Mastercard Inc. became the latest payments company to call out healthy spending levels among consumers as the financial-technology giant beat profit expectations for its latest quarter.
Gross dollar volume for Mastercard
MA,
rose 12% in the second quarter on a local-currency basis, while cross-border volume was ahead 24%. Switched transactions increased by 17%.
“From a macro standpoint, we continue to see remarkably resilient consumer spending,” Chief Financial Officer Sachin Mehra told MarketWatch. “Consumers, on the back of what we think are very strong employment markets and good wage-growth levels, continue to exercise their interests in terms of how they’re spending.”
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That means a sustained preference for purchases in the travel and entertainment categories, and Mehra expects the travel recovery to continue. Inbound travel to China is still only at about half of 2019 levels, and even outside of China, he thinks there’s still pent-up demand.
It hasn’t necessarily been easy for people to go on the trips they want, given limited airline capacity and visa restrictions in some countries, and Mehra said Mastercard is well positioned to capitalize on the sustained rebound thanks to recent travel-focused wins in its portfolio and an emphasis on loyalty-related perks like lounge access and discounts that incentivize people to choose Mastercard-branded cards while spending.
In the second quarter, Mastercard saw revenue rise to $6.3 billion from $5.5 billion, while analysts were anticipating $6.2 billion.
The company logged net income of $2.8 billion, or $3 a share, up from $2.3 billion, or $2.34 a share, in the year-ago quarter. On an adjusted basis, Mastercard earned $2.89 a share, up from $2.56 a year earlier and ahead of the FactSet consensus, which was for $2.83.
Mastercard is benefiting from ongoing adoption of contactless payments, which make up more than 60% of all in-person switched-purchase transactions. Contactless uptake has helped Mastercard eat into small-ticket purchases that users have previously tended to make with cash, such as transit fares and coffees.
There are financial benefits to the trend that extend beyond people simply spending more through the company’s network. Since Mastercard makes revenue based on both volumes and transactions, it benefits more if a customer makes 10 separate $2 subway transactions at the turnstile than if that customer loads $20 onto a transit card.
Mastercard is the last of the big three payments players to post results, following American Express Co.
AXP,
and Visa Inc.
V,
both of which also called out healthy spending.
See also: Visa earnings benefit from ‘resilient’ spending
Read: Why American Express is feeling good about credit, even as it builds reserves
Shares of Mastercard were down 1.6% in Thursday afternoon trading.
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This post was originally published on Market Watch
