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MasterCard Inc. in the three months ending March 31 posted its biggest increase in processed transactions in two-and-a-half years, thanks to strong U.S. volumes and growth in many, if not all, other markets.
The No. 2 payment card network Thursday reported its processed transactions totaled 12.6 billion in the first quarter, up 14.2% from 11 billion a year earlier. The growth rate was MasterCard’s highest since a 15.3% increase in third quarter of 2013.
In the U.S., total purchase volume grew 10.3% from 2015’s first quarter to $316 billion. Credit card purchases increased 11.2% to $162 billion and debit card purchases grew 9.5% to $154 billion.
In MasterCard’s other four regions, purchase volumes increased 9.5% in Canada to as much as 15% in Latin America despite weakness in Brazil and Venezuela, for a 12.2% worldwide increase. “We’re seeing double-digit volume and transaction growth across most of our markets,” MasterCard president and chief executive Ajay Banga said during a conference call with analysts. “Steady as she goes is what our focus is.”
Regarding the rollout of EMV chip card payments in the U.S. that officially began in October, Banga said 67% of MasterCard-branded consumer credit cards and 24% of consumer debit cards now have chips, with some 1.2 million merchant locations enabled for EMV acceptance. To address widespread perceptions that EMV transactions take too long when the card is inserted, or dipped, into a contact EMV terminal, MasterCard on Wednesday announced its “M/Chip Fast” service for high-throughput merchants. The service enables the cardholder to remove the card from the terminal as soon as the one-time EMV cryptogram is generated rather than leaving it in for a few more seconds under normal protocols.
“Using that, cardholders will experience mag-stripe transaction speed, but with the added security of EMV and chip,” said Banga.
Visa Inc. last week revised its EMV transaction protocols to address perceptions of slow EMV speeds. In its M/Chip Fast announcement, MasterCard called for industry collaboration to develop a common approach for addressing the issue.
Addressing online and mobile payments, Banga said MasterCard is close to signing 270,000 merchants representing more than $160 billion in sales to accept the MasterPass digital-payment service. Those new merchants would represent a more than doubling of the MasterPass acceptance base, which stood at 250,000 last June.
Asked by an analyst what he thinks about Wal-Mart Stores Inc.’s new Walmart Pay service and other retailer-only mobile wallets, Banga said most merchants want to offer a variety of payment choices to their customers
“More consumer choice in tenders and payments is better than less, I think that’s just to reduce the friction,” he said. “There is one large merchant in the United States who doesn’t think that way, but otherwise, every other merchant around the world is keen to basically offer [more] tender choice to their consumers rather than less, and I think that is going to be even more important in the mobile world to reduce friction.”
On a related note, Banga said MasterCard this summer will roll out its MasterCard Identity Check, often called “selfie pay” because it uses a digital photo of the cardholder for verification, in the U.S., Canada, and parts of Europe.
MasterCard reported first-quarter net income of $959 million, down 6% from $1.02 billion a year earlier or 2% on a currency-neutral basis. Net revenues of $2.44 billion were up 10% as reported and 14% on a currency-neutral basis. The profit decline stemmed from a 25% increase in operating expenses, the lack of a tax credit MasterCard received last year, and a change in a balance-sheet item related to economically troubled Venezuela.
