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August 31, 2010

Internet helps drive MasterCard second-quarter GDV in Europe

A MasterCard decision to enable Maestro debit cards on the internet helped boost gross dollar volume by 13.7% in the second quarter of 2010.

By Verdict Staff

Performance: MasterCard GDV, Europe – past six quarters (growth rate)A MasterCard decision to enable Maestro debit cards on the internet helped boost gross dollar volume by 13.7% in the second quarter of 2010.

The move to allow consumers to use Maestro, MasterCard’s European domestic debit solution, led to a “significant increase in business momentum” on debit cards in Poland, Turkey and Belgium. It was introduced on 1 April 2010, the first day of MasterCard’s second quarter.

Growth in European gross dollar volume in the same period last year was 3.1% in local currency terms (see chart).

“Initiatives such as these have helped, as have new card programmes and partnerships across Europe – all going towards the double-digit GDV figure for Europe,” said a MasterCard spokeswoman.

At a group level, MasterCard reported net income of $458m for the second quarter of 2010, up 31% on the same period last year.

For the six months ended June 30, net income was up 27.5% to $913m. Revenues in the second quarter were up 6.7% year-on-year at $1.4bn driven by an increase in cross-border volumes of 15.2%, growth in gross dollar volume of 8.5% to $656bn and an improvement of 4 percentage points in pricing changes.

“We are pleased with our performance in the second quarter,” said Ajay Banga, MasterCard president and chief executive officer, who replaced former CEO Robert Selander in April.

“Solid GDV growth, particularly in markets outside the US, continued momentum in worldwide cross-border volumes, and thoughtful expense management all contributed to good financial results this quarter.”

MasterCard’s highlights for the first six months included a recent co-brand deal with Telefonica, a telco in Latin America, and an agreement with Bank of China to implement its MoneySend person-to-person money transfer programme.

The main takeaways from the first-half results included 30.6% growth in the business’s Asia-Pacific, Middle East and Africa gross dollar volume (GDV) at $282bn. Latin American GDV was up 25.9% at $100bn. Worldwide increased 12.2%.

Credit and charge GDV declined in the US by 5% (to $248bn), but increased 16.3% in dollar terms in its international business (to $585bn). Debit programmes improved 3.9% in the US (to $231bn) and 38% internationally ($454bn).

The number of MasterCard cards in issue increased by around 2m globally to 942m, with growth in all geographies other than in the US, where card numbers declined by 41m.

Meanwhile, MasterCard acquired European payment service provider DataCash in a deal worth £333m ($518m).

DataCash develops and provides outsourced electronic payments solutions, fraud prevention and alternative payment options. MasterCard wants to acquire the business to drive growth of in the e-commerce section of its business.

“The acquisition of DataCash will expand our already significant e-commerce merchant gateway presence in Asia and Australia to European countries and other high-growth, emerging markets worldwide,” said Banga.

MasterCard’s offer for DataCash is valued at 360 pence per share and is subject to shareholder approval.

The companies directors have recommended shareholders accept the deal, which is expected to close in October.

In 2009 DataCash processed more than 240m transactions for more than 1,400 merchants across a variety of payments sectors. The company reported revenue of £36.9m for the year ended December 31, 2009.

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