it's unclear at this point if the proposal has bi-partisan support.

Debit card fees are currently set by Visa and MasterCard as card-issuing banks like

JPMorgan Chase

(JPM) - Get Report

,

Bank of America

(BAC) - Get Report

,

Citigroup

(C) - Get Report

and

Wells Fargo

(WFC) - Get Report

, pass the cost along to merchants. Visa and MasterCard do earn money from those fees, but they almost get a cut every time a card is swiped for a transaction. There has been considerable controversy surrounding alleged interchange abuses, including a host of lawsuits against both Visa and MasterCard that claim overcharging of the fees to merchants.

The Senate bill, sponsored by Senator Richard Durbin (D-IL), contends that Visa and MasterCard have continued to raise fees while processing costs have actually decreased and is looking to give the Federal Reserve more oversight over the debit interchange fees.

The bill does not address credit card interchange fees.

Still, as evidenced from the monthly metrics, Visa is experiencing solid growth trajectory as it focuses on the overall global trend from exchanging cash to electronic forms of payment and extending their franchises internationally.

Analysts on average, according to

Thomson Reuters

, estimate Visa will earn 93 cents in the June-ending quarter - a nearly 40% jump from its profit in the year-earlier quarter.

--Written by Laurie Kulikowski in New York.