Mastercard Inc. saw strong growth in its core business in the second quarter, a time when the network continued its push for contactless cards and development of the new Secure Remote Commerce system for online payments.
Mastercard said it switched 21.4 billion transactions globally in the three months ending June 30, up 18% from 18.2 billion in the year-earlier period. In the U.S., the network reported total purchase volume of $427 billion, an 11% increase from $384 billion in 2018’s second quarter. Credit card purchase volume grew nearly 13% on higher spending and business from new issuers. Debit volume increased 9% to $199 billion.
Volume also was strong in most other regions, according to Mastercard chief executive Ajay Banga, who reviewed the results for analysts on a Tuesday morning conference call. Chief financial officer Sachin Mehra attributed part of the 18% transaction increase to more contactless cards in the market, and more merchants accepting them for formerly small-value cash payments.
Banga added that contactless payments, which are just getting off the ground in the U.S., are strong in 10 to 12 countries so far, especially Australia, Canada, Turkey, Poland, Hungary, and the United Kingdom. Asked by an analyst how long it takes for contactless to gain sizable market share, he said “four, five years to get to a really large percentage of small-dollar transactions.” In Australia, contactless payments took about that long to go from nothing to capturing about 80% of transactions under A$100, he said. Last week, Visa Inc. CEO Al Kelly predicted the U.S. would have 300 million Visa contactless cards by the end of 2020.
Meanwhile, Mastercard is testing the new Secure Remote Commerce standard developed by EMVCo, the standards body owned by Mastercard, Visa, American Express, Discover, Japan’s JCB, and China’s UnionPay. SRC is meant to simply online checkouts and potentially replace the plethora of individual network checkout systems, including Mastercard’s Masterpass.
Banga said “we are making good progress” on SRC and testing the system with card issuers and merchants. “We are actively working on Masterpass upgrades to SRC with partners like Tickets.com, Expedia Group, Saks Fifth Avenue, and Norwegian Cruise Lines, and we expect to launch in the United States in the next few months,” he said.
Mastercard reported second-quarter net income of $2.05 billion, a nearly 31% increase from $1.57 billion a year earlier, on net revenues of $4.11 billion, up 15% on a currency-neutral basis from $3.67 billion in 2018’s second quarter.