Visa on Thursday decided to pull its full-year outlook on rising unemployment numbers and more people conserving cash during the Covid-19 pandemic even while posting a second-quarter profit that rose 4%.
In January, the world's No. 1 payments processor forecast revenue growth in the low-double digits for the full year.
"Our prior outlook for fiscal 2020 is no longer relevant, and it is not possible to provide you with any reliable forecast for the second half," Chief Financial Officer Vasant Prabhu said.
U.S. retail sales suffered a record drop in March from the closure of bars, restaurants, and non-essential retailers such as clothing stores, outweighing an anticipated surge in spending on household essentials and at online retailers such as Amazon.com.
"About 1/4 of our payments volume is in the hardest-hit categories, including travel, fuel, restaurants, and entertainment," Prabhu said.
The company's total payments volume rose 5% to $2.14 trillion, on a constant dollar basis, in the second quarter, but was well below the 8.2% growth during the same period last year.
The virus outbreak has also hammered the global economy, forcing companies to lay off millions of employees and dampened consumer confidence and people's ability to spend on non-essential items.
The surge in unemployment is likely to weigh on credit card issuers such as American Express as more people default on their payments.
AmEx saw its quarterly profit sink by more than two-thirds as it set aside more money to brace against a wave of potential delinquencies.
Visa, however, pointed to a surge in online spending during the last two weeks of April.
The stimulus checks being sent to millions of Americans is encouraging spending in sectors such as home improvement, automotive, health care, and retail.
Smaller rival Mastercard posted a decline in quarterly profit on Wednesday, but indicated spending would gradually return to 'pre-Covid' levels as countries ease lockdown measures.
Visa's net income rose 4% to $3.08 billion in the second quarter ended March 31 from $2.98 billion a year earlier.
Net revenue rose 7% to $5.85 billion, beating analysts' estimates of $5.75 billion, according to Refinitiv IBES data.