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Mastercard, the second-largest US-based card network, posted strong growth in volume, cards, and transactions in its Q2 2016 earnings call.
But as the US credit card environment becomes increasingly competitive, the firm will need to find ways to balance impressive rebates and incentives with profitability — something that all the card networks are currently trying to navigate.
Three key categories saw an uptick: Volume: Mastercard’s gross dollar volume (GDV) increased to $1.2 trillion, up 7.6% constant currency year-over-year (YoY). Both US and international volume grew at roughly that rate, hitting $391 billion and $837 billion, respectively. For context, Visa purchase volume grew slightly faster, hitting 10% YoY growth constant currency in the quarter.
Cards: Mastercard added 143 million cards in the past year. The firm now counts nearly 2.3 billion cards worldwide. It’s worth noting that card growth came entirely from Mastercard-branded products — the number of Maestro cards decreased by 9 million.
Transactions: Mastercard processed 13.7 billion transactions in Q2 2016, up from 12 billion in the same quarter last year. The average number of transactions per card increased slightly, from 5.6 to 6.0. But the firm noted that a competitive rewards and card environment offset this number slightly.
In order to maintain and accelerate growth in these categories, Mastercard will have to find an effective way to navigate the competitive credit card market. Rebates and incentives spending is on the rise. Strong rewards offerings are the most important factor for customers willing to take on credit — a new survey from Citi found that 67% of customers said a rewards program is the biggest reason to choose a card, beating out interest rates and sign-on bonuses. That’s […]
