MasterCard Results Top Expectations as Transactions Grow -- Update
July 28 2016 - 11:22AM
Dow Jones News
By Austen Hufford and Robin Sidel
MasterCard Inc. said profit and revenue grew in the second
quarter as transactions increased at the credit card network.
Results topped expectations, and shares were up $1.72, or 1.83%,
to $95.47 in morning trading.
Like rival Visa Inc., MasterCard charges fees to financial
institutions for transactions that travel over its network.
Purchase, N.Y.-based MasterCard said transactions rose 14%
during the quarter but said that was partly offset by higher
rebates and incentives.
Operating expenses increased 15% to $1.31 billion in the
quarter, due to higher general and administrative, marketing and
legal expenses.
In all, MasterCard reported a profit of $983 million, or 89
cents a share, up from $921 million, or 81 cents, a year prior. On
an adjusted basis, earnings per share were 96 cents. Revenue rose
13% to $2.69 billion. Analysts polled by Thomson Reuters expected
90 cents in per-share profit on $2.59 billion in sales.
MasterCard is expanding from the traditional physical credit and
debit cards as its customers move to digital formats. Among other
things, it is overhauling its Masterpass digital payment platform
to let shoppers use the service on their mobile phones at store
check-out terminals, creating another rival to Apple Inc.'s Apple
Pay and a number of other mobile-payment products.
Chief Executive Officer Ajay Banga said the company is having a
"constructive dialogue" with PayPal Holdings Inc. to make
transactions more transparent. He didn't discuss details of those
talks, but said the companies have been holding conversations for
some time.
Last week, PayPal struck a deal with Visa Inc. in which
consumers can have an option to pay for purchases with PayPal when
they pay with their smartphones in a store. The deal also will
enable consumers to instantly withdraw money from PayPal's
person-to-Person Venmo service if they link the account to a Visa
debit card.
That deal came after years of tension between the two companies
and essentially may move more of PayPal's transactions to the Visa
network.
Mr. Banga said that MasterCard established rules for
digital-wallet operators like PayPal in 2013. Details of those
rules weren't immediately clear.
"PayPal is working to resolve some of the concerns we all had,"
Mr. Banga said, adding "I'm not saying there aren't hurdles along
the way."
Earlier this month, MasterCard said it was buying most of
VocaLink Holdings Ltd., a bank-owned technology company in the U.K.
that provides the backbone for non-card transactions such as
employer payroll deposits and consumer bill payments, for about
$920 million.
Write to Austen Hufford at austen.hufford@wsj.com and Robin
Sidel at robin.sidel@wsj.com
(END) Dow Jones Newswires
July 28, 2016 11:07 ET (15:07 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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