MasterCard Worldwide says it’s gaining U.S. debit card market share, and it’s not being quiet about it. And why not? It’s been stuck hovering between a 20% and 25% share for a very long time.
Is there a light at the end of the tunnel?
Ajay Banga, MasterCard chairman and CEO, certainly sang the praises during a May 2 first-quarter earnings call with analysts: MasterCard has doubled the number of U.S. debit cards it can process since the new federal interchange rates took hold Oct. 1, he said.
“Before the regulations went into effect, MasterCard functionality was at approximately 25% of U.S. debit cards,” Banga noted. “Now MasterCard is enabled on about half of all U.S. debit cards, including three of the largest portfolios in the market.”
MasterCard also owns the international Maestro point-of-sale and Cirrus ATM PIN-debit networks. In recent years, MasterCard and Visa Inc. negotiated exclusive deals with issuers to use only their debit brands, which the new Durbin amendment rules no longer allow under a policy that took effect April 1. Visa negotiated most of those exclusive deals, with issuers tying Visa’s Interlink POS PIN-debit debit brand to their Visa check cards.
Banga said during the call MasterCard’s share of PIN-debit transactions increased 20% in April, carrying momentum that helped produce solid first-quarter earnings (
“It is too soon to know how routing will play out longer term, but in the short term we have roughly doubled our presence in U.S. debit cards and nearly tripled our share of U.S. PIN-debit transactions,” Banga said.
Carlos Menendez, MasterCard group executive, global debit, echoed Banga’s assertion that MasterCard is gaining U.S. debit card market share during an April 30 presentation at NACHA’s Payment 2012 conference in Baltimore (
MasterCard executives point to the improved debit card processing capabilities in the U.S. and continued processed transaction growth in all sectors as key factors in a quarter that saw net revenue increase 20%, to $1.8 billion, up from $1.5 billion a year earlier. Net income was $682 million, up 21.4% from $562 million.
Acquisitions of Data Cash and Access Prepaid over the past year have helped MasterCard increase its presence in the e-commerce gateway business and in the prepaid card market, Banga said (
The Data Cash Internet gateway handles non-MasterCard transactions as well, Banga noted. “We have an opportunity to gain insights for the breadth of transactions we see,” he added.
The company reported a 15.4% increase in global purchase volume, to $629 billion from $545 billion for the quarter ended March 31. Transactions worldwide increased 16.7%, to 9.1 billion from 7.8 billion.
In the U.S., purchase volume rose 13.5%, to $236 billion from $208 billion, while transaction volume increased 16.7%, to 4.2 billion from 3.6 billion.
U.S. purchase volume for credit and charge card programs rose 7.8% to $124 billion from $115 billion, with transaction growth also at 6.6% to 1.46 billion from 1.37 billion.
In the rest of the world, purchase volume for credit and charge programs rose 17.3% to $319 billion from $272 billion, with transaction growth increasing 16.1%, to 3.6 billion from 3.1 billion.
For debit card programs, MasterCard reported a 19.4% increase in U.S. purchase volume, to $111 billion, up from $93 billion, with debit card transaction growth at 17.4%, up to 2.7 billion from 2.3 billion.
In the rest of the world, debit card purchase volume increased 15.4%, to $75 billion from $65 billion, while debit transactions rose 23.6%, to 1.36 billion from 1.1 billion.
For all credit, charge and debit programs, MasterCard reported an increase in accounts in the U.S. to 279 million, up 5.7% from 264 million, while cards issued by participating banks rose 5.1%, to 312 million from 297 million.
Accounts for all programs in the rest of the world totaled 696 million, up 12.4% from 619 million, while cards issued by participating banks increased to 770 million, up 11.4% from 691 million.
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