Dubai: MasterCard, which is under pressure from France to cut card payment fees, said European consumers are increasingly using credit and debit cards for purchases, dismissing the sovereign debt crisis.
"Our business in Europe has been growing really well," Ann Cairns, president of International Markets at the company, said in an interview in Dubai. "The sovereign debt issue isn't affecting consumer confidence in the way that it might."
The Purchase, New York-based company said it's benefiting from strong consumer spending in the Nordic countries, the Netherlands, Germany and Eastern Europe. At the same time, consumers are also turning away from cash in favour of plastic.
Mastercard is expanding even as Europe's financial crisis enters unprecedented territory after Euro-area finance ministers agreed to a tax on Cypriot bank deposits. Officials unveiled a 10 billion-euro ($13 billion) rescue plan for the country, the fifth since Europe's debt crisis broke out in 2009.
The 17-nation economy will follow last year's 0.6 per cent contraction by shrinking 0.3 per cent in 2013, the first back-to- back decline since the euro's debut in 1999, according to forecasts from the European Commission.
"Our business isn't just credit cards. We're consumer payments and despite sovereign debt, consumer payments continue to grow in the economy," said Cairns, who manages all markets and customer-related activities outside the US. "People are still putting petrol in their cars and still buying groceries."
Global consumer expenditure is increasing five per cent to six per cent, "so there is a natural growth curve," she said. "Only 15 per cent of the world's consumer payments are electronic, 85 per cent are still cash and paper so there's a big circle which is growing outwards."
Mastercard net income beat analyst expectations in the fourth quarter, rising 18 per cent to $605 million. The company is fending off competitors Visa Inc. and Shanghai-based China UnionPay as it seeks a larger share of the electronic payments processing market. It is targeting developing countries such as Myanmar, Ghana, Nigeria and Angola for growth amid the global consumer shift from cash to plastic.
The company faces a renewed push by French regulators to lower the fees it charges merchants of bank-card transactions.
The French Competition Authority intends to "commence a formal proceeding and issue a statement of objections unless MasterCard offers commitments to reduce its interchange fees," the company said in a February 15 regulatory filing.