Here’s What Led to Substantial Rise in Mastercard’s Net Revenues
Significant YoY rise
In 3Q17, Mastercard (MA) reported net revenues of $3.4 billion, compared to $2.9 billion in 3Q16, reflecting a YoY (year-over-year) rise of 17% on a currency-neutral basis. The components of net revenues are cross-border volume fees, domestic assessments, other revenues, and transaction processing. The company arrived at its net revenues after making adjustments for rebates.
Interested in EEFT? Don't miss the next report.
Receive e-mail alerts for new research on EEFT
The YoY rise in net revenues was mainly due to the rise in transaction processing fees. The components of transaction processing revenues are connectivity fees, switched transactions, and other processing fees.
Mastercard reported an operating margin of 54.4% on a trailing 12-month (or TTM) basis. Its peers (XLF) Visa (V), Western Union (WU), and Euronet Worldwide (EEFT) reported operating margins of 66.9%, 20.0%, and 12.6%, respectively, on a TTM basis.
Transaction processing, domestic assessments
Mastercard’s transaction processing fees for 3Q17 were $1.7 billion, compared to $1.4 billion in 3Q16, implying a substantial YoY rise of 21% on a currency-neutral basis. The rise was mainly due to a significant rise in switched transactions. However, revenues generated from other services also contributed to the rise.
Domestic assessments, which form part of Mastercard’s net revenues, saw a YoY rise of 14% on a currency-neutral basis. Domestic assessments were $1.3 billion compared to $1.1 billion in 3Q16.
In 3Q17, Mastercard witnessed a 19% YoY rise in rebates and incentives on a currency-neutral basis. Reported rebates and incentives were $1.5 billion, compared to $1.2 billion in 3Q16.