Rising Credit, Debit Card Spending Boosts MasterCard, Visa

Credit and debit card spending is climbing worldwide as payment-processing giant MasterCard today reported a healthy third-quarter profit that beat estimates, following a similarly solid earnings result last month from its top rival Visa.
MasterCard reported net income of $717 million, up 38.4 percent, and earnings per diluted share of $5.63, up 42.9 percent, compared to a year ago. Net revenue for the third quarter was $1.8 billion, a 27.3 percent increase versus the same period in 2010.
“We are pleased with our strong results this quarter, which were driven by several factors including double-digit increases in volumes and processed transactions in most regions across the globe,” said Ajay Banga, MasterCard president and chief executive officer.
Visa last month reported earnings for its fiscal fourth quarter of $880 million, or $1.27 a share, up from $774 million, or $1.06, a year earlier – a 14 percent jump. Visa credit-card spending in the U.S. grew faster than debit cards for the first time since at least 2005.
But the two card networks are also benefiting from a gradual shift back toward more credit card spending by U.S. consumers, who had restrained their credit card balances and additional spending on plastic since the onset of the financial crisis.
Credit card reform that took effect in 2010 may have helped the card networks, forcing credit card issuers to restrict certain penalty fees and certain retroactive or penalty-driven interest rate hikes.
Spending worldwide by consumers using MasterCard- and Maestro-branded cards was up 17 percent to $628 billion, compared to a year earlier, based on local currencies, MasterCard said today.
MasterCard reported that debit-card spending in the U.S. shot up 23 percent to $97 billion. Worldwide, excluding the U.S., debit-card usage surged 35 percent to $62 billion. Credit-card spending worldwide increased 21 percent to $469 billion from $389 billion a year earlier.
Visa last month reported that global spending on Visa credit and debit cards for its fiscal fourth quarter, adjusted for currency fluctuations, climbed 17 percent to $970 billion, compared with a year earlier. Visa’s processed transactions worldwide jumped 9 percent to 13.3 billion.

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