Mastercard Joins Visa With Jump in Spending Amid Reopenings

(Bloomberg) -- Mastercard Inc. joined Visa Inc. in reporting a rebound in consumer purchases on its cards in July after the pandemic devastated spending for much of the second quarter.

• Payments processed on Mastercard’s network climbed 1% in the week ended July 21, improving from a 3% decline in June. The firm and its larger rival have struggled in recent months as consumers were forced to stay home and many businesses remained shuttered to stem the spread of Covid-19.

Key Insights

• Mastercard said overall spending on its cards dropped 8.9% to $1.04 trillion in the second quarter, topping the $995 billion average of analysts’ estimates compiled by Bloomberg. The firm said it benefited from consumers’ increased use of tap-to-pay technology.
• “The trajectory is a good, solid-growth trajectory,” Chief Financial Officer Sachin Mehra said on a conference call with analysts. Switched volume, or payments processed on the network, climbed roughly 2% so far in the week of July 28, he said.
• The company has yet to see a turnaround in cardholders’ overseas spending as countries around the world keep their borders shut to tourists. Cross-border volume -- a closely watched metric because those transactions are among the most profitable for Mastercard -- dropped 45% in the quarter.
• Mastercard, which inked an $825 million deal for Finicity in the second quarter, said it now expects third-quarter expenses to grow by a percentage in the mid-single digits. Excluding acquisitions and the effects of currency swings, expenses should fall by a percentage in the low-single digits, it said.

Market Reaction

• The shares, which gained 3.6% this year through Wednesday, slipped 0.9% at 9:59 a.m. in New York.

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• “Our platform uniquely positions us to support the shift to digital across consumer and business payments that has been accelerated by the Covid-19 pandemic, including an increase in consumers’ preference for contactless payments,” Chief Executive Officer Ajay Banga said in a statement.
• Read the full statement here.

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