10-Q

Weekly 10-Q: Visa vs Mastercard — who did better this quarter?

  • Visa and Mastercard reported their quarterly earnings results -- here’s what investors need to know about the two payments giants.
  • And, the CFPB is looking to finalize the US open banking rule by 2024.
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Weekly 10-Q: Visa vs Mastercard — who did better this quarter?

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Last week we covered: Key takeaways from Wall Street banks’ Q3 earnings results


Visa vs Mastercard — who did better this quarter?

VISA

Visa reported its fourth-quarter results last week:

  • It registered a GAAP net income of $3.9 billion in the fiscal fourth quarter, up 10% from the same quarter a year ago.
  • Its non-GAAP net income of $4.1 billion increased by 16% over the same period.
  • The firm’s net revenues soared 19% to $7.8 billion. Service revenue rose 11% to $3.5 billion, while data processing revenues increased 10% to $3.8 billion.
  • International transaction revenue jumped 52% to $2.9 billion and other revenue grew 13% to $551 million.
  • Total processed transactions in the July-September 2022 quarter were $50.9 billion, a 12% rise from the corresponding quarter of 2021, while payments volume grew 10%.
  • Net income for the full 2022 financial year surged 21% to $15 billion, while revenues jumped 22% to $29.3 billion.

Source: Popular Fintech


In summary, the net income increased, fueled by strong growth in payment volumes and processed transactions. However, the growth rate was on the decline due to inflation and U.S. credit card holders. 

MASTERCARD

Mastercard posted its third-quarter results on Thursday:

  • It reported a 4% increase in net income to $2.5 billion during the third quarter of 2022 from $2.4 billion during the year-ago period.
  • Diluted earnings per share during the quarter that ended on 30 September 2022 were $2.68, excluding one-time costs.
  • Net revenue jumped 15%, as per reported GAAP, and 23% on a currency-neutral basis to $5.8 billion in Q3 2022 from $5 billion in Q3 2021.
  • Specifically, gross dollar volumes were up by 11% to $2.1 trillion on a local currency basis and cross-border volume growth surged by 44%.
  • Operating expenses also surged during the period under review to 17%.

In summary, consumer spending remained resilient as cross-border travel continues to recover. However, operating expenses were driven by higher personnel costs to support investment in strategic initiatives across payments, services, and new network capabilities.

Source: Mizuho Group


“Our side-by-side assessment of major KPIs shows that in Q3, Mastercard mostly exceeded Visa on key metrics as it improved relative share in US credit and international debit while maintaining share in US debit and international credit. October trends look a little more upbeat vs. Visa as US switched volumes accelerated vs. being largely flat at Visa,” according to analysts Dan Dolev, Ryan Coyne, and Nicholas Lucas at Mizuho Group.


Top stories of the week

AMAZON
Amazon now accepts Venmo, just in time for the holidays

By Black Friday, certain Amazon US customers will be able to pay with Venmo for purchases on Amazon.com and its mobile shopping app. The move highlights the company’s acceptance of digital transactions and providing customers with more flexible payment solutions, especially ahead of the holiday shopping spree. (Bloomberg)

BNY MELLON
BNY Mellon launches new aggregated payments platform “Vaia”

BNY Mellon has launched a new aggregated payments platform called Vaia, in collaboration with Verituity, a cloud-based solution that connects banks, payers, and payees to first-time and on-time digital payouts. Institutions can offer payees a full range of payment choices through the platform, including RTP, same-day ACH, tokenized payments with Zelle, and debit cards. Vaia aims to reduce the time and resources businesses need to connect with any available payment rails. (Yahoo)

CFPB
CFPB to finalize US open banking rule by 2024

CFPB Director Rohit Chopra at Money 20/20 outlined the Bureau’s strategy toward determining the regulation of open banking in the US, which will allow consumers who wish to switch card carriers or banks to transfer their account histories to a new company. In this way, customers won’t have to start from square one to build a new record of their financial history — which will limit the misuse of their personal financial data by merchants or insurers. The CFPB plans to propose a rule in 2023 and finalize it in 2024. (Finextra)

