NEW YORK (Dow Jones)--Affluent customers and commercial clients are helping drive a turn-around in credit-card spending, which has rebounded this year despite the sluggish economy, a top MasterCard Inc. (MA) executive said Tuesday.
The Purchase, N.Y., company, which processes credit and debit card transactions for banks, is investing more heavily in products and services geared toward these clients as it looks to boost spending volume, Tim Murphy, chief product officer at MasterCard, said at a Wells Fargo conference in New York.
Affluent customers "are spending and the affluent, as you would expect, tend to overperform on volume growth across the entire economic cycle," Murphy said.
Commercial card programs used by businesses are also helping boost credit volume, which took a hit during the recession when many banks scaled back on lending and many consumers shelved their credit cards in an effort to pay down debt. Many consumers also shifted to using debit cards, which pull money from a checking account versus a line of credit.
MasterCard expects affluent consumers and commercial clients to continue driving credit card, and is focusing offering services to its partner banks to better win over these customers, Murphy said.
The amount of purchase transactions made with MasterCard credit cards in the third quarter rose 15.3% on a local currency basis to $469 billion worldwide. That compares to a 7.9% growth rate a year ago.
MasterCard last week reported a 38% jump in third-quarter profit as spending on its credit and debit cards increased.
MasterCard and competitor Visa Inc. (V) do not lend to consumers but process transactions for banks. The more transactions cardholders make, the more revenue the companies generate.
The companies have been grappling with new rules on the fees that banks can charge merchants on debit-card transactions and how transactions are processed. Visa and MasterCard are both trying to entice retailers to continue directing customers' debit-card transactions over their respective networks by paying rebates and incentives to merchants.
MasterCard, which has a significantly smaller share of the debit-card market than Visa, is working to win banks' debit card portfolios from rivals. It recently announced it won the debit portfolio of Huntington Bancshares Inc. (HBAN), formerly a Visa issuer, and has made similar wins with SunTrust Banks Inc. (STI) and Banco Santander SA's (STD) Sovereign Bank in recent years.
The company is seeing "good progress" in its effort to win debit processing business, Murphy said.
MasterCard's shares were down 0.3% at $364.83 but are up more than 62% year-to-date.
URL: http://online.wsj.com/article/BT-CO-20111108-714207.html
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