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Visa Stock Slumps On Senate Competition Bill Report, Clouding Q3 Earnings Beat

"We're seeing no evidence of a pullback in consumer spending," said CFO Vasant Prabhu.

Updated at 1:33 pm EST

Visa Inc  (V)  shares turned lower Wednesday following a report from the Wall Street Journal suggesting Senate lawmakers are preparing a bill aimed at reducing credit card fees.

The Journal said the bi-partisan bill, which could be introduced over the coming days by Senators Dick Durbin and Roger Marshall, is aimed at creating more competition in the $164 billion credit card market.

News of the proposed legislation sent shares in Visa sharply lower, and offset the group's stronger-than-expected third quarter earnings, powered by cross-border transactions that topped pre-pandemic levels for the first time in more than two years.

Dow component Visa earned $1.98 per share over the three months ending in June, the group's fiscal third quarter, well ahead of the Street consensus forecast of $1.74, per share, as group revenues jumped 19% to a Street-beating $7.3 billion.

Cross border spending was up 40%, Visa said, with payments volume up 12% on a constant-currency basis.

Looking into the final months of its current financial year, Visa said it sees revenue growth in the "high teens to 20% range in constant dollars", with client incentives -- a cost base for card issuers -- ranging 26% and 27% of gross revenues. 

"We're seeing no evidence of a pullback in consumer spending,. We keep looking for it, because we've heard some other people say it, and we're not seeing any evidence of that," CFO Vasant Prabhu told investors on a conference call late Tuesday. "If anything, affluent spending has been on the rise and is one of the reasons why we've seen some of the robust growth we saw this quarter."

Visa shares were marked 3.44% lower in early afternoon trading Wednesday to change hands at $205.20 each, a move that would nudge the stock into negative territory for the year. 

Last week, American Express  (AXP)  posted better-than-expected second quarter earnings Friday, and boosted its full-year revenue growth forecast, as a rebound in business and leisure travel trigged record cardmember spending.

Cardmember spending was up 30%, American Express said, while expenses rose 31% to $13.4 billion, thanks in part to the group's focus on reward payouts to entice new members, with that tally coming in at 3.2 million.

Looking into the second half of the year, American Express said it now expects group revenues to rise by between 23% and 25%, up from its prior forecast of between 18% and 20%.