The Card Giants Report Robust Cross-Border Results As Pandemic Effects Wane

A key business for international card companies is cross-border travel, which took a big hit with the onset of the Covid-19 pandemic early in 2020. But now it appears that business is staging a comeback. Mastercard Inc. reported Thursday its cross-border volume in March climbed above numbers last seen in 2019. 

Earlier, Visa Inc. said its March-quarter growth in cross-border volume “remained robust,” with a 38% increase in transactions over the same period last year. Excluding transactions within Europe, the volume increase was even more robust, at 47%.

“Cross-border travel is improving as travel restrictions ease,” said Sachin Mehra, Mastercard’s chief financial officer, during an earnings call Thursday morning to discuss the company’s first-quarter results. The improvement, he added, has occurred “faster than we expected. We are off to a strong start to 2022 with the recovery of cross-border travel.”

For Visa, “the cross-border recovery in the quarter was stronger than we expected,” said Vasant Prabhu, Mehra’s counterpart at Visa, during that company’s earnings call earlier in the week. The recovery in the business is particularly notable, he added, because it tends to be highly profitable for the network. Disruptions caused by Russia’s invasion of Ukraine have not impacted cross-border traffic “so far,” Prabhu added. But for Visa, at least, the level of transactions is “still below” that seen pre-pandemic.

With respect to the Ukraine war, much the same can be said of Mastercard, which reported its cross-border volume was up 53% compared to the first quarter of 2021. But excluding Russia, where both Visa and Mastercard have shut down processing following the imposition of sanctions on that country, the increase was still 52%. For April through the 24th, Mastercard said its volume increased 60% compared to that period last year, while the increase excluding Russia was 65%. 

“Cross-border [activity] is still fundamentally sound,” said Mehra. In fact, he pointed out, improved consumer spending overall is helping to drive the cross-border trend line back to pre-pandemic normality. Much of the improvement in cross-border business can be attributed to a lessening of restrictions put in place early on to combat the spread of Covid, both card networks said.

Cross-border transactions, defined as those in which the issuing country is not the same as the merchant country, matter to the card networks as a barometer of the health of their international, markets and of the networks’ ability to serve those markets. The onset of Covid-19 two years ago threatened that ability, though it also had the effect of boosting e-commerce traffic globally. “As cross-border travel comes back, you can see some give-back on cross-border e-commerce,” Mehra noted.