Visa enjoys upbeat quarter, MasterCard lags

Visa Inc , the world's largest credit and debit card network reported strong quarterly results as its customers spent more on its cards, but smaller rival MasterCard Inc reported a tougher quarter and warned of a difficult outlook.

Visa reported rising growth in the key U.S. market in contrast to MasterCard, which has suffered as some of its biggest issuers, including Citigroup Inc , struggle.

Visa stock rose 2.2 percent in after-hours trading while shares in MasterCard, which reported earlier in the day, closed down 2.4 percent on the New York Stock Exchange.

Both reported purchase volume increases of 9-10 percent from a year earlier, after adjustment for currency fluctuations, but MasterCard said its growth was slowing in the United States, the biggest market.

Annual growth in MasterCard's U.S. purchase volumes eased to 4.6 percent from 7.1 percent in the previous quarter. Visa's annual growth edged up to 4.1 percent from 3.0 percent. (http://link.reuters.com/xep77t)

As well, MasterCard was downbeat about coming months.

"In the U.S., the second quarter right now looks a little bit dodgy, but there could be some upside going into the second half of 2013 as far as U.S. economic growth is concerned," MasterCard Chief Executive Ajay Banga said on a post-earnings conference call.

Visa raised its fiscal 2013 earnings forecast to around 20 percent in earnings per share from a previous outlook for gains in the high-teens.

Consumer sentiment across the globe has remained muted, given the uncertainty in Europe and China's slowing growth. U.S. consumer spending has taken a hit from higher payroll taxes.

MasterCard said it signed a memorandum of understanding with China's Alibaba Group , Asia's largest e-commerce company, to offer epayment services to potentially 800 million Alibaba customers.

Both MasterCard and Visa are trying to capture new business as consumers turn increasingly to cards and digital payments instead of cash.

They are also experimenting with mobile payments as they fear losing business to upstart technology companies.

Digital wallets are electronic versions of real wallets that store card and bank information and can be used to buy things online quickly and anonymously. They are increasingly being used on smartphones to shop in retail stores, posing a threat to networks such as MasterCard, Visa and American Express .

Visa's net profit fell to $1.27 billion from $1.29 billion a year earlier. But, on a per-share basis, profit rose to $1.92 per Class A share from $1.91, after share buybacks. ID:nPnNY05166]

Total operating revenue rose 15 percent to $2.96 billion.

Analysts on average had expected a profit of $1.81 per share on revenue of $2.85 billion, according to Thomson Reuters I/B/E/S.

MasterCard net income rose to $766 million, or $6.23 per share, in the first quarter, from $682 million, or $5.36 per share, a year earlier.

Analysts on average were expecting the company to earn $6.18 per share, according to Thomson Reuters I/B/E/S.

Revenue rose 8.4 percent to $1.91 billion but fell short of the average analyst estimate of $1.93 billion.

Visa shares were up 2.2 percent at $169.64 in after market trade on Wednesday.

MasterCard shares closed down 2.3 percent at $539.82 on Wednesday. They had previously risen about 6 percent this year.

(Editing by Rodney Joyce)