Tag Archives: Mastercard Inc

Stock futures rise to start the week as traders try to build on Friday’s rally

A trader works on the trading floor at the New York Stock Exchange (NYSE), January 5, 2023.

Andrew Kelly | Reuters

Stock futures rose Monday after the major averages notched their first big rally of the new trading year.

Futures tied to the Dow Jones Industrial Average ticked up 85 points, or 0.3%, while S&P 500 and Nasdaq 100 futures added 0.3% and 0.4%, respectively.

All the major averages advanced last week, with the Dow and S&P posting their best week since November. The Dow on Friday surged 700 points, or 2.13%, while the S&P 500 and Nasdaq Composite added 2.28% and 2.56%, respectively, after the December jobs report signaled that inflation may be easing.

Nonfarm payrolls came in slightly higher than expectations, but wages increased at a slower pace than expected. That, and data showing a contraction in the services sector, heightened hopes that the central bank’s rate hikes are accomplishing their goal.

Friday’s S&P 500 performance “confirmed what we anticipated entering 2023: The monthly jobs report will be the ‘new CPI,'” said Wells Fargo analyst Christopher Harvey, using an acronym for the consumer price index. This year, labor data is “setting the tone for marginal swings (either hawkish or dovish) in Fed perceptions.”

Harvey said that data helped investors shake off pessimism earlier in the week following the release of the December Fed meeting minutes, in which officials said interest rates would need to be elevated for “some time.”

The New York Fed Survey of Consumer Expectations and consumer credit data are due out Monday. Later in the week, investors will look for December’s consumer price index report Thursday and big bank earnings Friday.

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Inflation peaked but will remain above pre-Covid levels: Mastercard

Inflation has already peaked, but it will remain above pre-Covid levels in 2023, said David Mann, chief economist for Asia-Pacific, Middle East and Africa at the Mastercard Economics Institute.

“Inflation has seen its peak this year, but it will still be above what we had been used to pre-pandemic next year,” Mann told CNBC’s “Squawk Box Asia” on Friday. 

It’ll take a few years to return to 2019 levels, he said. 

“We do expect that we go back down in the direction of where we were back in 2019 where we were still debating how many countries needed negative interest rates.”

Central banks around the world have been hiking interest rates as recently as November in response to high inflation.

They include central banks from the Group of 10 countries — such as the U.S. Federal Reserve, the Bank of England and the Reserve Bank of Australia — as well those of emerging markets, such as Indonesia, Thailand, Malaysia and the Philippines, Reuters reported.

The Fed will hold its December policy meeting this week, where it is expected to hike interest rates by 50 basis points. The central bank has raised rates by 375 basis points so far this year. 

“Inflation has become that big challenge. It’s been spiking and staying very high,” Mann said. But he warned that it would be risky if central banks end up hiking rates more than they need to. 

“The challenge is if you’ve lost orientation of where the sky and the ground is, you’re not quite sure where you need to end up,” Mann said. 

It would be a “serious scenario” if central banks “end up going slightly too far and then need to reverse relatively quickly,” he added. 

Consumer spending

Despite high inflation, Mann said, U.S. consumers are still willing to engage in discretionary spending in areas such as travel. 

Travel recovery in the U.S. is strong and people are still choosing to spend on experiences rather than material goods, Mann said.

And they are being frugal about their spending on necessities in order to be able to afford non-essentials, he added.

“There is something in the back of people’s minds that worries them that even though it’s not very likely, it’s still possible that those [Covid] restrictions [will] come back,” he said. 

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Payments giants to apply new code identifying sales at U.S. gun stores

Fire arms are seen at the Bobâs Little Sport Gun Shop in the town of Glassboro, New Jersey, United States on May 26, 2022. 

Tayfun Coskun | Anadolu Agency | Getty Images

Visa, the world’s largest payments processor, said on Saturday it will implement a new merchant category code for U.S. gun retailers, which will identify transactions at firearms stores.

