Mastercard Services Helps Processor Stay Afloat During COVID

Tuesday, September 1st, 2020

Consumers and businesses are not the only ones who have been hit hard during the global pandemic; payment network processors have as well. Processing giants Visa Inc. and Mastercard Inc. have, thus far, managed to remain profitable during the COVID-ravaged second quarter. In fact, over the last few weeks, companies have experienced improving transaction trends.

According to a report by Mastercard, the total U.S. purchase volume reached $405 billion in the quarter ending in July. This was just down 5% from $427 billion seen in 2019. Granted, the U.S. has fared better than many other countries. Worldwide, Mastercard’s purchase volume slipped 9% to $1.04 trillion.

Changes in Consumer Spending

The biggest consumer trend changes were caused by the government stay-at-home orders. During a season when consumers would typically be traveling and enjoying their summer vacations with family and friends, they were kept home in order to control the spread of COVID-19. Travel and other spending that would have normally been charged to credit cards plunged.

On the other hand, Mastercard, Visa, technology providers, and other payment processors said that their online purchase volume and contactless transactions at the point of sale increased dramatically during this time. 

“In the second quarter, contactless penetration represented 37% of in-person purchase transactions, up from 28% a year ago,” chief financial officer Sachin Mehra told analysts.

New Consumer Habits Emerge

What consumers were buying online also shifted. Consumers began cutting back on many of their purchases, but a few purchase categories pivoted and then picked up. In general commerce, there was a huge spike as Americans dashed to stockpile non-perishable food, hand sanitizer and toilet paper. In retail, office supplies was a major purchase as people began to work from home and homeschool their children. As restaurants had to shift, delivery services were substituted for fine dining.

Mastercard says they have also resorted to a growing menu of services to keep up with consumer’s shifting spending habits during the pandemic; everything from fraud control to data analytics to systems and supporting non-card payments. These services have experienced strong growth, rising 14 percent to $1.08 billion.

All in all, Mastercard reported net revenues of $3.33 billion, down 17% from a year earlier on a currency-neutral basis. Meanwhile, net income declined 31% to $1.42 billion.

Where to Get Payment Processing Services

The challenges of these unprecedented times have been difficult for many merchants as they adapt their services to keep up with changing consumer trends. One of the biggest obstacles has been finding a payment processor, especially for the businesses that have yet to take their products/services online and now have to stay afloat. The key is to find a processor that specializes in working with your business type and industry. If you are unsure of where to search and how to get started, consider Best Payment Providers.

The payment processing reviews and information our team at Best Payment Providers provides can help you find the processor that is right for your business and its unique needs. Find everything you need to compare providers, browse other merchant’s reviews, and keep track of the latest industry news and tips.