Payment networks spotlight spending resilience with upbeat quarter

By Utkarsh Shetti

April 30 (Reuters) – Mastercard joined Visa and American Express in posting a quarterly profit beat on Thursday, highlighting spending resilience as well as allaying fears of a slowdown in the face of growing pressures.

Payment processors offer the earliest window into consumer spending health, given their mammoth market share in facilitating transactions on their individual networks.

Spending has largely held up despite concerns of economic uncertainty fueled by the Iran war and U.S. tariffs, even though consumer confidence has waned in a sluggish labor market.

American Express, whose customer base is typically seen as more affluent, topped first-quarter profit expectations last week, while Visa posted a quarterly profit beat on Tuesday.

“If you were hoping for a recessionary tell, the payment processors did not get the memo,” said Michael Ashley Schulman, Partner at Cerity Partners.

Executives at all three firms sought to inspire confidence in the health of the consumer, underscoring that spending had remained resilient despite economic pressures.

Concerns are, however, growing that the resilience may be challenged by a rapid rise in global energy prices that is clouding the economic outlook and complicating policy decisions.

SPENDING STILL RESILIENT

A bulk of consumer spending comes from wealthier households, which continue to make discretionary purchases, while lower-income families pare back on non-essential items.

Experts are increasingly highlighting the bifurcation as the so-called “K-shaped” economy continues to underpin consumer trends, cushioning industries such as travel and entertainment.

The war in Iran initially battered stock markets, but those losses have largely been recouped in hopes that the conflict will be short-lived. Market declines typically temper spending by wealthy consumers.

“With the market rebound, higher-income individuals have been back to business as usual with spending,” said Brian Jacobsen, chief economic strategist at Annex Wealth Management.

Earlier this month, most of the big U.S. lenders also reported an uptick in consumer loan balances, signaling sustained borrowing despite macroeconomic pressures that typically prompt caution.

Spending growth aside, underlying credit quality has also not deteriorated, Evercore ISI analyst Adam Frisch said, adding that delinquency rates were fairly steady.

Wall Street executives and experts have said that while spending trends have largely remained stable, higher gasoline prices spurred by the war could start impacting some categories.

The conflict has also shrouded travel demand, as the Middle East turmoil forced airspace closures and disrupted key global flight corridors.

(Reporting by Utkarsh Shetti in Bengaluru; Editing by Arun Koyyur and Shinjini Ganguli)