The International Organization for Standardization (ISO) approved creation of the merchant code on Friday following pressure from gun-control activists who say it will help track suspicious weapons purchases.

“Following ISO’s decision to establish a new merchant category code, Visa will proceed with next steps, while ensuring we protect all legal commerce on the Visa network in accordance with our long-standing rules,” Visa said in a statement.

Mastercard said on Friday that following ISO’s approval, “we now turn our focus to how it will be implemented by merchants and their banks as we continue to support lawful purchases on our network while protecting the privacy and decisions of individual cardholders.”

American Express said when ISO develops a new code, the company will work with third-party processors and partners on implementation.

The code will show where an individual spends money but not what items were purchased.

Several top U.S. pension funds including those for government workers in New York City and California had submitted shareholder resolutions asking payment companies to weigh in on the issue.

Some gun-rights activists have worried the new code could lead to unauthorized surveillance.

Mass shootings this year, including at a Texas elementary school that killed 19 children and two teachers, have added to the long-running U.S. debate over gun control.

U.S. President Joe Biden has called for Congress to pass an assault weapons ban as well as $37 billion for crime prevention programs, with $13 billion to hire and train an additional 100,000 police officers over the next five years.

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McDonald’s, Netflix, Amazon, Nvidia, Visa

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Meta, McDonald’s, Teladoc, Ford and more

Pavlo Gonchar | LightRocket | Getty Images

Check out the companies making headlines in midday trading.

Meta Platforms — Shares of the company formerly known as Facebook surged 17% after reporting mixed first-quarter results. The company posted a beat in earnings but a disappointing revenue miss. It also saw daily active users grow following a decline in the fourth quarter.

McDonald’s – Shares of the restaurant chain gained 3% after first-quarter revenue topped expectations. McDonald’s reported first-quarter revenue of $5.67 billion versus the $5.59 billion expected by analysts, according to Refinitiv. The company saw same-store sales growth of 3.5% in the U.S. and even higher in international markets, ahead of estimates compiled by StreetAccount.

Qualcomm — Qualcomm’s stock price surged more than 7% after its most recent earnings report showed all four of the company’s semiconductor businesses grew during the most recent quarter. Qualcomm posted adjusted earnings per share of $3.21 on revenue of $11.16 billion. Analysts surveyed by Refinitiv were forecasting earnings of $2.91 per share on revenue of $10.60 billion.

Ford — The automaker’s shares fell 2% after the company said its stake in Rivian dragged profits lower in the recent quarter. Ford reported adjusted earnings per share of 38 cents on $32.1 billion in revenue. Analysts surveyed by Refinitiv anticipated earnings of 37 cents per share on $31.13 billion in revenue.  

Caterpillar – Shares of the machinery company dropped more than 3% despite a first-quarter report that beat estimates on the top and bottom lines. Caterpillar reported an adjusted $2.88 in earnings per share on $13.59 billion of revenue. Analysts surveyed by Refinitiv had penciled in $2.60 in earnings per share on $13.40 billion of revenue. The company’s sales growth did slow relative to the fourth quarter, and operating profit margins shrank year over year.

PayPal — PayPal shares jumped 9% following a beat on revenue in the first quarter. The stock rose even as the payments firm issued weak guidance for the second quarter and full year.

Mastercard — Mastercard shares gained 4.6% following a beat on the top and bottom lines in the recent quarter. For the first time since the start of the pandemic, the company said cross-border travel ticked above 2019 levels.

Comcast — Shares of Comcast plummeted more than 6% despite beating analysts’ expectations on the top and bottom lines as growth in broadband subscriptions slowed. The company beat analysts’ estimates on the metric but noted that roughly 80,000 of the subscribers were free internet customers.

Southwest Airlines — Southwest Airlines’ stock rose 2% after reporting a wider-than-expected loss but a beat on revenue in the recent quarter. The company reaffirmed its second-quarter forecasts and said it expects revenue for that period to outpace 2019 despite fewer flights.

