Card issuer Mastercard posted results Tuesday morning that bested analyst estimates, buoyed by increased spending by consumers globally, driven across both debit and credit cards.
The bottom line, at $1.01, was six pennies ahead of the consensus estimate and up 12.7 percent from a year ago, while revenues of $2.7 billion were better than the $2.6 billion expected and were up 12 percent year over year.
In terms of card count, the firm stated that its customers have issued as many as 2.4 billion cards on a global basis.
Adjusted gross dollar volume grew by 8 percent year over year, while purchase volume, according to the company, was 9 percent higher as measured year over year.
CEO Ajaypal Banga recounted several initiatives on the call aimed at additional uptake of its cards. Other efforts revolve around safety and security, as the executive noted that a card that debuted in South Africa has a safety feature embedded in the form of a fingerprint scanner. VocaLink, he said, is performing well as the acquisition was closed and should be dilutive by about a nickel to $0.06 for the year.
Delving a bit into the numbers, cross-border volume growth in transactions was up 13 percent year over year, and dollar volume growth stood at 8 percent. Volume growth was even stronger in switched transactions, which gained 17 percent to 14.7 billion tallied. The U.S. showed relatively lighter growth, with 2 percent GDV, credit growth of 5 percent and debit flat on a year-over-year basis.
In comments made to investors and analysts, the CEO said that “we believe that the future of payments is going to be defined by, first of all, choice, convenience and security. And, if you build a strong business based on innovation and scale in card-based retail payments … VocaLink adds key platforms to that foundation, including the technology behind the BACS ACH payments system, the real-time account-to-account Faster Payments service and the LINK ATM network in the U.K.”
In comments about the economy, he noted that “not much has changed since the last quarter,” speaking on broad terms. But pinning down individual countries, Brazil is showing signs of emerging from its recession, and there is inbound travel into the U.K., with muted outbound consumer spend in the wake of Brexit. All in, said the executive, transaction growth and volume growth was in the double digits in the wake of Brexit.
Continuing with Masterpass, the company saw, as Banga stated, “continued momentum with Masterpass through our Digital by Default strategy.” With more banks added in the quarter via BMO Harris in the U.S. and LaCaixa in Spain, among other conduits, the tally was 85 million enabled accounts at quarter end. Merchant acceptance proceeds, as there are now 10,000 small- and medium-sized merchants. Masterpass QR is being rolled out across several markets in the Middle East and Africa.
In response to analyst queries over the regulatory environment, management noted that things are uncertain in the present environment for the U.S., though the current administration will likely lead to improvement in this area. “On Europe, on the other hand, there’s a lot going on,” said the CEO, “but PSD2 is at very early stages. As you know, what PSD2 does is that it basically opens up — even if fully implemented — the market to many new players who could come in and play in the payments ecosystem. It also introduces a number of things that aren’t as simple for merchants or consumers to handle — for example, two-factor authentication.”
Looking toward international, specifically India, said Banga, “the growth rate of card spend at point of sale is still very substantial but much lower than it was in the fourth quarter. I think that’s partly because currency notes have come back into circulation.”