4Q RESULTS: Why Visa Outshined, and How MasterCard Is Fighting Back

Lepro, Sara, American Banker

Byline: Sara Lepro

For today's consumers, there's nothing like cash on the barrelhead - and that's giving Visa Inc., with a stronger debit card foothold than MasterCard Inc., an advantage in the competition for card transactions.

Visa's overall U.S. payments volume grew in its fiscal first quarter, which ended Dec. 31; MasterCard's volume declined from a year earlier in the corresponding period (though it grew slightly from the previous quarter). Visa's margins expanded; MasterCard's shrunk. Visa's profits trounced analyst estimates; MasterCard's missed them.

MasterCard isn't just sitting tight.

The company is making a concerted effort to acquire a bigger slice of the rapidly growing debit market. But that means spending more money to offer rebates and incentives to bank customers - a reason for the margin compression.

"If you look at the differences between the two, it boils down to debit card market share," said Red Gillen, senior analyst at Celent, a Boston research …

Questia, a part of Gale, Cengage Learning. www.questia.com
Publication information: Article title: 4Q RESULTS: Why Visa Outshined, and How MasterCard Is Fighting Back. Contributors: Lepro, Sara - Author. Magazine title: American Banker. Volume: 175. Issue: F305 Publication date: February 5, 2010. Page number: 1. © 2009 SourceMedia, Inc. COPYRIGHT 2010 Gale Group.

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