Visa sees signs of industry's stabilizing

Visa Inc , the world's largest payment network, said its U.S. payment volume fell less in August than in July as more consumers used their debit cards -- a sign the industry may be stabilizing.

Visa's U.S. payment volume declined 1 percent in August compared with a year earlier. In July the drop was 2 percent.

U.S. credit volume declined 10 percent in August, compared with a 9 percent contraction in July. But debit volume grew 7 percent in August, compared with a 4 percent increase in July, Visa said in a regulatory filing.

"Instead of putting on credit, people just used the debit card instead. Consumers are more focused on controlling how much they have," said Robert Dodd, an analyst at Morgan Keegan & Co. He said the Visa results were in line with his expectations.

Visa is partially insulated from the global credit crisis because it processes transactions rather than extends credit. However, revenue growth has slowed along with transaction volume as consumers try to reduce their debts.

Early this year, debit payment volumes exceeded credit payment volumes in the United States for the first time in Visa's history. The trend has intensified in recent months as more debt-burdened consumers leave their credit cards at home.

Cross-border payment volume on a constant-dollar basis fell 7 percent in August, compared with a 6 percent decline in July.

However, global processed transactions grew 9 percent in August, following a rise of 8 percent in July.

"There have been some signs that you hit and passed the bottom, and generally it makes me feel better about the card market as a whole," Dodd said.