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Credit Card Applications » News » Other » MasterCard show a 31 percent increase in the profits for the second quarter

MasterCard show a 31 percent increase in the profits for the second quarter

August 16, 2010
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The strong financial growth globally, coupled with the increased spending of the customers in the United States, has helped MasterCard post a 31 percent increase in profits for the second quarter of the current fiscal year.

The profits posted by this financial conglomerate beat Wall Street predictions; however, it could not beat the 38 percent increase posted by its biggest competitor, Visa Inc. On Tuesday, the value of the MasterCard shares dropped by $1.61 and closed at $200.91.

The gain posted by MasterCard showed the dependency of the company on the processing of the card used overseas. The purchasing spirit of the consumers all over the world contributed to an 8 percent growth while the spending by the customers in the United States contributed to a mere 1 percent increase in profits. The use of the credit cards all over the world increased by 10 percent, while the use of debit cards increased by 29 percent.

Martina Hund-Mejean, the CEO of MasterCard, during an interview, mentioned that the usage of cards was strong in the Asia Pacific and Latin American regions, which together contributed significantly to the growth in double digits. Overlooking the economic turbulence in Europe over the last few months, she went on to mention that the spending in the European countries did not contribute much to the growth of the company.

The number of people using credit cards in the United States dropped by 1.5 percent, which is the second consecutive decline over the last 24 months; however, this has been the least drop noticed since 2008's third quarter.

The use of debit card increased, by less than 1 percent. This clearly indicates that the customers prefer the use of debit cards over credit cards. However, even this could not come to the rescue of MasterCard and help better its profits because MasterCard lost a couple of major deals on debit cards with banks. One of the most notable was that of Washington Mutual which fell into the hands of JP Morgan Chase in the year 2008.

The spending by customers in the United States using their credit cards increased in the month of April; however, it could not sustain the same momentum in the next quarter. Hund-Mejean continued saying that despite the customers showing signs of spending, they are still being cautious in their approach which is the reason for the dip in card usage over May and June.

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