Mastercard's value-added services boost revenue | PaymentsSource | American Banker

This news is developing. Please check back here for updates.

Mastercard's revenue rose 13% in the third quarter, topping analysts' expectations and buoyed by healthy consumer spending that pushed up demand for the company's payment network and value-added services.

Revenue landed at $7.4 billion in the three months ended Sept. 30, up from $6.5 billion a year ago and ahead of analysts' expected $7.3 billion, according to S&P Capital IQ.

Mastercard posted net income of $3.3 billion, or $3.53 a share, up from $3.2 billion, or $3.39 a share, in the year-ago period. Analysts had expected $3.3 billion, or $3.64 a share. Total operating expenses rose 25% in the quarter, including a restructuring charge and litigation provisions.

Adjusted earnings were $3.89 a share, above analysts' estimates of $3.75 a share according to S&P Capital IQ.

"These results reflect healthy consumer spending and ongoing solid demand for our value-added services and solutions, where net revenue increased 18%, or 19% on a currency-neutral basis," CEO Michael Miebach said in a press release Thursday.

"We continue to invest in our suite of differentiated services to grow our addressable market, protect the ecosystem and add value in every transaction," he said.

Payment network revenue jumped 10%, with a gross dollar volume increasing 10% and cross-border volume increasing 17% on a local currency basis. Switched transactions grew 11%.

Value-added services revenue was up 18%, driven primarily by growth in "underlying key drivers," strong demand for consulting and marketing services, and scaling of fraud, security, identity and authentication solutions, Mastercard said.

The results are comparable to rival Visa's third-quarter earnings and follow a strong second quarter, which was somewhat overshadowed by a interchange fee deal with merchants that fell apart when a federal judge blocked it.

Mastercard also said last quarter it planned to lay off about 3% of its staff by September despite the fact that it reported earnings results that beat analysts' estimates and was upbeat on consumer spending.

Still, Mastercard was busy in the third quarter. The payment card processor in July named more partners in its push for open banking with the addition of nine international fintech startups to its Start Path Open Banking and Embedded Finance accelerator program.

In August, the company partnered with the Medical Tourism Association to provide virtual card technology for arranging treatment, booking travel and making payments, and in September spent $2.7 billion to acquire Recorded Future, a generative AI-powered technology that analyzes data sources to identify potential security threats.

Miebach said Thursday that the planned acquisitions of Recorded Future and Minna Technologies are expected "to add leading AI-powered threat intelligence and subscription management capabilities to meet the needs of our customers."

Mastercard also this month inked a global payments partnership with Citigroup that allows the mega-bank to connect with its Mastercard Move product to move money cross-border to bank accounts, prepaid debit cards, mobile wallets and cash-access locations in a few seconds.