MA MasterCard Incorporated

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)

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