Mastercard reported a quarterly profit beat on Oct. 29 as consumer spending continued to hold up despite persistent inflation and economic uncertainty. The results extended a strong period for major payment networks and offered fresh evidence that households are still using cards for both essential and discretionary purchases.
Mastercard shares rose more than 4% in afternoon trading after the report. Visa shares gained about 2%, while American Express also rose about 2%. Visa had reported its own quarterly results earlier in the week, and American Express posted results earlier in October.
Spending remains broad across income groups
Ling Hai, Mastercard’s newly appointed chief financial officer, said spending was increasing across income groups. Lower-income consumers were directing more of their budgets toward necessities, while higher-income customers continued making discretionary purchases, according to an interview with Reuters.
Higher gasoline prices also contributed to part of this year’s spending growth, Hai said. That effect could weaken if inflation stays high. The report said a steady labor market and continued wage growth have helped cushion households from higher fuel and living costs.
“Cash-strapped consumers might swipe their card to ride through the rougher times,” — Brian Jacobsen, chief economic strategist at Annex Wealth Management
Card use can increase when consumers face financial shortfalls because borrowing helps bridge the gap between income and expenses. That does not necessarily mean households are in stronger financial condition. It can also indicate that some consumers are relying more heavily on credit as costs remain elevated.
Payment networks remain cautious
Mastercard and Visa operate payment networks spanning more than 200 countries and territories. That global reach can provide some protection when economic conditions weaken in one region, as consumers and businesses continue using the networks for everyday transactions elsewhere.
Executives have nevertheless avoided declaring that the current pace of spending will last. Visa CEO Ryan McInerney told analysts that spending had been stable across income groups but said it was difficult to determine how strong the results would be, how long the strength would continue or what the new normal would look like.
| Company | Reported market reaction on Oct. 29 | Development described |
|---|---|---|
| Mastercard | Shares up more than 4% | Quarterly profit beat |
| Visa | Shares up about 2% | Quarterly results reported earlier in the week |
| American Express | Shares up about 2% | Quarterly results reported earlier in October |
- Mastercard said spending was rising across income groups.
- Essentials accounted for more of mass-market consumers’ budgets, while higher-income consumers maintained discretionary spending.
- High inflation, gasoline prices and interest rates remain risks to the durability of spending growth.
Cross-border spending growth at Visa and Mastercard also remained steady, according to the report. For consumers, the results show continued card activity rather than a change to card rates, fees or account terms. The broader question for payment companies is whether spending can remain resilient if high prices and borrowing costs continue to pressure household budgets.
