MasterCard to Net Big Profits Despite CARD Act

Consumer advocates won’t like it, but the evidence is there in black and white: MasterCard (Stock Quote: MA) says its net income will rise 20% in 2010.

While MasterCard claims its profits stem primarily from an increase in international travel, card industry observers and those in Congress who voted to rein in card issuers will wonder why a major carrier is making big bucks after the Credit Card Accountability, Responsibility and Disclosure (CARD) Act was passed earlier this year.

The Act was meant to control rising fees and charges that credit card companies charge to consumers, especially those who pay their bills late.

But the CARD Act has seemingly had all of the impact on issuers as a pebble bouncing off a battleship. MasterCard’s net income rose to $458 million in the second quarter of 2010, a 31% rise from the $349 million recorded in the same quarter of 2009. Total transactions (on a worldwide basis) were up 0.1%, while card usage outside the U.S. rose by 15%, MasterCard reports.

Net income for 2010 is expected to reach $1.76 billion, according to numbers released by the company.

MasterCard CEO Ajay Banga isn’t talking about the CARD Act, but he’s clearly bullish on his company’s prospects going forward in a post-reform environment. “I feel optimistic about our future growth prospects,” Banga told analysts on a conference call. “The majority of our revenues come from outside of the United States, which as of now is showing faster growth.”

Banga has a point. While credit card usage is growing overseas, there is evidence that it has stalled here in the U.S. A November 2009 study by Javelin Research says that 56% of U.S. consumers used a credit card that month. A year earlier, that number was 87%, according to Javelin. The firm estimates that number to drop to 45% in November of this year.

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