Mastercard Sees Return of Overseas Spending to Pre-Covid Levels
A pickup in overseas spending has been good news for Mastercard Inc.
Cross-border volume jumped 52% in the third quarter, topping the 50% increase analysts in a Bloomberg survey were expecting. Such spending is a boon for Mastercard and its rival Visa Inc. because the companies can charge more for such transactions on their networks.
“Our performance was driven by the execution of our strategy, healthy domestic spending and solid growth in cross-border spending which has recently returned to pre-pandemic levels,” Mastercard Chief Executive Officer Michael Miebach said Thursday in a statement announcing the quarterly results.
Visa on Tuesday said overseas spending on its cards surged 38%. While that topped analysts’ expectations, the firm warned cross-border travel -- a key driver of such transactions -- likely won’t reach pre-pandemic levels until the summer of 2023.
Overall spending on Mastercard’s cards surged 23% to $1.54 trillion during the three months ending Sept. 30, in line with the average of estimates compiled by Bloomberg.
The return of the credit-card rewards war also appeared to help Mastercard during the quarter. Banks have kick-started efforts to add new customers, rolling out a bevy of perks and cards. For Mastercard, that sent spending on credit cards in the U.S. up 35%, a bigger jump than the 26% increase expected by analysts in a Bloomberg survey.
The gains outpaced the 13% increase in spending on the firm’s debit cards in its home country. That’s also a boon for the payments giant, which can charge more for credit-card payments.
The increase in spending has helped buoy revenue, which rose 29% to $5 billion. That exceeded the $4.95 billion analysts expected.
Mastercard set aside a whopping $2.84 billion in rebates and incentives designed to lure banks and retailers to route more transactions over its network. While that was a 34% increase from a year earlier, it was less than the $2.88 billion analysts were expecting.
Overall expenses jumped 30%, a bigger increase than analysts predicted. Still, profit soared 59% to $2.4 billion or $2.44 a share. Excluding special items, profit was $2.37 a share, which topped the $2.18 average of analysts’ estimates.
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