Mastercard Sees ‘Long Runway’ for Card Usage Amid Reopening

(Bloomberg) -- Mastercard Inc. said card use in the U.S. soared 36% as the economy reopened from pandemic lockdowns.

The surge was bigger than the 31% analysts were predicting, helping overall purchase volume climb to $1.47 trillion, also beating estimates. Mastercard said spending on the firm’s network was helped by a pickup in travel as well as continued strength in online shopping.

“There’s a whole stock of people that are vaccinated and want to travel,” Chief Executive Officer Michael Miebach said on a conference call with analysts on Thursday. “There’s a long runway for this to play out.”

Mastercard shares climbed 2% to $390.97 at 9:48 a.m. in New York. The stock is up 9.6% this year, compared with the 18% advance of the S&P 500 Information Technology Index.

Total revenue jumped 36% to $4.5 billion, better than the $4.38 billion average of analysts’ estimates compiled by Bloomberg. The better-than-expected performance came even as the company set aside a whopping $2.69 billion in incentives to lure banks and retailers to use its cards and route transactions over its network, higher than the $2.47 billion analysts expected.

Mastercard and Visa Inc. were hit hard by the pandemic, as spending on their credit cards slowed amid widespread lockdowns to stem the spread of the virus. Stimulus programs to help consumers were a boon for both companies’ debit cards businesses.

That held true during the second quarter. Spending on Mastercard’s debit and prepaid cards in the U.S. increased 26% to $283 billion.

Mastercard said it now expects third-quarter revenue to climb by a percentage in the “high-end of high 20s.” Expenses for the period should also jump by a percentage in the “high 20s,” fueled by spending on acquisitions, it said.

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