UPDATE 4-Visa Q2 earnings beat estimates; lowers costs

* Net income rises to $536 million, or 71 cents per share

* Adjusted EPS beats estimates

* Debit volumes surpass credit volumes in the U.S.

* Shares slightly lower in after-hours trading (Adds details on credit and debit volumes, analyst comment)

By Juan Lagorio

NEW YORK, April 29 (Reuters) - Visa Inc (V.N) posted better-than-expected quarterly earnings on Wednesday as the world's largest credit card network increased prices, slashed expenses and consumers used debit cards more.

Net income rose 70 percent to $536 million, or 71 cents per diluted class A share, for the second quarter ended March 31, compared with a profit of $314 million, or 39 cents per diluted share, a year earlier.

On an adjusted basis, reflecting a normalized tax rate, restructuring and purchase amortizations, quarterly net income rose 38 percent to $553 million, or 73 cents per diluted class A common share. On that basis, analysts expected earnings of 64 cents per share, according to Reuters Estimates.

"What caught my attention most was the expense control they had. For instance, advertising falling from $210 million to $196 million. Their ability to cut costs in this environment is surprising," said Ken Crawford, senior portfolio manager at Argent Capital Management.

"It speaks of the flexibility and profitability of card processor companies. MasterCard Inc (MA.N) reports on Friday morning and it sets a stage," Crawford said.

Adjusted operating expenses fell 5 percent to $745 million, as the company cut personnel, advertising and marketing, as well as consulting fees, and administrative costs.

Net operating revenue rose 13 percent to $1.6 billion, while total processed transactions -- which represent transactions processed by VisaNet -- increased 6 percent to 9.4 billion.

Visa said payments volume fell 1 percent for the quarter ended Dec. 31, which translates to revenue in the following quarter.

"The results turned out to be pretty good," said Robert Dodd, an analyst at Morgan, Keenan & Company.

DEBIT OFFSETS IMPACT OF CREDIT CRISIS

Visa is partially insulated from the credit crisis because it processes transactions rather than lends funds. However, the company has seen a slowdown in the growth of revenue and transaction volumes as battered consumers used their credit cards less.