Bernstein: Mastercard third-quarter revenue outpaces transaction growth as value-added services and pricing support gains

Why is revenue growing faster than transaction volume?

In the third quarter of 2026, Mastercard’s net revenue rose 14% year over year to 9.807 billion dollars, about 1% above market consensus. Adjusted earnings per share were 5.31 dollars, up 21% year over year and 3% above consensus. Network-processed transactions grew 9% over the same period, unchanged from the second quarter.
Transaction processing revenue rose 14% year over year, about 5 percentage points faster than processed transaction growth, mainly benefiting from pricing and an improved transaction mix. Value-added services revenue grew 19% to 4.058 billion dollars, accounting for about 41% of net revenue.
Value-added services were supported by demand for customer acquisition, marketing insights, security and identity authentication, as well as pricing. However, some consulting revenue was brought forward from the fourth quarter to the third, and the timing of client incentive recognition also provided some help.

Third-quarter global payment volume grew 8.9% year over year on a constant-currency basis, roughly 0.5 to 1 percentage points below Visa. Bernstein said Mastercard’s core business share gains had slowed, with the high comparison base from earlier share gains in Europe and Capital One’s debit card business affecting growth.
Cross-border travel spending rose 8% year over year, an improvement from 6% in the second quarter, but growth in non-travel cross-border online spending fell from 20% to 15%. Management attributed the latter slowdown partly to newly imposed customs fees in Europe, promotional activity and a higher comparison base from cryptocurrency purchase spending last year.
As of 21 October, cross-border payment volume rose 10% year over year on a constant-currency basis, below the third quarter’s 11%. Travel-related growth fell from 8% to 7%, while growth in non-travel cross-border online spending fell from 15% to 14%.

The company maintained its 2026 full-year guidance for organic, constant-currency non-GAAP revenue growth at the high end of the low-double-digit range. It also raised its full-year GAAP operating expense growth guidance from the high end of the high-single-digit range to the low end of the low-double-digit range.
Client rebates and incentives accounted for about 53% of gross payment network revenue in the third quarter, and the company expects the proportion to rise further in the fourth quarter.
Bernstein expects Mastercard’s revenue to grow about 13% in 2027, potentially outpacing Visa again: the Capital One debit card revenue headwind will be partly reflected in the comparison base, the effects of foreign-exchange fluctuations will also enter the comparison period, and security solutions are expected to continue growing. The firm also noted uncertainty around the migration of Capital One’s credit card business.

Transaction volume from AI-agent shopping remains very small. Through tokenized payments, agent authentication and transaction intent recognition in Agent Pay, Mastercard hopes to enable banks and merchants to identify and process agent-initiated transactions. Shopify’s Shop Pay already uses Agent Pay and network tokens, and the company signed a strategic partnership with OpenAI in the third quarter that includes Agent Pay.
The company believes single-use virtual cards fragment consumer rewards and controls and advocates ultimately adopting end-to-end tokenization. The payments ecosystem still needs to prepare for this, and the company is currently discussing transitional solutions such as virtual cards with processors.
In cybersecurity, a newly launched digital risk protection product has served nearly 800 enterprise customers within months of launch. Management said the security business has long grown rapidly, so it does not expect a pronounced near-term jump.
Bernstein maintained its outperform rating and 730-dollar price target. The target is based on its 2027 earnings-per-share forecast of 23.27 dollars and a price-to-earnings multiple of 31.