MasterCard Posts Increases in Transactions and Charge Volume, and Boosts Incentives

Transaction volumes, revenues and profits all headed up smartly for MasterCard Inc. in the first quarter. But MasterCard on Wednesday also reported laying out nearly $900 million in rebates and incentives during the quarter to build future volume in an increasingly competitive global card marketplace.

In the United States, total first-quarter credit and debit card purchase volume rose 7% to $287 billion from $268 billion a year earlier. Debit card charges increased 8% to $141 billion from last year’s $130 billion, on 3.51 billion transactions, up 9% from 3.21 billion. U.S. credit card volume hit $146 billion, up 6% from $138 billion, on 1.61 billion transactions, an increase of 7% from 1.51 billion in the year-earlier period.

While those increases were respectable, they might have been even greater had not Americans been in such a thrifty mood. President and chief executive Ajay Banga told analysts this morning that MasterCard’s research indicated that rather than spending it, consumers were saving more or paying down debt with the cash they had available thanks to lower gas prices versus early 2014.

Worldwide, MasterCard’s network processed 11 billion transactions, up 12% from 9.85 billion in 2014’s first quarter.

Net income jumped 17% to $1.02 billion from $870 million in 2014’s first quarter on net revenues of $2.23 billion, up 3% from $2.17 billion on an as-reported basis. But the strong U.S. dollar negatively affected MasterCard’s results. Adjusted for currency fluctuations, net revenues increased 8%.

Transaction-processing revenues increased 7% on an as-reported basis to just over $1 billion from $936 million a year earlier but were up 13% adjusted for currency fluctuations.

MasterCard charged $881 million for rebates and incentives against revenues in the first quarter, an increase of 19%—and 25% adjusted for currency—from $738 million in 2014’s first quarter. Rebates and incentives go to card issuers that agree to put MasterCard’s brand on their plastic, and to merchant acquirers and merchants to encourage transaction volume. Among the recipients of some of those funds was Citigroup Inc., which in March announced an expanded 10-year global agreementwith MasterCard to move more of its consumer credit and debit cards to the MasterCard brand.