Soaring Debit Traffic Helps Propel Revenue And Profit at MasterCard

Surging U.S. debit card traffic is helping to propel revenues and profits for MasterCard Inc. as the Purchase, N.Y.-based network marks its first full year as a publicly held company. Point-of-sale debit card activity for the company hit 1.5 billion transactions in the first quarter, up fully 48% over the year-ago period, generating dollar volume of $63 billion, a 41% increase. By contrast, credit card purchase traffic rose only 7%, to 1.42 billion transactions, though higher tickets on credit cards produced $124 billion in charge volume, a 4.3% rise. Credit card tickets averaged $87 vs. $42 for debit cards. Partly as a result of the company's debit programs, net income in the quarter totaled $214.9 million, a 70% jump. Revenue reached $915.1 million, up 24%. Noting the company's first-quarter profit is the highest in its 40-year history, MasterCard president and chief executive Robert W. Selander said in a statement: “These results continue to demonstrate the strength of our business model and growth in electronic forms of payment.” To some extent, the upward momentum in MasterCard's U.S. debit card figures results from Washington Mutual Inc.'s decision to convert its debit portfolio, one of the largest in the country, to MasterCard from Visa. This conversion, which involved 10.5 million cards, was not completed until the second quarter of last year. MasterCard excludes its Maestro and Cirrus PIN debit programs from from its debit card numbers, but includes all signature-debit traffic as well as PIN debit activity on its branded cards handled by other networks. MasterCard went public a year ago in a move that has had far-reaching implications for processors and networks in the electronic-transactions business. Among other things, the company's relatively strong stock performance has drawn the attention of private-equity firms and other investors to the business, and has influenced rival Visa International, which seven months ago announced it would undergo a sweeping restructuring that will lead up to an initial public offering (Digital Transactions News, Oct. 11, 2006). MasterCard's stock closed Thursday at $134.82, up $8.47 and just below its 52-week high.