Pinterest — Pinterest’s stock price jumped more than 7% following an earnings beat. On Wednesday, the image-sharing company reported adjusted earnings of 10 cents per share and revenues of $575 million. In comparison, analysts polled by Refinitiv expected earnings of 4 cents per share on revenues of $573 million.

Eli Lilly — The drug maker’s shares 3.7% after the company reported results from a clinical trial showing its obesity drug tirzepatide helped patients lose up to 22.5% of their weight. Eli Lilly also reported better-than-expected earnings and revenue for the first quarter and boosted its full-year revenue guidance.

Teladoc —  Shares of the telehealth service plummeted by 45% after the company reported an earnings miss for its most recent quarter and gave weaker-than-expected revenue guidance, after which at least six Wall Street firms issued downgrades of the stock.

ServiceNow — Shares of ServiceNow added 7.9% following a beat on the top and bottom lines in the recent quarter. The company saw $1.73 adjusted earnings per share on $1.72 billion in revenue. Analysts expected $1.70 per share and $1.70 billion in revenue, according to FactSet’s StreetAccount.

— CNBC’s Jesse Pound, Tanaya Macheel and Sarah Min contributed reporting

Disclosure: Comcast owns CNBC’s parent NBCUniversal.

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Visa, Mastercard block Russian financial institutions after sanctions

Visa and Mastercard credit cards.

Getty Images

Payment and credit card giants Visa and Mastercard have blocked financial institutions from their networks in response to sanctions targeting Russia after its invasion of Ukraine.

Last week, Russia launched an unprecedented invasion of Ukraine, forcing the U.S. and governments around the world to impose a series of sanctions aimed at cutting off Moscow from the global financial system.

Last week, the U.S. placed a number of Russian individuals and financial institutions on a sanctions list called the Specially Designated Nationals list. It effectively blocks U.S. companies and people from doing business with any individual or entity on that list. Washington also sanctioned Russia’s central bank on Monday.

On Monday, Mastercard said it had “blocked multiple financial institutions” from its payment network, without naming companies or individuals. “We will continue to work with regulators in the days ahead to abide fully by our compliance obligations as they evolve,” the company added.

Rival Visa has also blocked those on the sanctions list, saying Tuesday that it was “taking prompt action to ensure compliance with applicable sanctions, and are prepared to comply with additional sanctions that may be implemented.”

Visa and Mastercard also both pledged $2 million toward humanitarian relief funds for Ukraine.

It comes after the U.S., Canada and European allies agreed Saturday to remove key Russian banks from the interbank messaging system, SWIFT. It means Russian banks won’t be able to communicate securely with banks beyond its borders.

The wide-ranging sanctions have caused a plunge in the value of the Russian ruble. Citizens in Russia have also been waiting in long lines to withdraw cash from ATMs.

Meanwhile, Ukraine’s Vice Prime Minister Mykhailo Fedorov called on major cryptocurrency exchanges to block the addresses of Russian users.

Bitcoin and other digital currencies could become a way for Russians to potentially circumvent sanctions and get their money out of the country, as cryptocurrencies are not owned or controlled by a single entity like a central bank.

Binance, the world’s largest exchange, has said it will block the accounts of Russian individuals who have been sanctioned, but stressed that it will not “unilaterally” freeze the accounts of all Russian users.

CNBC’s Amanda Macias contributed to this report.

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Amazon and Visa reach global truce over credit card fees

Visa payment cards laid out on a computer keyboard.

Matt Cardy | Getty Images

Amazon has reached a global agreement with Visa to settle a dispute over the credit card giant’s fees.

The deal means Amazon customers in the U.K. can continue using Visa credit cards, as previously announced by the two companies. Amazon will also drop a 0.5% surcharge on Visa credit card transactions in Singapore and Australia, which it introduced last year.

Last month, Amazon said it had dropped plans to stop accepting Visa credit cards in Britain, two days before the change was expected to take place. The companies said at the time that they would continue talks on a broader resolution to their spat.

