Visa and Mastercard both reported better-than-expected results, at a pivotal time in their business with the emergence of digital wallets. Bobbi Rebell reports.
Visa and Mastercard both reporting better-than-expected quarterly results. Investors enthusiastic about global opportunities - incuding in China- a trillion dollar business now opening up to these companies. Rising consumer confidence here in the U.S. giving consumers the green light- to spend. Clear Alternatives Diane Garnick: SOUNDBITE: DIANE GARNICK, CEO, CLEAR ALTERNATIVES (ENGLISH) SAYING: "These are two of the biggest transaction companies to look at, many people use them we can even throw in discover there but visa and mastercard clearly leading the way. and what they are seeing is year over year a 10 percent increase in US spending. That is a dramatic increase." But the companies are also talking more about changes in how consumers want to PAY for what they what they are buying - as digital wallets finally start to go mainstream. Both Visa and Mastercard have partnered with Apple Pay - the company's mobile payment system. Mary Monahan is the Research Director for Mobile at Javelin Strategy & Research: SOUNDBITE: MARY MONAHAN, RESEARCH DIRECTOR FOR MOBILE. JAVELIN STRATEGY & RESEARCH (ENGLISH) SAYING: "Consumers are wanting to use these phones. They have got them in their pockets. There is a pent up demand. When we look over time, if you look back 5 years ago, people were just downloading ring tones and hardly anyone was purchasing physical goods." That's changing - Javelin Strategy found that over half of mobile purchasers bought physical goods using their smartphones in 2014, up to 51% in 2014, from only 14% in 2009. These payments will rise from about $3 billion in 2013 to $53 billion by 2019 according to Javelin Strategy and Research. But Visa and Mastercard have been shut out of another emerging group - CurrentC- backed by a consortium called MCX that includes huge players like Wal-Mart, Best Buy and CVS - who want to avoid paying the credit card companies a piece of every transaction. SOUNDBITE: MARY MONAHAN, RESEARCH DIRECTOR FOR MOBILE. JAVELIN STRATEGY & RESEARCH (ENGLISH) SAYING: "CurrentC is really asking the consumer to have plastic surgery. They want us to cut up our credit cards and a lot of consumers want to use their credit cards for purchasing. But Currentc would prefer that we go into our checking accounts and take a debit out of our checking accounts because for the merchant that is much cheaper than using a credit card. " But Visa and Mastercard are not putting all their eggs in one basket: they have developed their own digital wallet products - Mastercard has its Masterpass wallet and Visa has Visa Checkout.