Mastercard profit beats estimates on sustained consumer spending

[NEW YORK] Mastercard beat Wall Street expectations for fourth-quarter profit on Thursday (Jan 29), as resilient spending on travel, leisure and everyday essentials boosted transaction volumes for the payment processor.

Spending has largely held up despite concerns of economic uncertainty fuelled by US President Donald Trump’s trade policies, sticky inflation and a sluggish labour market.

Shoppers also locked in deals to stretch their discretionary budgets during the holiday quarter, lifting transaction volumes for payment processors.

Mastercard’s gross dollar volume, the value of all transactions processed on its platform, rose 7 per cent in the quarter.

The company also reported a 14 per cent jump in cross-border volumes, a metric that tracks spending on cards outside the country they were issued in.

Household spending has remained resilient, as consumers continue to prioritise necessities, while high earners show little sign of pulling back on discretionary purchases.

US banks have seen their credit card balances edge up in the latest quarter, signalling sustained borrowing demand despite high interest rates.

Mastercard is the first of Wall Street’s biggest payment processors to post earnings this quarter, with rival Visa set to report later in the day and American Express results due early on Friday.

Adjusted profit for Mastercard came in at US$4.76 per share, surpassing analysts’ average expectations of US$4.25, and revenue of US$8.81 billion also beat estimates of US$8.78 billion, according to data compiled by LSEG.

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The company has been shoring up its diversification push with services such as fraud protection and cybersecurity tools – typically higher margin products. The segment’s growth has outpaced its core network in recent quarters.

Revenue in Mastercard’s value-added services and solutions segment increased 26 per cent during the fourth quarter. REUTERS