Visa and Mastercard Performing Well: Q1 Insights
Visa and Mastercard both reported strong revenue and volume growth globally for the three-month period ending March 31, 2017. The networks continue to benefit from the secular shift of cash and check volume to electronic payments, card and acceptance growth (notably in international markets such as India, Brazil, and China), and increased cross-border spending. Highlights for each network are outlined below.
Figure 1: Calendar Q1 Result Highlights
1 Includes Visa Europe revenue and payments volume.
2 Inclusive of Visa Europe in prior year results
Source: Visa, Inc., Mastercard, Inc. and First Annapolis Consulting analysis.
Visa’s quarterly payments volume in the U.S. increased by $80B (12%) in aggregate over Q1 2016, while Mastercard’s increased $8B (3%) (see Figure 2). This discrepancy is attributable to recent market events in Visa’s favor: 1) Visa’s exclusive credit card acceptance relationship with Costco, effective as of June, 2016; and 2) the migration of USAA’s credit and debit card portfolios to Visa throughout 2016.
Visa’s U.S. growth was driven primary by credit, which increased 21% YOY, compared to 5% for Mastercard. While a considerable amount of the increase was driven by Costco and USAA, Visa also cited strong organic growth, particularly in the area of travel spend.
Visa’s U.S. debit volume increased 3% overall, while Mastercard debit volume was similar to prior year levels. Neither network provided details on their respective volume composition, but we can infer from their product growth rates and commentary that the networks are experiencing shifts in their mix of dual message vs. single message transactions:
- Visa noted that non-Interlink volume increased 7% (compared to 3% for debit overall), suggesting that Interlink volumes may have declined YOY. Visa specifically referenced PIN debit routing choices by acquirers, merchants and gas prices as drivers affecting Interlink volume.
- Mastercard, in contrast, cited positive growth in Maestro volume as a result of increased issuer enablement and merchant routing. This growth helped mitigate its loss of USAA’s signature debit volume.
The networks also communicated strong digital commerce growth as enrollments in Visa Checkout and Masterpass exceeded 20 million and 85 million accounts, respectively.
For more information, please contact Andrew Gordon, Manager, firstname.lastname@example.org, specializing in Payments Strategy & Innovation.
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