As Mastercard and its peers long desired, travel spending has recovered from its near-total collapse during the early days of the pandemic.
"Over the last two years, the travel industry was hard hit. We always said the recovery was going to happen this year and we're prepared for that," said Michael Miebach, CEO of Mastercard, during Thursday's earnings call.
For the quarter ending March 31, Mastercard reported profits of $2.6 billion, or $2.68 per share, up 44% from $1.8 billion, or 46% from $1.83 per share, the prior year. Analyst estimates were $4.91 billion and $2.18 per share, according to
Travel was a particularly strong category. For the first three weeks of April, travel payment volume was up 179% year over year, Mastercard reported, with travel payments for 2022 thus far at 110% of 2019 levels — far ahead of the card network's initial projection that travel payments would reach 2019's level by the end of 2022.
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"Consumers are ready to move on from the pandemic. They want to go out there and knock things off of their bucket list," Miebach said.
The travel recovery will also contribute to a greater volume of credit card payments over debit, resettling a trend toward debit early in the pandemic as consumers tried to avoid debt.
"As travel comes back it's more credit-card oriented," Miebach said.
Among specific markets, Asia Pacific has been slower to recover, with travel payments at 40% of 2019 levels. The region was about 14% of Mastercard's travel payment volume in 2019, and China, which has locked down Shanghai and other large cities, was not a significant portion of Mastercard's travel volume before the pandemic, according to Miebach.
Cross-border payment fees, which include international travel, were $1.4 billion, up about 50% from the prior year and above 2019 levels for the first time in March. Beyond travel, Mastercard's plans for growing cross-border payments include expanding processing transactions for import and exports and remittances.
"That's all additive and expansive," Miebach said. Mastercard's
"All of this is coming together into a space that has been historically inefficient," Miebach said.
The overall spending mix as consumers emerge from the pandemic will be a continued high level of digital shopping that emerged during the pandemic and a return to in-person shopping. "Consumers will go for more choices, so we're supporting a multi-rail strategy," Miebach said. Under questioning from analysts, Miebach said Mastercard is monitoring the impact of inflation, which has reached
"We have not seen anything yet in terms of changes in consumer spending behavior," Miebach said, adding there has been some impacts in specific verticals, such as fuel.
There has been a 1% increase in transaction volume for gas, suggesting an impact from higher gas prices, as well as a shift in higher per-transaction volume for airline ticket purchases, though that has not hurt the recovery in travel.
Mastercard affirmed its 2022 outlook for overall growth in the high teens, noting it is monitoring economies, geopolitical and pandemic infection rates but has not seen a substantial impact from these issues. Before Russia's invasion of Ukraine, which caused the card brand to
Much like Visa, Mastercard reports it will offset the loss of Russian business by reducing its expenses in Russia, and by targeting growth in other areas such as open banking and non-travel cross-border payments.
