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How Mastercard Beat Earnings, Revenue Estimates in 3Q17

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Part 3
How Mastercard Beat Earnings, Revenue Estimates in 3Q17 PART 3 OF 8

Mastercard’s Net Revenues Rose, and So Did Expenses

Cross-border volume fees

In 3Q17, Mastercard (MA) reported cross-border volume fees of $1.2 billion, compared to $996 million in 3Q16, which implies a YoY (year-over-year) rise of 15% on a currency-neutral basis. Cross-border transactions are beneficial to the company because they garner more revenue than domestic transactions. The main reason is that more fees are charged for cross-border transactions than for domestic transactions. Charges related to currency conversion are also sometimes included in cross-border fees.

Mastercard&#8217;s Net Revenues Rose, and So Did Expenses

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Mastercard reported revenue per share of $10.55 on a trailing 12-month (or TTM) basis. Its peers (XLF) Euronet Worldwide (EEFT), Western Union (WU), and Visa (V) reported revenues per share of $39.28, $11.31, and $7.64, respectively, on a TTM basis.

Other revenues

Mastercard managed to report other revenues of $747 million in 3Q17, compared to $620 million in 3Q16. That implies a YoY rise of 19% on a currency-neutral basis.

The major components of Mastercard’s other revenues are safety and security service fees, bank account-based payment services, program management services, loyalty and rewards solution fees, consulting, data analytics, and research.

Expenses

In 3Q17, Mastercard saw a substantial rise in total operating expenses compared to 3Q16. It incurred total operating expenses of $1.5 billion compared to $1.2 billion in 3Q16, which implies a YoY rise of 19% on a currency-neutral basis.

Let’s take a deeper look at Mastercard’s total operating expenses in the next part of this series.

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