Visa's Upswing

We've talked before about signs that credit spending has been increasing, signaling not just a rise in consumer confidence but an expansion in the amount of money American have been spending - which is of tremendous good to the larger economy. This week we got the strongest data point yet: Visa announced that its fiscal second-quarter profit was up 33 percent over the same period in 2009. It also said that payment transactions were up 14 percent from a year earlier.

Visa, remember, doesn't actually issue any credit cards; it's a payments network, processing transactions for member banks like Capital One and Chase. Visa's income for the three months ended March 31 was a relatively paltry $713 million; by contrast, Capital One had revenue of nearly $4 billion in the last quarter. Although we tend to refer to our credit cards as Visa cards (or MasterCards), the Visa side of the equation is not nearly as significant as the issuing bank. So that means Visa's figures are a pretty pure representation of credit card usage, and not a result of jacked-up interest rates or any other factors that go into Capital One's revenue.

Total payments by people using Visa cards rose 3.4 percent in the quarter; this was the first quarter showing an increase since 2008. Credit card payments are kind of a reverse of the tragedy of the commons - it's a bad idea for any one individual to rack up a lot of credit card debt, but it sure can be helpful for society as a whole.