Debit Cards Propel What Growth There Is for MasterCard And Visa

Despite the economic downturn and softening volumes, MasterCard Inc. put in a “solid” first quarter, Robert Selander, MasterCard president and chief executive, said early Friday. “Our volumes have been impacted by significant headwinds, such as slower cross-border travel, lower gas prices, and an appreciating dollar,” Selander said at an analysts' conference call. “But our business model remains resilient as we continue to benefit from the secular shift from cash and check to electronic payments.” MasterCard's total U.S. debit and credit card purchase volume for the first quarter totaled $192 billion, a 6.8% drop from $206 billion in 2008's first quarter. U.S. purchase transactions rose 2.5% to 3.33 billion from 3.25 billion a year earlier. Debit helped limit losses in dollar volume. U.S. debit volume rose 5.3% to $79 billion from $75 billion in 2008. Debit purchase transactions were up 10.8% to 1.95 billion from 1.76 billion in last year's first quarter. In contrast, the 1.39 billion U.S. credit card purchase transactions represented a 6.7% drop from 1.49 billion last year. Credit card purchase volume also dropped to $113 billion in the first quarter, down 13.7% from $131 billion a year earlier. MasterCard's U.S. credit card base shrank 14% to 239 million from 278 million in 2008's first quarter. The U.S. debit card base increased 9.5% to 127 million from 116 million a year earlier. Net income for the first quarter dropped 17.8% to $367.2 million from $446.9 million, due primarily to the effect of volatile currency markets, Selander says. The economic downturn, including rising unemployment and declining retail and travel sales, also contributed to the lower earnings, he said. Meanwhile, Visa Inc. reported earlier this week that U.S. debit dollar payment volume exceeded that of credit for the three months ended Dec. 31. Previously, though U.S. debit transactions have surpassed that of credit for several years, total purchase volume on credit remained higher on credit than debit because of credit's higher tickets. However, in recent months, credit card transactions have been falling, as has the size of the average sale, according to Visa. Visa's total $409 billion U.S. debit and credit card purchase volume represented a 1.1% drop from year-ago levels. Credit card purchase volume dropped 6.9% to $203 billion from $218 billion a year earlier. Visa's U.S. credit card base dropped 8.5% to 334 million from 365 million. In contrast, dollar volume on U.S. debit cards increased 5.6% to $206 billion for the three months ended Dec. 31, from $195 billion a year earlier. Debit transaction volume rose 9.7% to 5.44 billion from 4.96 billion a year earlier. Visa's U.S. debit card base rose 12.9% to 333 million cards from 295 million in 2007. Net income for the Visa's second fiscal quarter ended March 31 totaled $536 million, up 71% from a pro forma $314 million a year earlier, Visa said.