Visa sees muted revenue growth in 2020, shares fall 3%

Visa Inc (V.N) on Thursday fell short of analysts’ estimate for first-quarter revenue and said revenue this year would be crimped by incentives it provide to banking clients, sending its shares down nearly 3%. The world’s largest payments network said it now expects client incentives as a percentage of revenue to be in the high-end of its forecast range of 22.5% to 23.5% in 2020.

Client incentives are what Visa pays out to their issuing bank partners to increase its total payments volume (TPV), and when a partner renews, Visa’s TPV goes up. In October, Visa said about 15-20% of its TPV is slated to be renewed in the first half of 2020.

Visa has been spending more on rewards and perks such as airport lounge access, roadside assistance programs and travel insurance which pushed operating expenses up by 14% to $2.04 billion in the first quarter. Payments processors have also leaned on acquisitions to fend off competition from digital rivals. Earlier this month, Visa said it would buy fintech startup Plaid for $5.3 billion, as it seeks to expand into the digital economy. On an adjusted basis, Visa earned $1.46 per share, in line with analysts’ estimate. Visa shares, which have risen 51% in the past 12 months, were down at $201.85 in extended trading.