After a successful quarter for card issuers, Mastercard Inc cautioned that runaway inflation was sapping lower-income clients’ spending. Consumers throughout the world have begun to break in the face of decades-high pricing pressures, with purchases at shops such as Walmart migrating away from big-ticket items and toward necessities like food.

“In the U.S., what you are seeing is a declining trend in terms of the growth rates on the lower income side of things,” Chief Financial Officer Sachin Mehra said on an analyst call.

Mastercard’s comments were less upbeat than rival Visa Inc’s, which said it had yet to observe signs of a slowdown in cardholder spending.

While affluent consumer spending and a jump in cross-border volumes have been a bulwark against the downturn thus far, that trend may be threatened when the US economy enters a recession following two quarters of contraction.

Rising interest rates and a natural gas crisis, according to Mastercard CEO Michael Miebach, are also threats in Europe, the company’s second-largest area with positive payment volumes.

The company’s performance in the second quarter was bolstered by the biggest summer travel season since the outbreak began, thanks to pent-up demand and the easing of COVID-19.

Cross-border volumes increased by 58 per cent in local currency in the April-June period, contributing to a 14 per cent increase in total dollar volumes on Mastercard’s network to $2.1 trillion.

The New York-based corporation posted an adjusted profit of $2.56 per share on $5.49 billion in net revenue. According to Refinitiv statistics, the amounts were higher than analysts’ projections of $2.36 per share and $5.26 billion, respectively.

(Adapted from Business-standard.com)