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January 28, 2021Blog Posts

Mastercard sees U.S. spending trends improve in January as earnings ‘set the stage’ for 2021 rebound

MarketWatch

Mastercard Inc. shares are up 3% in Thursday trading after the payments giant topped expectations with its latest results and pointed to improving U.S. spending trends in January relative to the end of last year.

The company’s revenue for the fourth quarter decreased to $4.12 billion from $4.41 billion, though it exceeded the FactSet consensus that called for $4.0 billion. Chief Executive Michael Miebach called out “very strong e-commerce sales” on the company’s earnings call, though weak international travel trends continued to weigh on lucrative cross-border spending.

Cross-border volume dropped 29% in the quarter, while gross-dollar volume rose 1%, both in local currency. Mastercard MA, +1.64% saw a 4% increase in switched transactions which Chief Financial Officer Sachin Mehra attributed in part to increasing adoption of contactless payments.

Contactless or tap payments can be greater drivers of switched-transaction growth than regular card swipes or card dips because they’re more likely to replace the sorts of small-ticket purchases people would once use cash for, Mehra told MarketWatch. Contactess adoption is growing amid the pandemic as people seek to avoid handing their physical cards over to cashiers.

Europe is “always at the forefront” of contactless usage but Mastercard is seeing “good traction” in Asia-Pacific, Latin America, and “even the U.S,” which has been a laggard.

Mastercard's new logo suggests a future where payment is digital - Vox

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