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After a strong quarter for card issuers on Thursday, MasterCard Inc. warned that runaway inflation is reducing spending by lower-income customers.
Consumers around the world are showing signs of cracking amid decades of price pressures, with purchases at retailers including Walmart shifting from big-ticket items to essentials and groceries.
“What you’re seeing in the U.S. is a declining trend in terms of growth rates on the lower income side,” Chief Financial Officer Sachin Mehra said on an analyst call.
MasterCard’s outlook was less optimistic than that of rival Visa Inc., which said it had yet to see signs of a return to spending by cardholders.
While affluent consumer spending and cross-border volumes have so far been a buffer for the downturn, that trend could be significant as the US economy looks into recession after two quarters of contraction.
MasterCard CEO Michael Mibach also cited rising interest rates and natural gas shortages as risks in Europe’s second-largest market, where payment rates are positive.
Travel bonanza
The company’s performance in the second quarter was boosted by the strongest summer travel season since the start of the pandemic, thanks to demand and an easing of COVID-19 restrictions.
Cross-border volumes surged 58 percent in local currency during the April-June period, helping total dollar volume through the MasterCard network rise 14 percent to $2.1 trillion.
The New York-based company reported an adjusted profit of $2.56 billion on net revenue of $5.49 billion. The figures beat analysts’ estimates of $2.36 per share and $5.26 billion, according to Refinitiv data.
By Niket Nishant and Manya Sanini
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