Categories: Earnings

Q1 Mastercard Earnings: Worldwide Debit, Prepaid GDV Grow 9.5 Pct

Mastercard posted results that showed a steep falloff in transactions and cross-border volumes, as measured year over year, as the quarter progressed and the coronavirus pandemic hurt spending levels.

In terms of headline numbers, the company said earnings per share were $1.83, while consensus stood at $1.74. Revenues were $4 billion, up a bit more than 3 percent year on year, and better than the $3.97 billion the Street had expected.

Additional materials released by the company showed gross dollar volumes worldwide were up 8 percent to $1.6 trillion in the quarter. Within that metric, debit and prepaid activity surged faster than the overall growth rate, up roughly 9.5 percent to $810 billion. Credit was a slower 1.7 percent. As defined regionally, the U.S. saw 6 percent growth to $478 billion, and the rest of the world logged 9 percent growth to $1 trillion.

Overall switched transactions showed 13 percent growth to 22.1 billion, and total cards in the field gained 5 percent to 2.6 billion.

In a conference call with analysts, Mastercard CEO Ajay Banga pointed to a progression during the pandemic, and that should accompany a resurgence in payments activity: Containment, stabilization, localization and then, finally, growth. There have been signs of stabilization in regions such as Asia, management said on the call.

Amid the continuing impact of the coronavirus, and where businesses have been shuttered and stay-at-home orders remain in force, card not present transactions represented 50 percent of payments volume in the latest quarter, up from 40 percent a year ago. Contactless payments growth was 40 percent worldwide year on year.

Overall cross-border volume was off one percent for the quarter, as measured on a local currency basis. The drop in this metric, tied at least in part to a decline in travel and tourism related spending, continued into the current month. Management said on the call that cross-border transactions, for example, slipped by 49 percent in the week that ended April 21, though that decline was better than the 55 percent drop seen in the week that ended April 14.

To get a sense of how the pandemic is impacting overall spending, switched transactions were down by 20 percent for the week ended April 21, and a bit better than the 24 percent decline seen in the previous week. Cross-border payments can be broken down roughly between card present and card not present transactions. Card not present, non-T &E related, was up nearly 40 percent in April, as measured until April 21.

Cross-border activity is seeing a least some support amid a continued shift in B2B transactions as supply chains and business activity becomes more digitized, according to management on the call.

Looking at regional trends, across gross dollar volume (USD equivalent), in Europe, growth was 9 percent, while in Latin America that rate was 1.9 percent. APMEA (Asia Pacific, Middle East and Africa) was up 2.7 percent.

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The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.