By Allison Prang
Credit-card companies Mastercard Inc. and Visa Inc. reported double-digit declines in their revenue Wednesday, as the pandemic continued to weigh on results.
Mastercard's revenue fell 14% from a year earlier to $3.84 billion, hurt by a steep dive in cross-border volume, meaning payments cardholders make outside of the country where the card was issued. Cross-border volume on a local-currency basis tumbled 36%.
Chief Financial Officer Sachin Mehra said the drop in those volumes was "due to the effects of border restrictions and social distancing measures." Mastercard's revenue missed the estimate of $3.95 billion from analysts polled by FactSet.
"As travel starts to come back, we'll see personal travel...come back sooner than business travel," Mr. Mehra said on the company's earnings call. "And that should be tied to how we see the evolution of the Covid vaccine and the therapeutics taking place."
"While we have seen some improvement in travel within the [European Union] during the quarter, cross-border travel outside the EU has shown only limited recovery," Chief Executive Ajay Banga said.
Mastercard logged $1.51 billion in profit and said earnings were $1.51 a share. That compares to net income of $2.11 billion, or $2.07 a share, a year earlier. Adjusted earnings were $1.60 a share. According to FactSet, analysts were expecting $1.65 a share.
Shares of Mastercard, which reported results before the market opened Wednesday, fell 8.1% to $291.38 a share.
Visa's revenue tumbled 17% to $5.1 billion, but was still above the analyst consensus from FactSet of $5 billion. Cross-border volume fell 29% on a constant-dollar basis.
"Overall cross-border spending remains depressed, led by travel spending, as the majority of borders remain closed," the company said.
Visa said earnings were $2.14 billion, down 29% from a year earlier. Earnings were 97 cents a share and adjusted earnings were $1.12 a share. According to FactSet, analysts were expecting adjusted earnings of $1.09 a share.
Shares of Visa rose 0.35% in after-hours trading.
While travel is taking a hit from the coronavirus pandemic, contactless payments are growing in popularity. Contactless penetration was 41% of in-person purchase transactions in the third quarter, Mastercard President Michael Miebach said. In the second quarter, it was 37%, and a year ago it was 30%, he said.
"We believe that as the economies reopen, people will shop in stores again. But e-commerce will remain elevated from pre-pandemic levels as behaviors have changed and payment preferences have shifted," Mr. Miebach said.
American Express Co., which reported results last week, logged a 69% drop in travel and entertainment spending.
Write to Allison Prang at firstname.lastname@example.org
(END) Dow Jones Newswires