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A Look at Mastercard’s Net Revenue

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Net revenue

Mastercard (MA) saw positive momentum in its business in 2017 thanks to the adoption of e-commerce. This momentum will likely also be witnessed in 2018, as the company’s recent initiatives related to payments through mobile phones are expected to experience a strong response.

The company saw a rise of 18% in gross revenue in 2017 compared to 2016. Of its total gross revenue of $18.3 billion in the year, its domestic assessments contributed $5.1 billion, or 27.9%.

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Moving forward, Mastercard and its competitor (XLF) Visa (V) will likely experience upward trends in their revenues mainly due to rising inflation as a result of trade war fears. On the other hand, Discover Financial Services (DFS) could benefit on the back of higher interest rates, which could improve its net interest income. In 2018, American Express (AXP) will likely experience the positive impact of more frequent business travel.

Cross-border volumes

Mastercard’s cross-border volumes amounted to $4.1 billion in 2017 compared to $3.5 billion in 2016, implying a 17% rise. This component accounted for 22.8% of the company’s total gross revenue in 2017. In 1Q18, the company is expected to witness the positive impact of cross-border revenues due to cryptocurrencies. However, this will be a one-time effect.

Mastercard saw a rise in transaction processing revenue from $5.1 billion in 2016 to $6.1 billion in 2017, which implies a rise of 20%. In 2017, it formed 33.7% of total gross revenue. The company’s other revenue amounted to $2.8 billion in 2017 compared to $2.4 billion in 2016, and it accounted for 15.5% of total gross revenue.

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