Visa Inc. said it will update its 2011 financial forecast on July 6, one week after the Federal Reserve Board discloses its final determination of debit interchange rate limits. The Wall Street Reform and Consumer Protection Act of 2010 carries in it an amendment promoted by Sen. Dick Durbin, D-Ill., that requires the Federal Reserve to set interchange rates that are "reasonable and proportional' to costs.
After grappling with the requirement for the last year, the Fed revealed its final rule for the debit card interchange rate June 29. (See "Federal Reserve sets debit interchange at 21 cents" in this issue's news section - July 11, 2011, issue 11:07:01). Currently, issuers charge an average of 44 cents per debit transaction. The Fed initially proposed cutting the rate to as little as 12 cents - a 75 percent cut.
Experts expected the final interchange rate to be higher than 12 cents to allow for investment in fraud prevention initiatives and to account for processing costs, but the industry could still lose as much as $20 billion in fees as a result of the Durbin Amendment. The final rule will take effect Oct. 1. The financial update will fulfill a promise Visa management made in its last earnings update to reassess its 2011 financial outlook after the Fed rule on debit interchange is announced.
"Visa's business foundation remains solid and we will continue to be a growth company," Visa said in a statement. "Our global network, strong client relationships, product and service offerings, and global brand underpin our ongoing success. As we have done throughout our history, we will continue to adapt our strategies to ensure our long-term success including aggressive investments to grow our global presence and the introduction of innovative new products and services."
For additional news stories, please visit www.greensheet.com and click on "Read the Entire Story" in the center column below the latest news story excerpt. This will take you to the full text of that story, followed by all other news stories posted online.
Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.Prev Next