MasterCard's revenue misses estimates on higher incentives

Wed Jul 29, 2015 2:56pm EDT
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(Reuters) - MasterCard Inc (MA.N: Quote), the operator of the world's second largest payment network, reported lower-than-expected quarterly revenue as the company offered more rebates and incentives to win new and renewed deals.

Shares of MasterCard, which operates the world's second largest payment network, fell about 3 percent in premarket trading on Wednesday.

The company paid $940 million in rebates and incentives in the second quarter, up 21 percent from a year earlier.

MasterCard charges companies using its payment network for transactions on cards that carry its brands. It doesn't issue cards, extend credit or set interest rates.

The company usually pays higher incentives to its partners than larger rival Visa Inc (V.N: Quote).

Client incentives accounted for nearly 28 percent of MasterCard's gross revenue in the second quarter, way above Visa's 16 percent.

MasterCard's cross-border volumes - the value of transactions made by card holders outside the card-issuer's country - jumped by 17 percent.

The company's net income fell to $921 million in the quarter ended June 30 from $931 million, a year earlier, due to a $44 million after-tax charge related to a U.K. merchant litigation settlement. However, earnings rose on a per-share basis to 81 cents from 80 cents.

Excluding the charge, MasterCard earned 85 cents per share.   Continued...

A sign with a logo of MasterCard is seen on the door of a shoe shop in Stavropol January 13, 2015.  REUTERS/Eduard Korniyenko