This increase in Visa-Mastercard earnings has been attributed to the easing concerns among customers regarding the economic slowdown and to the large-scale discounts which were offered during the holiday shopping season, which encouraged consumers to spend more.
All week long, financial analysts and market enthusiasts were anticipating the quarterly numbers for Visa and Mastercard, which would indicate the customers’ spending patterns over the past three months. Wall Street analysts had predicted Visa’s adjusted earnings to slump to $2.66 per share, but that would still have been an increase from last year’s figure, which was $2.41 per share.
However, the reports released on Thursday proved that Visa’s earnings had surpassed Wall Street’s expectations by recording $2.75 per share, which was an increase of 1.8%. This increase has been attributed to the easing concerns among customers regarding the economic slowdown and to the large-scale discounts which were offered during the holiday shopping season, which encouraged consumers to spend more.
Retailers had offered discounts on a multitude of products, from clothing to home appliances and luxury items, and online sales also skyrocketed due to mobile shopping. There was a 9% increase in payments volume which determines the overall consumer and business spending on Visa’s network and the company reported a 10% rise in revenue, earning $9.5 billion in the last quarter.
Yet another reason for Visa’s increased profit margins was the huge demand for domestic and international travel, which was a result of increased prices and suitable weather conditions. Cross-border travel volume, including travel within Europe, which still falls under the purview of international travel, increased by 16% and processed transactions were up by 11%. With Visa’s improved earnings, the company’s stocks increased by more than 2% and there was a record high with the share prices rising by 2.1%.
The Dow Jones firm expects a full-year growth in earnings and a double-digit revenue growth. On Tuesday, Visa announced a partnership with Elon Musk’s X as part of the tech billionaire’s efforts to transform the social media platform into an ‘everything app.’ CEO Linda Yaccarino said on X that a new feature called X Money Account will enable users to make person-to-person payments and link their debit cards for immediate bank transfers. X Money is set to debut later this year.
Mastercard, on the other hand, reported a 20% increase in earnings, with shares going up to $3.82 per share, along with a 14% revenue growth of $7.49 billion. Mastercard recorded an 11% increase in switched transactions and clearing and settlement transactions. For the year 2025, Mastercard has a double-digit targeted growth rate. Mastercard’s 3.8% increase in share prices has yet again credited the holiday season shopping spree for its improved performance.
Wall Street analysts had expected the company to report share prices at $3.69 which would be a decrease from the $3.89 per share recorded in the third quarter of 2023 and an increase from the fourth quarter’s $3.39. The cross-border value rose by 20% and benefited from a rise in travel expenditure and investments in cryptocurrencies.
Mastercard has an added edge when compared to its peers as it offers important services such as fraud protection and has a more balanced global presence. This has contributed to the continued stability of the company’s growth margins. These value-added services are not merely business diversification initiatives for Mastercard, as the revenue from such services surged by 17% in the past quarter.
The company has understood the challenges and downsides associated with finance becoming increasingly reliant on digital and AI-reliant platforms and has finalised an acquisition of threat intelligence company Recorded Future for $2.65 billion in the fourth quarter to mitigate these risks.
Despite anticipations that consumption expenditure would decrease in the wake of the global financial downtrend, the opposite is true with global consumer spending sustaining. While both Visa and Mastercard have performed reasonably well this quarter, when compared to the broader 2024 markets, the performance has been underwhelming. With the global financial and economic systems undergoing major changes in the coming months, it is difficult to estimate consumer behaviour and by extension, the performance of these payment processors.