With some of its payments cohorts already having warned the coronavirus would hurt their businesses, it was no surprise Visa Inc. joined the crowd in forecasting reduced cardholder spending would translate into lower revenues.
More signs of growing concern about the impact of the virus, officially named Covid-19, on the economy popped up when the Federal Reserve Board cut its benchmark interest-rate target by half a percentage point. “The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity,” the Fed’s Open Market Committee said in a statement announcing the new federal funds target range would be 1% to 1.25%.
In a regulatory filing, Visa said it expects revenue growth for fiscal 2020’s second quarter ending March 31 to be 2.5 to 3.5 percentage points lower than it predicted Jan. 30 during its latest quarterly earnings call. At that time, Visa forecasted second-quarter revenue growth in the low-double digits, percentage-wise.
The filing further notes “cross-border growth rates have deteriorated week by week since the coronavirus outbreak in China, and trends through February 28, 2020, do not yet fully reflect the impact of the coronavirus spreading outside of Asia. As such, we anticipate that this deteriorating trend has not bottomed out yet.”