Consumers Continue to Use Cards More Often
The amount of money consumers spent on their credit and debit cards during the third quarter of the year increased dramatically for the world's second-largest payment processing company, and profits rose as a result. However, 
there is also some concern about the effect new federal rules will have going forward.
MasterCard recently announced that it saw the amount of money spent on its branded debit and credit cards in the U.S. rise 13 percent between July and September, to a total of $227 billion, according to a report from the Associated Press.
"We are pleased with our strong results this quarter, which were driven by several factors including double-digit increases in volumes and processed transactions in most regions across the globe," said Ajay Banga, MasterCard president and chief executive officer.
However, the company's two largest competitors, Visa and American Express (the first- and third-largest payment processing firms in the world, respectively), saw similar increases that were largely driven by greater card use among their wealthiest cardholders, the report said. As a consequence, some experts worry that this indicates a continuing unsteadiness in the broader economy.
Still, the use debit cards, which tend to be utilized more often by less affluent consumers who are trying to avoid taking on more credit card debt, rose appreciably for MasterCard during the quarter, the report said. In all, the company saw debit use spike 23 percent to a total of $97 billion. This amount was considerably larger than the increase observed by Visa during the same period, which stood at just 8 percent.
But analysts believe there may remain some cause for concern at MasterCard, according to a report from Dow Jones Newswires. This is because MasterCard's profits were heavily driven by the fees it collects from debit card transactions, which are now limited by new federal regulations. In the past, payment processors of that size charged a percentage of the total purchase price any time a merchant accepted a debit transaction - which averaged out to a total of about 44 cents - but the new limit now stands at just 21 cents per purchase regardless of its size. As a result, these companies stand to make more than 50 percent less for processing these purchases.
5-7-2012
by Chris Martin
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by Dan Seitz
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by Neil Hayashi
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