MasterCard Inc expects growth to remain strong in the next few years, helped by revenue from overseas markets, even as the US credit crisis cuts into spending by Americans, a senior executive told Reuters on April 14.
Walt Macnee, president, global markets, said the business trend in markets outside the United States, in particular less developed payment markets such as China, remained very positive, and the credit crisis should not have any direct and major impact on the company's growth.
-- Remains confident about this fiscal year and the one after
-- Plans to boost its expansion in emerging markets such as China
"We've got a lot of hedges, leaving us in a position that we remain very confident about this fiscal year and the one after," said Macnee, referring to its opportunities in emerging markets, where people have fast increasing demands for card payment services.
"We don't take hits from the credit, so there is a good confidence level in our business," he told Reuters in an interview at the company's headquarters in Purchase, New York.
In January, MasterCard said quarterly earnings rose to $304.2 million, or $2.26 a share, from $40.9 million, or 30 cents a share, in the same quarter in the prior year.
Macnee declined to give a specific forecast for annual earnings growth. MasterCard's credit card network feeds off transaction volume, but does not issue cards, so it is not directly exposed to the debt problems of consumers.
In contrast, credit card companies such as American Express Co have been hurt by consumers struggling to pay bills as they face higher fuel costs and falling home prices.
But Macnee said he was concerned about negative "wealth effect" caused by the credit problems in the United States, which would affect American consumer behaviour. "The reduction of asset value, mostly housing, has created negative wealth effect," said Macnee, who is responsible for MasterCard customer-related activities around the world. "When people feel more wealthy, when they feel their house value double or triple the value, they're more happy to spend."
TRAVEL MAKES MONEY:
In the United States, MasterCard's major rivals include Visa Inc and American Express. Visa, the world's biggest card network, gets less of its revenue from outside the mature US market than MasterCard, analysts have said.
Outside the world's largest economy, MasterCard is facing rapidly increasing competition from domestic card network operators, especially in China, where China Unionpay is the country's sole operator of its domestic interbank transaction network. China Unionpay, backed by the central bank, controls its bank payment system and automatic teller machines (ATMs).
Most Chinese banks issue local currency yuan-denominated credit cards, although some of them also issue dual currency, usually yuan and US dollar-denominated, credit cards with both China Unionpay and MasterCard logos, to allow Chinese card holders to make transactions more easily when travelling abroad.
"Because China Unionpay is a designated processor, it's a little more challenging for our revenue in China than the situation in other countries," Macnee said.
"But we're very excited about the future of China and it's a great market to us," he said, adding that Chinese people prefer using foreign credit cards such as MasterCard to China's Unionpay card when they travel abroad due mainly to Unionpay's limited network coverage and ATMs outside China.
International travel is a key source of profits for card companies, as people usually spend more when travelling abroad and global card companies such as MasterCard can charge customers fees for transactions in foreign currencies. "China is a destination as well as an exporter of travellers," Macnee said.
"People around the world are really getting used to their mobility and it's one of the things that's really feeding our prospects," he said, adding that economic globalisation had become a major factor in keeping people travelling.
Comments
Comments are closed.