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Mastercard net income up 134% YoY in Q4 2019

Mastercard’s net revenue grew by 16% YoY to $4.4 billion, while net income grew to 134% to $2.1 billion in Q4 2019. The company’s gross dollar volume increased 12% YY, and cross-border volume increased 16%. In India, MasterCard signed a co-brand deal with Vistara Airlines, and renewed debit deals with HDFC Bank and SBI. The company has also entered into a partnership with Pine Labs, that provides PoS and prepaid services to merchants in India, Southeast Asia, and Middle East.

In a blow to the digital payments industry, the Indian government last month disallowed businesses with annual turnover of over Rs 50 crore to levy merchant discount rate (MDR) on either customers or merchants for RuPay and UPI transactions.

Mastercard president and CEO Ajay Banga said the company is monitoring “a number of economic and geopolitical factors as well as the potential effects of the corona virus that could impact results”. It’s early days for the Coronavirus, “fortunately, a decent portion of our inbound and outbound cross border from China is e-com related. So it provides some level of a hedge. And we will continue to monitor the environment. It’s too early to tell at this point in time, how this thing plays out,” CFO Sachin Mehra said. If the coronavirus epidemic becomes bigger, more urgent and immediate crsis across many parts of the world, then “we’ll take a look at those numbers once again. But you’re going to take this as it comes, one step at a time, and that’s the only way to look at this carefully.”

The coronavirus outbreak has now reached every region in mainland China, with 7,711 confirmed cases, including a confirmed case in Tibet. 170 people have died from the virus. Coronavirus is an infectious disease which has now spread to at least 15 other countries. More people have now been infected than the SARS outbreak, also a coronavirus, in early 2000s.

When SARS was on in 2003-04, “the total business in China was also smaller. The total size of our Company was also smaller, and our ability to be a real player in cross-border across many corridors 18 years ago was very different. So I kind of wouldn’t go too much on that. I would rather, think about the natural hedge that e-commerce provides the fact that there’s still a lot of travel there, but that could change over the next few weeks. We’ll keep an eye on it very carefully.”

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In numbers:

  • Cross-border volume increase of 16% YoY
  • Increased in switched transactions by 19% YoY
  • Total operating expenses decreased 22%
  • 2.6 billion MasterCard and Maestro branded cards issued
  • 9 billion, up 9.4% YoY
  • Purchase volume stood at $1146 billion
  • Purchase transaction stood at $24.7 billion, up 20.9%

Download: Financials | Earnings Call Transcript

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