MasterCard Benefiting from New US Regulation

• Under today’s regulatory context, US financial institutions are compelled to issue cards encompassing several networks. This considered, MasterCard, unlike Visa, displays encouraging gains in its debit card business, and in PIN debit in particular.

• In the US, MasterCard announces its debit dollar volume climbed 14% to 149 billion versus Q2 2011. 111 billion of these 149 billion are derived from POS payments, with the remaining gains coming from ATMs and other operations. Purchase transactions on debit totalled 2.82 billion (+14%). These figures highlight the favourable impact of the new regulation on the market number two: MasterCard further insists on card issuing incentives.

• All in all, MasterCard also displays a favourable global trend, with a 29% increase in processed transactions (to 8.5 billion) and 17% increase in cross-border volumes.

Source: MasterCard press release

• MasterCard’s reported volumes are encouraging despite a fragile economic context. The network has managed to take advantage of the new regulation on issuers which took effect on 1st April, limiting the interchange and requiring them to propose at least two independent networks on their cards. Visa, for its part, shows a 54% decrease on its Interlink PIN-debit network; as the issuing market leader, Visa is systematically penalised by the opening to competition imposed on its, until then, mono-issuer customers.

• MasterCard also insists on several growth opportunities, including its recent partnership with Deutsche Telekom (see July 2012 Insight) and the completion of AliPay’s integration with DataCash’s payment platform.