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Why Mastercard Fell 11.4% in January

By Royston Yang - Feb 5, 2021 at 8:43AM

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The financial services firm is collaborating with multiple partners to push for contactless payments and introduce more transparency to customers' transactions.

What happened

Shares of Mastercard (MA 1.19%) fell by 11.4% in January, according to data provided by S&P Global Market Intelligence.

The financial services company's shares have hovered around current levels in recent months, but are still up more than 55% from their lows in March 2020.

A woman holding up a credit card in her left hand while typing on a laptop with her right.

Image source: Getty Images.

So what

Mastercard recently released its fourth-quarter and full-year 2020 earnings report, showcasing what investors have been seeing for the last three quarters since the onset of the pandemic. Net revenue declined by 7% year over year while net income fell by 15% year over year to $1.8 billion. For the full year, net revenue was down 9% year over year while net income fell by 21% year over year to $6.4 billion.

Cross-border volume remains depressed at just 70% of the previous year's level for the week ended Jan. 21 as the pandemic continues to force the closure of borders and restrict travel. With infection rates remaining high in many parts of the world, it's unlikely that cross border volumes will recover anytime soon. On a positive note, transaction volume has been holding steady at around 3% to 4% higher than the level registered a year ago.

Now what

Undaunted, Mastercard continues to collaborate with partners to expand its services and capabilities. The company is working with NMI, a payments enablement technology company, and Global Payments (GPN 1.35%), a payment technology company, to accelerate the transition toward contactless payments. The pilot project, known as Tap on Phone, will turn any smartphone into a payment acceptance device, thereby allowing more businesses to roll this feature out to its customers without any additional hardware or software requirements. 

Mastercard has also introduced a new service that will offer customers more details of their transactions such as the merchant's name and location of purchase, in the hopes that it will minimize unnecessary chargebacks from customers who may not immediately recognize a transaction as being legitimate. These initiatives will certainly help the company to recover strongly when borders eventually reopen and are a positive sign that management continues to grow the business despite the challenges it faces.

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Stocks Mentioned

Mastercard Incorporated Stock Quote
Mastercard Incorporated
$336.18 (1.19%) $3.96
Global Payments Inc. Stock Quote
Global Payments Inc.
$122.10 (1.35%) $1.63

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