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By: Kendrick Sands

MasterCard and Visa reported their final quarter results of 2014 on January 30th and 29th respectively. In the fourth quarter, both Visa Inc. (excluding Visa Europe) and MasterCard reported a decline in y-o-y growth of card payment value in 2014 compared to 2013 as a result of a strengthening dollar and the falling price of gas. MasterCard acquired two companies in the fourth quarter bringing their total acquired companies in 2014 to six. The fourth quarter acquisitions of Transaction Network Services and 5one Marketing Limited focused on increasing MasterCard’s digital products, services and global reach. From 2013 to 2014 Visa Inc. and MasterCard increased total payment value by US$376 billion and US$289 billion respectively. However, MasterCard’s growth rate surpassed that of Visa with a y-o-y growth of 9.7% compared to 8.6% for Visa.

Both companies cited falling gas prices and a stronger dollar as justification of slower growth than the previous quarter in 2013. The strengthening dollar has resulted in lower cross-border spend and travel from Europe and Asia Pacific countries to the US. Both networks expect currency volatility to be a temporary impact unique to this quarter. The networks also emphasized progress with their digital platform development. MasterCard extended its MasterPass platform to 16 markets and reached 60,000 online merchants that provide the checkout option. Visa Checkout launched in 2013 in the US, Canada and Australia and by the end of 2014 had 240 financial institution partners and three million registered users. However, Visa’s online payment platform has only signed up 110 e-commerce retailers. Further announcements regarding both networks digital platform are expected in the next six months. With both networks facing increasingly aggressive competition in the digital payment space from traditional and non-traditional actors continued investment and expansion of these platforms is certain.

In Latin America, MasterCard made progress in increasing its share relative to Visa with a yearly value growth rate 8% higher than Visa. However, Visa still retained higher absolute payment value processed of US$190 billion. By card product, Visa and MasterCard both increased their credit card payment value both by 9% from 2013 to 2014. For debit payment value, MasterCard’s 12% y-o-y growth far outpaced that of Visa’s 8% and increased total debit cards in circulation by 24% from 2013 to 2014.

 

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