Page last updated at 23:31 GMT, Monday, 28 April 2008 00:31 UK

Visa lifted by cash-to-card shift

Visa credit card
Visa has so far proved resilient in the deteriorating economic environment

Visa has posted a 28% rise in profits for the first three months of 2008 as credit card transactions increased.

The electronic-payments firm said net income was $314m (157.6m), up from $246m the year before.

But analysts had expected even better, and Visa shares fell 4% after the US market closed. This suggests they will fall on Tuesday.

These are the first results from Visa since it raised $18bn in the biggest US share sale to date last month.

"Despite a challenging economic environment, Visa recorded strong growth in payments volume and transactions globally and across our diverse suite of products," said chairman and chief executive Joseph Saunders.

He said he saw this trend continuing.

The firm has benefited from an increasing switch to making payments using plastic rather than cash.

Legal battles

Visa is more protected from a US consumer slowdown than its rivals American Express and Discover Financial Services because its customers are not the cardholders, but the banks that issue Visa cards and make the loans to its customers.

It faces bigger risks from potential lawsuits.

Last year Visa agreed to pay American Express $2.1bn to settle a case in which American Express accused Visa of illegal anti-competitive practices.

It faces similar allegations from Discovery Financial Services.

The San Francisco-based firm set aside $292m to cover future litigation costs.

This is in addition to the $3bn it set aside from its initial public offering for potential legal liabilities.

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