(November 4, 2008) Like the other payment card networks that recently reported their quarterly financials, MasterCard Inc. saw softening volumes in the third quarter. Things worsened in October but, like bank card rival Visa Inc., MasterCard’s debit business is holding up much better than credit in what MasterCard president and chief executive Robert W. Selander on Monday called an economic crisis “like no other we’ve seen.”

Meanwhile, big merchant acquirer Heartland Payment Systems Inc. reported Tuesday that same-store sales fell 2% in the third quarter. But total volumes and processing revenues still increased thanks to new merchants and more than $4 billion in volume from acquisitions.

MasterCard’s total U.S. debit and credit and charge card purchase volume of $218 billion represented a 6.6% gain over $205 billion in 2007’s third quarter. U.S. purchase transactions rose 7.9% to 3.48 billion from the year-earlier period’s 3.23 billion.

But it was debit that carried the day. U.S. debit purchase volume rose 17.5% to $78 billion from $66 billion in the year-ago quarter. Debit purchase transactions were up 16.1% to 1.88 billion from 1.62 billion. MasterCard’s U.S. debit card base increased 13.9% to 123 million from 108 million in 2007’s third quarter.

The 1.60 billion U.S. credit and charge card purchase transactions, in contrast, represented a decrease of 0.4% from last year’s levels. Credit and charge card purchase volume rose just 1.5% to $141 billion from $139 billion in the year-ago quarter. And MasterCard’s U.S. credit/charge card base shrank 2.2% to 269 million from 275 million in last year’s third quarter.

“We’re seeing trends in our U.S. business that until now we have not seen,” Selander said at an analysts’ conference call late Monday. “In the month of October we have seen a pronounced weakness in the U.S. where our processed volumes were slightly negative versus last year.” In addition, cross-border volumes are weakening, mostly because U.S. cardholders “are cutting back on travel and cautiously spending if they do travel,” he added.

MasterCard generates most of its revenues from the network fees and assessments paid by financial-institution customers. With growth stagnant in the U.S. and slowing down globally, MasterCard has instituted a hiring freeze and is holding the line on travel and spending with outside vendors and consultants.

Despite the economic storm clouds, MasterCard’s third-quarter financials were mostly sunny. Total transactions processed grew 13% to 5.4 billion and worldwide purchase volume grew 13.3% to $497 billion on a local currency basis. Excluding a special charge for its recent antitrust settlement with Discover Financial Services (Digital Transactions News, Oct. 28), MasterCard posted earnings of $322 million. With the charge, MasterCard recorded a loss of $193.6 million compared with net income of $314.5 million a year earlier. Net revenues grew 23.6% to $1.34 billion from $1.08 billion in 2007’s third quarter.

At Princeton, N.J.-based Heartland, card-processing volume grew 42.4% to $20 billion, including $4.4 billion from acquisitions. Heartland earlier this year bought Alliance Data Systems Corp.’s Network Services unit, an acquisition that gave it 71,000 new merchant locations, mostly gas-station and convenience stores (Digital Transactions News, May 5).