(Reuters) - MasterCard Inc (MA.N) reported a better-than-expected 15.5 percent jump in quarterly profit as efforts to expand its international business pay off, with more people willing to use cards instead of cash.
China’s decision to open up its $1 trillion a year domestic bank card market to foreign companies should further benefit the company and its larger rival Visa Inc (V.N).
“We are pleased with the announcement and see it as a good step in the right direction,” MasterCard Chief Executive Ajay Banga said on a post-earnings conference call.
MasterCard’s shares were up 7 percent at $81.25 in midday trading. Visa was up 8.7 percent, the biggest gainer on the Dow Jones Industrial Average .DJI on Thursday.
MasterCard has a bigger exposure to global markets than Visa, deriving nearly 60 percent of its revenue from its international business.
Wedbush Securities analyst Gil Luria said if the two companies were to grow at their current rate, they would need big new opportunities and China was one of them.
MasterCard’s worldwide purchase volume, excluding the United States, grew 12.8 percent to $554 billion on local currency basis in the third quarter.
The company’s cross-border volume fees rose 14 percent to $835 million.
The two companies also benefited from a rise in global consumer confidence. A Nielsen survey showed that concerns about the economy and job prospects had eased globally in the three months ended September from the second quarter.
U.S. consumer confidence rose in August to its highest level since October 2007.
Visa, which reported a better-than-expected adjusted quarterly profit on Wednesday, said cross-border transactions increased 10 percent.
MasterCard’s net income rose to $1.02 billion, or 87 cents per share, in the quarter ended Sept. 30 from $879 million, or 73 cents per share, a year earlier.
Net revenue rose 12.8 percent to $2.5 billion.
Analysts on average had expected earnings of 78 cents per share on revenue of $2.45 billion, according to Thomson Reuters I/B/E/S.
MasterCard and Visa are also turning their attention to mobile payments and have partnered with Apple Inc (AAPL.O) in the launch of Apple Pay, which allows iPhone users to pay using their phones.
Chief Executive Ajay Banga said the company planned to use mobile-based payments as a key tool of its cash displacement efforts.
Editing by Sriraj Kalluvila