MasterCard’s strong start to 2016

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Master card’s strong start to 2016

Though MasterCard’s profits went down in Q1 2016, the card network continues to grow in key areas despite macroeconomic headwinds, according to the card network’s Q1 2016 earnings call.

The firm continues to see transaction growth and increases in cardholders.

MasterCard now has 2.3 billion cardholders worldwide. The firm’s cards in circulation grew 7% YoY in Q1, driven by the increased issuance of MasterCards, which overcame the slight decline in Maestro cards.

And those cardholders are spending more. The firm’s total processed transactions grew 14% YoY, thereby increasing revenue. And despite ongoing headwinds, including low gas prices and tumultuous global markets, the firm continues to see double-digit transaction and volume growth in most markets, according to The Wall Street Journal.

Despite broader economic uncertainty, it’s likely that MasterCard’s growth will continue to accelerate both domestically and across borders, because the firm is investing in technology to counter some of these trends, according to Bloomberg. The firm is also beginning to see a more favorable foreign exchange environment, which could stimulate cross-border growth.

MasterCard continues to invest in acquiring consumers, which helps explain declines in profit but growth across other business segments. The firm’s revenue gains were hampered by enhanced rebates and incentives as well increased operational expenses. Those incentives and expenses were likely part of an effort to acquire more customers, according to The Wall Street Journal. And though this might cause losses in the short term, it could ultimately help MasterCard build a larger user base from which the firm can generate higher overall spending.

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