By Allison Prang
Mastercard Inc. said social-distancing measures and border restrictions continued to weigh on its revenue in the third quarter.
The credit-card company's revenue fell 14% from a year earlier to $3.84 billion, hurt by a steep dive in cross-border volume, or payments cardholders make outside of the country where the card was issued. Cross-border volume on a local-currency basis tumbled 36%.
Chief Financial Officer Sachin Mehra said the drop in those volumes was "due to the effects of border restrictions and social distancing measures." Mastercard's revenue missed the estimate of $3.95 billion from analysts polled by FactSet.
Shares fell 6.3% Wednesday.
"As travel starts to come back, we'll see personal travel...come back sooner than business travel," Mr. Mehra said on the company's earnings call. "And that should be tied to how we see the evolution of the Covid vaccine and the therapeutics taking place."
"While we have seen some improvement in travel within the [European Union] during the quarter, cross-border travel outside the EU has shown only limited recovery," Chief Executive Ajay Banga said.
Gross dollar volume, or the value of card transactions, rose 1.2% on a local-currency basis.
While travel is taking a hit from the coronavirus pandemic, contactless payments are growing in popularity. Contactless penetration was 41% of in-person purchase transactions in the third quarter, Mastercard President Michael Miebach said. In the second quarter, it was 37%, and a year ago it was 30%, he said.
"We believe that as the economies reopen, people will shop in stores again. But e-commerce will remain elevated from pre-pandemic levels as behaviors have changed and payment preferences have shifted," Mr. Miebach said.
Mastercard logged $1.51 billion in profit and said earnings were $1.51 a share. That compares a net income of $2.11 billion, or $2.07 a share, a year earlier.
Adjusted earnings were $1.60 a share. According to FactSet, analysts were expecting $1.65 a share.
Visa Inc. reports its latest quarterly results Wednesday. American Express Co., which reported results last week, logged a 69% drop in travel and entertainment spending.
Write to Allison Prang at email@example.com
(END) Dow Jones Newswires