MasterCard Inc., a credit and debit card company, reported a second-quarter revenue that falls short of analysts' estimates, as expenses surge due to offering of more rebates and incentives, according to Bloomberg.
The company reported a second-quarter revenue of $2.39 billion, an increase of less than 1 percent, falling short of analysts' estimates.
The company's net income is at $921 million, or 81 cents a share, down from the $931 million, or 80 cents a share report a year ago when there were more shares outstanding, according to Bloomberg.
Revenue fell short due to rising expenses, fueled by MasterCard offering more rebates and incentives to win new deals and renew older ones.
Bloomberg reports that as consumers demand better rewards for using their cards, Ajay Banga, CEO of MasterCard, has been striking deals with retailers and increasing incentives.
Reuters adds that the company paid $940 million in rebates and incentives, a 21 percent increase from last year's spending.
Total operating expense surged by 16 percent to 1.16 billion, Bloomberg reports.
Aside from rising expenses, MasterCard was also hit by the strengthening U.S. dollar.
MasterCard gets most of its revenue outside the U.S. The strong U.S. dollar has been hindering the company's profits, even as spending increases, according to Bloomberg.
Bloomberg adds that Banga said, "our business continues to perform well with good transaction and volume growth, particularly in cross-border, despite the mixed global economic environment and foreign exchange headwinds."
MasterCard's cross-border volume, the value of the transaction made by cardholders outside the card issuer's country, has increased by 17 percent, Reuters adds.
MasterCard's shares declined in premarket trading.
Bloomberg adds that MasterCard's shares were trading at $93.11, down 2.2 percent, at 8:49 a.m. in New York.
MasterCard's revenue is generated by charging companies who use its payment network when customers transact using cards that carry MasterCard's brand.
