CHARLOTTE, North Carolina (Reuters) – MasterCard Inc said second-quarter profit jumped 33 percent, as inflation in the United States lifted spending volume and more international consumers used debit and credit cards. Shares rose as much as 9.4 percent.
The credit- and debit-card processor said signing up two big banks -- SunTrust Banks Inc and Sovereign Bank -- to offer MasterCard debit cards instead of rival Visa Inc's service helped boost revenue in the second quarter, and should help next quarter too.
MasterCard executives told analysts on a conference call that the company benefited from overseas customers using debit and credit cards instead of cash to make payments, a long-term trend. U.S. consumers spent more on gasoline and other goods because of rising prices, increasing payment volumes even as the economy weakened.
Analysts said MasterCard's expanding international business can offset a slowdown in U.S. spending in coming quarters.
"They're getting strength from other areas," said Shannon Stemm, a financial services analyst with Edward Jones.
MasterCard on Wednesday reported second-quarter net income of $608 million or $4.76 per share, up from $458 million, or $3.49 per share, a year earlier.
Analysts expected $4.23 per share, according to Thomson Reuters I/B/E/S.
Visa also beat analysts' expectations when it reported quarterly results last week.
MasterCard executives said they would alter their U.S. debit interchange fee structure in advance of new industry fee caps being imposed on those charges later this year.
The fees are charged to merchants for processing a customers' debit card transaction. The so-called Durbin amendment to the 2010 Dodd-Frank financial reform law placed a cap on those fees which takes effect later this year.
MasterCard's U.S. market chief Chris McWilton said the company would institute a two-tiered fee structure by October 1, with fees varying according to the size of the merchant. McWilton did not comment on how the new system relates to the Durbin amendment, or how it will affect revenue.
Last week, Visa said it would introduce a flat network participation fee, and lowered the per-transaction rate for processing all U.S. transactions.
REVENUE
MasterCard's revenue increased 22 percent to $1.7 billion as its cross-border and overseas business grew.
Overall, MasterCard's cross-border transactions rose 19.3 percent, and processed transactions increased 17.4 percent.
The company said it also gained from new processing business in the Netherlands and Brazil.
Total operating expenses increased 20 percent to $782 million. MasterCard said the rise was due to higher personnel costs related to acquisitions.
MasterCard shares were up 8.6 percent at $324.22 on Wednesday afternoon, off an earlier high at $326.46.
(Reporting by Joe Rauch, editing by Gerald E. McCormick, John Wallace and Matthew Lewis)
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