MasterCard Inc. on Tuesday said an increase in international transactions, price increases and cost cutting helped lift its second quarter profit by 31 percent.
The gain topped Wall Street profit expectations, but fell short of the 38 percent leap in operating income posted by the company's larger rival, Visa Inc., last week.
MasterCard shares fell $3.52, or 1.7 percent, to $199 in premarket electronic trading.
The results showed MasterCard's reliance on overseas use of its cards and networks. Worldwide purchasing volume rose 8 percent, while U.S. purchasing volume eeked out a gain of less than 1 percent.
The number of transactions the company handled was basically flat at 5.6 billion. Cross-border volume jumped 15.2 percent.
As of June 30, there were more than 1.6 billion MasterCard and Maestro credit and debit cards in use worldwide.
The Purchase, N.Y.-based payments processor said net income rose to $458 million, or $3.49 per share, compared with $349 million, or $2.67 per share, a year ago.
Revenue rose 7 percent to $1.37 billion from $1.28 billion in the 2009 second quarter. MasterCard said the revenue increase reflected the higher cross-border volumes, higher gross dollar volume of the transactions it processed and the impact of pricing changes of approximately 4 percentage points.
Wall Street expected earnings of $3.33 per share on revenue of $1.38 billion.
Total operating expenses dropped 10 percent to $648 million. The decrease was led by a drop in severance and compensation costs as a result of layoffs in 2009.
U.S. credit card use edged down 1.5 percent, continuing a two-year decline but showing the smallest drop since the third quarter of 2008. Debit card edged up less than 1 percent. The figures together reflect continued sluggish consumer spending in the U.S.
Worldwide, credit card use rose 10 percent, while debit card use leaped 29 percent.
President and CEO Ajay Banga said the company's future resides in payment innovations that go beyond card-based transactions. He pointed to deals the company struck on mobile payments in Latin America, money transfer services in China and contactless payments in the U.S. as positioning MasterCard for continued growth.
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