New Deals and Digital Expansion Drive Mastercard’s Q2 Revenue Surge

Playing a hot hand of new deals and balanced global consumer spending, Mastercard posted double-digit revenue growth for the second quarter, as announced in its earnings call Wednesday (July 31).

“The macroeconomic environment remains mixed, and we continue to monitor the positives and negatives,” Mastercard CEO Michael Miebach told the company’s earnings call audience. “Strength in consumer spending continues to be supported by a solid labor market and wage growth. While there are some signs of labor market growth moderating, this is off very strong levels of job creation. Also, inflation and interest rates remain in focus. We’ve seen inflation cool, but to varying degrees across carded and non-carded categories.”

Mastercard reported a strong performance in the second quarter, with net revenue increasing by 14% year-over-year to $6.3 billion. This growth was driven by a significant rise in gross dollar volume (GDV), which saw a 12% increase to $2.1 trillion. Cross-border payment volumes also surged, growing by 24% as global travel and eCommerce transactions continued to recover from the pandemic.

Additionally, revenue from value-added services and data saw a substantial uptick, contributing to the overall positive financial results. This segment experienced 19% growth, underpinned by the growing demand for cybersecurity solutions, data analytics, and other advisory services, leading Miebach to comment: “These results reflect how payments and services enable each other to create differentiated value for our customers and help us realize even more of the shift to digital.

Miebach highlighted several key achievements and initiatives following the Q2 earnings announcement. Mastercard won new deals, including a significant conversion of neobank Varo Bank’s debit and credit portfolios to Mastercard, and an extension of its enterprise agreement with Wells Fargo. Additionally, Mastercard renewed partnerships with major U.S. prepaid partners and extended its collaboration with the National Bank of Canada and Postapay. In Africa, Mastercard expanded its footprint with new co-brand deals with Ethiopian Airlines and other regional banks, enhancing digital and mobile money acceptance.

Miebach emphasized new payment flows, such as the virtual card issuance solution with Checkout.com for online travel agencies and a multi-year agreement with Wells Fargo and Expedia. He noted Mastercard’s commitment to security and tokenization, with 22 billion tokenized transactions in the first half of 2024, reducing fraud and improving approval rates. Mastercard’s efforts in enhancing the checkout experience include scaling biometric checkout programs and migrating Maestro cards to debit Mastercard to capture cross-border and online spend more effectively.

Mastercard’s initiatives in Africa are part of a broader strategy to drive digital transformation in regions with high cash transaction rates. Miebach pointed out Mastercard’s investments in partnerships with large telcos and mobile network operators, tripling acceptance locations in Africa over five years. He also mentioned significant progress in open banking, with partners like Klarna, PayPal, and Jack Henry leveraging Mastercard’s open banking capabilities for account opening, linking and balance checks.

The quarterly call gave analysts a chance to ask Miebach about the late-June rejection of Visa and Mastercard’s $30 billion swipe fee settlement with merchants. In that ruling, U.S. District Judge Margo Brodie stated that the two companies seem to be able to pay for a “substantially” bigger settlement. She also argued that the proposed deal would have “disproportionately and inequitably” benefited small, local merchants over larger retailers like Walmart and Target.

“We’re disappointed where this has landed for now,” Miebach told the call. “And I would describe it as we respectfully disagree with the court’s ruling to reject the settlement. This has been negotiated over many years across many parties, I think with best intentions, and it would have produced a lot of benefits for consumers, for merchants, and across all parties. So, this is now not happening. We are obviously ready, and we will take all effort to ensure that a solution is found before this goes to trial. Engage all parties. We’ve done this in previous scenarios before. It’s difficult to speculate about outcomes at this point, but I think this intention to lean in and see how we can provide more security predictability to merchants and banks and all parties here is what’s driving us. So, there’s a number of codefendants in this, and everybody will obviously take their own decisions here. But across the board, obviously there has to be a dialogue and find the best outcome of this.”