We missed this earlier. 

Card-not-present spend, which include online transactions and payments without a physical card, now account for over 50% of MasterCard’s switched volume in April, up from about 40% YoY. MasterCard said it is working to increase the amount cardholders can transact via contactless methods worldwide, the company said in its Q2FY20 earnings call released April 29. As lockdowns kicked in worldwide, MasterCard’s payments volume fell rapidly every week of of March and April. Cross-border volume fell by a third in mid-March, and remained half of usual volume since March 28 until the week ended April 21. Any changes planned around interchange or network fees have been postponed.

MasterCard expects to capture the market that will depart from cash to online payments. People are getting used to virtual entertainment and getting home deliveries (when otherwise they would have gone out), so “there is some behavior patterns moving toward digital, and we believe that will continue to persist,” Michael Miebach, president and CEO-elect said. “It’s not only displacing existing electronic payments, it’s a net increase that we expect versus cash,” he added. MasterCard expects the attitude towards cash to be more negative than it was before

Cross-border payments plummeted by over 20% by end of March, while card-present volumes plummeted by ~80%. Card-not-present payments (for non entertainment & travel) starting increasing in April and shot up by 35-40% by April end. Card-not-present transactions had fallen by 20% by April end, but this was dragged down by the impact on travel. Apart from resumption of international travel, how soon cross-border volumes will bounce back depends improvement in consumer confidence, which again depends on public health and ultimately a vaccine.

Possible trajectory in payments: MasterCard believes most markets were already adjusting to a lower level of spending due to mobility limitations with a focus on buying necessities, aided by e-commerce, CEO Ajay Banga said. Once lockdowns are relaxed and testing and tracing is more effective — even before a vaccine — spending will return to pre-COVID levels, especially in clothing, healthcare, domestic and inter-regional travel. Spending on mass entertainment and long haul travel will take longer, he added.

  • Spending on items that are either discretionary or require mobility are down significantly. This includes categories such as travel, restaurants, clothing, recreation and gas.

“It’s impossible to say how long any of this will take,” Banga added. The company has got preliminary approval for its license application to switch domestic transactions in China. This will allow it to set up a venture with NetsUnion Clearing Corporation (NUCC) over the next year.

  • Net income: $1.7 billion
  • Net revenue: $4.0 billion, up 3% YoY
  • Switched transactions: 22.1 million, up 13% YoY
  • Cards, both Mastercard and Maestro: 2.6 billion, up 5% YoY


Earnings Call Transcript | Presentation