Visa, Mastercard See Online Spending Countering Slump in Travel

For Visa Inc. and Mastercard Inc., a pick-up in online spending during the holidays was just enough to counter the pandemic-related continued slump in overseas travel.

Both companies posted a smaller decline in revenue for the last three months of 2020 than analysts were anticipating even as cross-border spending on their cards slid by more than 20%. Overseas transactions are often the most lucrative on the firms’ networks.

“The momentum we bring into 2021 reflects how our employees stepped up to the challenges of last year,” Michael Miebach, who took over as Mastercard chief executive officer this month, said in a statement Thursday. “We are encouraged by the availability of effective vaccines.”

Shares of Mastercard rose 2.8% to $324.28 in New York. Visa shares were up about 1% at 4:22 p.m. after the firm announced fiscal first-quarter results following the close of regular trading.

Mastercard and Visa have benefited from consumers moving to online shopping, trying to revive spending on their cards after the pandemic zapped commerce around the world for much of last year.

Travel Slump

Cross-border fees at Mastercard plummeted 40% in the fourth quarter as consumers around the globe remained limited by travel advisories and lockdowns. Still, overall spending on its cards inched up 3.1% to $1.32 trillion, topping analysts’ expectations.

At Visa, payments volumed climbed 4.8% to $2.47 trillion in the period, in line with the average of analyst estimates compiled by Bloomberg. A presentation on the firm’s website showed U.S. spending on the firm’s cards has climbed by more than 10% in recent weeks.

Both companies have been working to sign deals for new cards, with Mastercard recently announcing it won an agreement to be the network for cards the drugstore chain Walgreens is planning. Purchase, New York-based Mastercard set aside $2.3 billion in incentives to lure banks and retailers to route transactions over its network.

At Visa, such rebates added up to $1.86 billion, a 6% increase from a year ago. The company said given “the continuing impact of Covid-19 and the significant uncertainty in the global economy” it was unable to provide an outlook for the fiscal year.

“Our performance in the fiscal first quarter reflected solid results and continued positive momentum in a challenging Covid-19 environment,” Visa CEO Al Kelly said in a statement. “Looking ahead, I remain confident that Visa will exit the pandemic with strengthened prospects for our longterm growth.”

©2021 Bloomberg L.P.

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