Still, the company struck a cautious note on the U.S. economy. In addition, uncertainty stemming from financial regulation continues to concern investors.
"It's hard to see sustained growth until the housing market and unemployment improve," said Ajay Banga, MasterCard's president and chief executive, in a call Thursday morning with analysts and investors to discuss the quarterly results.
MasterCard shares recently traded down 0.5% to $238.11.
Gross dollar volume, or spending on MasterCard-branded cards, rose a record 11% from a year ago to $752 billion in local currency terms.
Processed transactions increased 6.3% to 6.2 billion during the same period. Cross-border volume increased 19%, the strongest growth in 10 quarters, as cardholders increased travel.
MasterCard and larger rival Visa Inc. (V) are insulated from credit problems because they don't lend to consumers. Instead, they make money from the fees they charge banks.
While new financial rules left untouched the network fees MasterCard and Visa charge banks on debit cards, they have the potential to erase billions of dollars in revenue banks earn. Investors are concerned that banks may try to offset this in ways that affect MasterCard and Visa.
Banga said MasterCard is "disappointed" by the proposal by the Federal Reserve, which seeks to cap transaction fees banks collect from merchants with each swipe of a debit card at 12 cents. MasterCard is "seeking changes" to the proposal, said Banga.
For the quarter ended Dec. 31, MasterCard posted a profit of $415 million, or $3.16 a share, up from $294 million, or $2.24 a share, a year earlier. Revenue jumped nearly 11% to $1.44 billion. The results beat Wall Street expectations. Analysts polled by Thomson Reuters most recently forecast earnings of $3.04 on $ 1.44 billion in revenue.
The company derives more than half its revenue from sources outside the U.S. This geographical diversity has helped the Purchase, N.Y., company weather the reduction in U.S. consumer spending fueled by the recession.
At the same time, MasterCard's global reach also has added an element of volatility to its performance. For instance, excluding currency fluctuations, revenue for the fourth quarter was up 13% in constant currency terms.
In December, MasterCard has agreed to acquire the prepaid card operations of foreign exchange group Travelex for $458 million. MasterCard could pay up to an extra $55 million if performance targets are met.
MasterCard expects the transaction to slightly reduce its earnings this year and start adding to the bottom line starting in 2013. The acquisition is expected to close in the first half of 2011. Prepaid cards are preloaded with funds and used like debit cards. Their use is expected to increase in the U.S. because they are exempt from the new rules that place curbs on fees earned by lenders from debit-card transactions.
Late Wednesday, competitor Visa said its fiscal first-quarter profit jumped 16% as consumers spent more and the number of transactions processed increased, helping revenue growth. Payments volume, representing spending on Visa cards, climbed 15% from a year ago for the three months ended Dec. 31. Last week, American Express Co. (AXP), which issues plastic in addition to processing payments, said cardmember spending rose 15%. For the latest updates PRESS CTR + D or visit Stock Market news Today
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