Second-quarter earnings results for Mastercard, like Visa before it and the big banks too, show a rebound in consumer spending and a snapback in cross-border activity as international travel is in its early innings of recovery.
To that end, the payments giant reported consolidated net revenues of $4.5 billion, which on a currency neutral basis were up 31 percent. Currency neutral earning came in at $1.95 a share, gaining 37 percent year on year.
Those results were better than Street estimates at a respective $4.3 billion and $1.73.
Drilling down into data contained within the supplementals, second-quarter gross dollar volume was up 33 percent year on year to $1.9 trillion worldwide, the company said. That was marked by 34 percent growth in the U.S., and 37 percent in the rest of the world.
Cards showed 8 percent growth, to 2.9 billion, up from 2.6 billion last year.
An update through July shows that total switched volume was up 28 percent year on year, and 130 percent of July 2019’s levels.
Demand, CEO Michael Miebach said, remains “pent up.”
As for cross-border volume: The company said volume was up 58 percent, up 47 percent month to date in July. Card not present volumes, excluding travel, were up 33 percent in the quarter, and stood at 169 percent of 2019’s levels. Cross-border travel volume — card present and card not present — was 131 percent over last year’s levels, and as a percent of 2019 levels was 49 percent.
Travel In ‘Early Stage’ Recovery
Miebach said international travel remains in the “early stages” of recovery and added that overall spending is starting to normalize.
“It’s clear,” he said, “that people want to travel and will do so where they are able to, domestically and across borders.”
He added that the company is seeing progress in its B2B efforts, building its open network and working with buyer/supplier agents. B2B, he said, offers a $125 trillion opportunity, and noted that commercial travel is “coming back” and there is a growing demand for commercial virtual cards.
With a nod to crypto, management said on the call that it was making it easier for stakeholders to connect cryptocurrency wallets to the Mastercard network. Cryptos contributed to cross-border transactions but moderated slightly off of previous quarters’ levels.
Miebach said that there is a “vibrant space around digital currencies,” and took note that there are different offerings spanning cryptocurrencies, stablecoins and central bank digital currencies (CBDCs), adding, “we want to be playing a role across all of them.” Virtual test platforms such as on offer from Mastercard, he said, can help develop offerings across all of those digital classes.
Conversation on the call turned to the Durbin Amendment, where caps might be extended across interchange fees levied on both debit and credit cards. Miebach said that if caps were pushed to credit cards, access to credit itself would be negatively affected.