Visa, Mastercard see spending soar amid Omicron headwind

Bloomberg

In the eyes of Visa Inc and Mastercard Inc., consumers are learning to live with the coronavirus pandemic.
Both networks said that spending on their cards surged to a record in the final three months of last year, even as the highly contagious Omicron variant disrupted travel and sparked fresh rounds of lockdowns. Spending on Visa’s network soared 20% to $2.97 trillion in its fiscal first quarter, while Mastercard’s purchase volume jumped 27% to $1.66 trillion.
Before Omicron started to bite, the two payment giants were benefiting as economies around the world slowly reopened and consumers got back to travelling and dining out. While both firms in recent weeks saw a slight dip in growth in spending on their cards, executives said the impact would probably be short-lived.
“People are now learning to live their lives with the virus and we just don’t see the same impact as you might have seen early in the pandemic,” Visa Chief Financial Officer Vasant Prabhu said in an interview. “The impact of omicron has been relatively mild and fairly quick to pass.”

Payment Volumes Soar
After two months during which coronavirus cases skyrocketed, they have begun to fall across the nation, according to the US Centers for Disease Control and Prevention. Globally, governments have begun to lift lockdown restrictions and reopen borders, spurring consumers to spend more.
Shares of San Francisco-based Visa jumped 2.5% in late trading in New York, after closing the day up 0.1%. Mastercard advanced 1.7% to $350.53 at the close.
While cross-border volume on Mastercard’s network soared 53% in the final three months of the year, trouncing the 49% average of analyst estimates, the firm warned that such growth in the first three weeks of this year slowed to 47%. Such spending is typically more lucrative for both networks, making it a closely watched metric by investors.
“We expect this to be short-lived because as the virus subsides, people get out and travel again,” Mastercard Chief Financial Officer Sachin Mehra said in an interview. “People have demonstrated over the course of 2021 that when they have the ability to travel, they really have gone ahead and done that.”
Mastercard, based in Purchase, New York, now believes net revenue for the first quarter will climb by a percentage in the “high teens,” while operating expenses will jump by a percentage in the “low teens,” the company said in a statement. Analysts were predicting revenue would increase 22% and expected a 15% jump in the expenses.
At Visa, the company is now expecting revenue to climb by a percentage “at the high of the high teens” range, an improvement from earlier guidance, while operating expenses could jump by a percentage in the “high end of mid-teens” range.
The year “is off to an excellent start,” Prabhu told analysts on a conference call. “We expect our growth this year will be well above the pre-Covid rate as cross-border recovers.”