“We’ve recently reached a global agreement with Visa that allows all customers to continue using their Visa credit cards in our stores,” an Amazon spokesperson told CNBC via email. “Amazon remains committed to offering customers a payment experience that is convenient and offers choice.”

Amazon has been piling pressure on Visa to lower its fees, in a series of moves that signaled growing frustration from retailers over the costs associated with major card networks, as well as the e-commerce giant’s market power and sway over its partners.

The likes of Visa, Mastercard and American Express now face intense competition from a flood of fintech challengers, from “buy now, pay later” services like Klarna to open banking, a technology that lets start-ups effectively bypass traditional payment rails such as cards.

In an emailed statement to CNBC, Visa said its agreement with Amazon would also see the two collaborate on “new product and technology initiatives to ensure innovative payment experiences for our customers in the future.”

Both companies declined to comment further on the terms of their agreement when asked by CNBC.

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PayPal crypto service launches in the UK

PayPal has launched its cryptocurrency service in the U.K.

PayPal

LONDON — PayPal is launching its cryptocurrency service in the U.K.

The U.S. online payments giant said Monday it would let British customers buy, hold and sell digital currencies, starting this week.

It marks the the first international expansion of PayPal’s crypto product, which first launched in the U.S. in October last year.

“It has been doing really well in the U.S.,” Jose Fernandez da Ponte, PayPal’s general manager for blockchain, crypto and digital currencies, told CNBC. “We expect it’s going to do well in the U.K.”

PayPal’s crypto feature lets customers buy or sell bitcoin, bitcoin cash, ethereum or litecoin with as little as £1. Users can also track crypto prices in real-time, and find educational content on the market.

Like the U.S. version of the product, PayPal is relying on Paxos, a New York-regulated digital currency company, to enable crypto buying and selling in the U.K. PayPal said it has engaged with relevant U.K. regulators to launch the service.

A spokesperson for the Financial Conduct Authority, Britain’s financial services watchdog, was not immediately available for comment on the announcement.

Growing adoption

PayPal’s crypto service is similar to one from U.K. fintech firm Revolut. As is the case with Revolut, PayPal users can’t move their crypto holdings outside the app. Although Revolut recently started testing a feature that lets users withdraw bitcoin to their own personal wallets.

PayPal says its foray into crypto is about making it easier for people to participate in the market. “The tokens and coins have been around for a while but you had to be a relatively sophisticated user to be able to access that,” da Ponte said. “Having that on a platform like ours makes a really good entry point.”

The payments processor is one of many large finance companies taking a leap into the mostly unregulated world of cryptocurrencies. Despite ongoing concerns about price volatility, consumer protection and potential money laundering in the industry, major firms including Mastercard, Tesla and Facebook have been warming to crypto lately.

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Bitcoin, the world’s biggest digital currency, hit a record high of nearly $65,000 in April before tumbling below $30,000 in July as Chinese regulators extended a crackdown on the market. It has since recovered to a price of $48,400.

While PayPal started with crypto trading, the company is betting digital currencies will take a greater role in e-commerce in the long run. Earlier this year, PayPal started letting U.S. consumers use crypto to pay at millions of its online merchants globally. The firm also expanded crypto buying and selling to Venmo, its popular mobile wallet.

“We definitely have ambitions to continue to expand the product range in the U.S., the U.K. and other markets,” da Ponte said.

“We are very deliberate about starting with initial functionality, and then we’ll see where the market is going to take us. Different markets have different appetite for products.”

‘Britcoin’

The launch of PayPal’s crypto service in the U.K. also comes as regulators become increasingly wary about the rise of digital currencies. In June, the FCA banned the British subsidiary of Binance, the world’s largest crypto exchange, citing a failure to meet money-laundering requirements.

“It makes sense that, as there is increased consumer interest and increased volume, the regulators are putting more attention into this space,” da Ponte said, adding that PayPal has built “strong regulatory relations.”