CITIGROUP
Citi integrates payments and billing platform
Citi has integrated its Spring e-commerce and B2B digital payments services with its electronic bill present platform, Present and Pay. By combining the two in one integrated platform, Citi’s institutional clients will now be able to collect payments across a broad range of US payment methods and provide digital billing options all in one place — saving time and streamlining implementation. (PYMNTS)

FISERV
Fiserv reports (mixed) Q3 results 

Fiserv reported mixed third-quarter 2022 results, wherein earnings missed the Zacks Consensus Estimate but revenues beat the same. Adjusted earnings per share of $1.63 missed the consensus mark by 4.1% but increased 11% y-o-y. Adjusted revenues of $4.27 billion beat the consensus estimate by 0.2% and increased 2.6% y-o-y. Organic revenue growth was 11% in the quarter, driven by 14% growth in the Acceptance segment, 1% growth in the Fintech segment, and 11% growth in the Payments segment. Shares traded lower by 3.23% at $98.47 on Thursday, last week. (Nasdaq)

JACK HENRY
Jack Henry brings out standalone, real-time person-to-person payments

Jack Henry has launched its standalone person-to-person (P2P) payments solution, powered by the Payrailz digital payments platform, which Jack Henry acquired in September 2022. The offering is now available for standalone implementation or as a strategic component of the full Payrailz payments platform. Operating as the industry’s only financial institution-centric, open-loop, real-time P2P payments solution, provides a flexible and convenient way to send money to virtually anyone — and does not require senders and receivers to belong to the same payment network. (Crowdfund Insider)

LENDINGCLUB
LendingClub posts its Q3’22 earnings results — what’s next for the stock?
LendingClub reported its third-quarter results. According to the CEO, Scott Sanborn, the first half was marked by strong demand by investors for the company’s loans, driving marketplace revenue. The second half is and will be marked by a rapidly changing rate environment temporarily affecting investor loan demand. Deposits increased 80% y-o-y to $5.1 billion, with the 2021 acquisition of the digital-only Radius bank fully integrated. The $2.4 billion in marketplace originations was lower by a bit more than 14% from Q2, and total loans of $3.5 billion were lower by 8% over the same period (up 14% y-o-y). LendingClub now navigates an environment where marketplace volumes (the majority of originations) were impacted by higher funding costs for some of the company’s investors, tied in part to interest rates. LendingClub shares have lost about 51.3% since the beginning of the year versus the S&P 500’s decline of -19%. (Seeking Alpha)

MARQETA
Marqeta for Banking: the largest-ever product expansion by Marqeta
Marqeta launched a portfolio of seven banking products under “Marqeta for Banking”. Marqeta for Banking includes new demand deposit accounts, giving non-banks the ability to hold money in accounts like traditional institutions can; direct deposit with early pay, which lets banks decide eligibility for early pay on a user-by-user basis; and ACH payments with a Plaid integration, to quickly verify external accounts during interbank payments. Two more solutions, cash loads and fee-free ATMs allow customers to more easily dispense and take in money to and from the end user. Marqeta for Banking will release two additional solutions — bill pay and instant funding — in beta next year. (Insider Intelligence)

PAYPAL
Apple gets the first taste of the PayPal passkey login system

PayPal is phasing out passwords and making cryptographic account verification available to its users on Apple devices. Passkeys are a new industry standard created by the FIDO Alliance and the World Wide Web Consortium that replace passwords with cryptographic key pairs, offering customers a simple and secure way to log in to PayPal, which is resistant to phishing as there is no shared passkey data between platforms. The new PayPal login option will first be available to iPhone, iPad, or Mac users on PayPal.com and will expand to additional platforms as those platforms add support for passkeys. (The Verge)


Tweet of the week

Source: Ryan Reeves

Chart of the week

Respondents who support a ban on stock trading among government officials, according to a survey

Source: Morning Consult

What’s trending

  • Goldman executives clashed over consumer bank before the retail retreat (FT)
  • BNPL Sezzle secures $100 million credit with Bastion, replaces Goldman (PYMNTS)
  • Truist forms a new stand-alone innovation team to build new offerings across the organization (Banking Dive)
  • Adyen launches embedded financial products in the US (The Paypers)

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