Redecard SA, Brazil's second-largest card payment processor by market value, said Friday that its first-quarter profit rose 11%, to $204.1 million, as the economy recovered from its first recession since 2003, spurring retail sales.

The value of credit and debit card transactions grew 25% and 20%, respectively, the Sao Paulo company said. Brazil's economic expansion fueled a 12.3% rise in February consumer spending, the steepest growth rate in two years.

"Cards are substituting other payment methods" such as cash and check, Henrique Navarro, an analyst at Banco Santander SA in Sao Paulo, said before the results were announced.

Redecard may lose market share to Cielo SA because of its controllers' plan to merge their card operations under the Elo brand, according to Navarro. Cielo, based in Sao Paulo, is controlled by Banco do Brasil SA and Banco Bradesco SA, which announced a plan on April 27 to integrate their card businesses.

"Elo is going to capture a piece of the market share to grow," Navarro said. "It's negative for Redecard."

Cielo had on Thursday reported 32% growth in first-quarter profit.

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