Meanwhile, central banks are exploring the potential issuance of their own digital currencies, as cash use in a number of developed countries dwindles rapidly. In April, the U.K. Treasury and Bank of England said they would evaluate the potential launch of a digital version of the British pound, dubbed “Britcoin” by the U.K. press.

Da Ponte said central bank digital currencies, or CBDCs, were a “fantastic prospect” but it would take policymakers some time to iron out the key issues involved.

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Square to buy Australia fintech Afterpay amid ‘buy now, pay later’ trend

Jack Dorsey, CEO of Twitter and co-founder & CEO of Square, speaks during the crypto-currency conference Bitcoin 2021 Convention at the Mana Convention Center in Miami, Florida, on June 4, 2021.

Marco Bello | AFP | Getty Images

Square plans to buy Australian fintech company Afterpay as it looks to expand further into the booming installment loan market.

Jack Dorsey’s payments company announced the $29 billion, all-stock deal on Sunday evening. The price tag marks a roughly 30% premium to Afterpay’s last closing price.

“Square and Afterpay have a shared purpose,” said Square’s CEO Dorsey in a statement. “We built our business to make the financial system more fair, accessible, and inclusive, and Afterpay has built a trusted brand aligned with those principles.”

Shares of Afterpay in Australia soared more than 23% Monday morning on the back of the news.

Square pointed to consumers eschewing traditional credit, especially younger buyers. The San Francisco-based payments company already offers installment loans, which said it has been a “powerful growth tool” for Square’s core seller business. It plans to integrate Afterpay into both its seller and Cash App ecosystems.

Afterpay lets customers pay in four interest-free installments and pay a fee if they miss an automated payment. Its 16 million customers will eventually be able to manage installment payments directly through Cash App. The deal is expected to close in the first quarter of 2022.

So-called installment loans have been around for decades, and were historically used for big-ticket purchases such as furniture. Online payment players and fintechs have been competing to launch their own version of “pay later” products for online items in the low hundreds of dollars.

Affirm is one of the better-known public companies offering the option to finance items in smaller, monthly payments. PayPal, Klarna, Mastercard and Fiserv, American Express, Citi and J.P. Morgan Chase are all offering similar loan products. Apple is planning to launch installment lending in a partnership with Goldman Sachs, Bloomberg reported last month.

Square also announced its second-quarter results on Sunday, ahead of the previously planned release on Wednesday.

Gross profit increased 91% from a year ago, which marked a record quarterly growth rate for the payments company. Cash App profit was up 94%, while seller jumped 85% from a year ago. Net revenue excluding bitcoin came in at $1.96 billion for the quarter, an 87% rise year over year.

The company’s Venmo competitor, Cash App now has 40 million monthly transacting active customers.

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Bitcoin surpasses $60,000 in record high as rally accelerates

Representation of the virtual currency Bitcoin is seen on a motherboard in this picture illustration taken April 24, 2020.

Dado Ruvic | Reuters

Bitcoin crossed a record high of $60,000 on Saturday morning, continuing its rally as major companies and financial institutions adopt cryptocurrencies.

Bitcoin, the world’s biggest cryptocurrency, was at $60,415.34 as of 7:25 a.m. ET, according to Coinbase, recovering from a dip at the end of February that followed a previous record high that month.

The digital currency is up 963% over the last 12 months, according to Coinbase. Its value surpassed $1 trillion last week for the second time this year.

Bitcoin’s rally is driven partly by increased adoption by larger institutional investors and firms and speculative demand. Tesla has purchased $1.5 billion worth of bitcoin and plans to accept the digital coin as payment for its products, a decision that sparked more widespread interest.

Mastercard also said it will open up its network to some digital currencies. And PayPal and BNY Mellon have made some moves into the space.

Bitcoin believers argue that the current rally is fueled by demand from institutional investors and is different than past rallies, such as when bitcoin skyrocketed to nearly $20,000 in late 2017 before losing about 80% of its value the next year.

Others argue that bitcoin and other cryptocurrencies have no intrinsic value and worry that bitcoin could be one of the biggest stimulus-fueled market bubbles on record.

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