MasterCard Inc said second-quarter profit jumped 33 percent, as inflation in the United States lifted spending volume and more international consumers used debit and credit cards.
Hmm.
MasterCard's U.S. market chief Chris McWilton said the company would institute a two-tiered fee structure by October 1, with fees varying according to the size of the merchant. McWilton did not comment on how the new system relates to the Durbin amendment, or how it would affect revenue.
Last week, Visa said it would introduce a flat network participation fee, and lowered the per-transaction rate for processing all U.S. transactions.
MasterCard's U.S. payment volumes were boosted by a spike in food and energy prices that fanned inflation earlier in the year, undercutting consumer spending and economic growth. But with gasoline prices off their peak of $4.02 a gallon in early May, inflation pressures are subsiding.
Consumer prices fell 0.2 percent in June, the largest drop in a year. Economists expect prices to moderate further in the months ahead amid sluggish demand.
MasterCard's revenue increased 22 percent to $1.7 billion as its cross-border and overseas business grew.
So credit card companies are making big money overseas too and are tapping out their cards more as the economy worsens. That's just fine for the credit card companies, it seems. Not so good for the consumer, especially those with less than perfect credit. Even though interest rates are ridiculously low, credit card rates have jumped as card issuers try to lock in maximum rate hikes before the rest of the law kicks in after January 1 capping fees.
A 33% jump in profits in this economy? Seems like somebody is picking up the tab alright.
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