MasterCard’s fourth-quarter financial results show that the credit card giant’s profits soared 29% during the holiday shopping quarter as customers made more purchases. MasterCard and its rivals such as Visa are benefitting from the rising use of payment cards instead of cash throughout the world. The company witnessed a net revenue growth driven by the impact of the following:
- An increase in cross-border transaction volumes of 19%
- A 13% increase in gross dollar volume, on a local currency basis, to $1.2 trillion
- An increase in number of transactions processed of 11%, to 11.6 billion
Worldwide purchase volume during the quarter was up 12% on a local currency basis versus the fourth quarter of 2013, to $858 billion. As of December 31, 2014, the company’s customers had issued 2.1 billion MasterCard and Maestro-branded cards.
Overseas transactions account for a major chunk of MasterCard’s transactions. MasterCard gets about 60% of its payment volumes from outside the US. In December last year, US retail sales rose by 5.5% right from Thanksgiving through Christmas Eve. This further helped boost MasterCard’s financial results.
Ajay Banga, president and CEO, MasterCard, said in an official press release: “Despite a mixed global economy, we delivered solid results for the quarter and for the full year in 2014. This year is off to a good start with several new wins, as well as renewals of some important customer agreements, with more in the pipeline. Looking ahead, we will continue to be at the forefront of our industry by driving payment innovation with solutions such as MasterPass, and by increasing electronic payments usage globally as demonstrated by our significant expanded acceptance footprint across Africa.”
MasterCard is currently going through companywide restructuring and is expected to lay off 500 employees. MasterCard is focusing on a few growth areas, primarily investments in digital. MasterCard is also looking to expand into markets which are dominated by Visa. In November last year, MasterCard had cited plans to launch a debit card service in Canada in 2015.