The data: Mastercard’s gross payment volume (GPV) grew 8% year over year (YoY) in Q4 2022, slowing from the post-lockdown 23% YoY increase from the same period in 2021, per its earnings release.

Key context: Inflation played a role in bumping up Mastercard’s volume—though it’s difficult to quantify to what extent because price increases have cooled in recent months.

Rival Visa has minimized inflation’s potential negative effects on the business—CEO Al Kelly said last year that personal consumer expenditures have historically remained strong for Visa during inflationary periods. That may also apply to Mastercard.

How we got here: Here are some other factors that may have contributed to Mastercard’s Q4 growth.

• Travel spending. Consumers released more pent-up travel demand throughout the quarter, helping boost Mastercard’s cross-border volume 31% YoY. Domestic flights increased 84% YoY in Q4, according to Emburse data. Flight prices have also gone up substantially in the last few months.
• Holiday shopping. Mastercard benefited from a flurry of holiday shoppers in the last months of the year. US retail and ecommerce holiday sales grew 7% YoY and hit $1.297 trillion in 2022, per Insider Intelligence forecasts.
• Tie-ups. Mastercard teamed up with several companies to enhance its card offerings in Q4, including a partnership with McAfee that let cardholders access discounted security services. The collaborations help make Mastercard a more attractive network to work with and improve customer loyalty.

Looking ahead: Mastercard warned that revenue growth for Q1 would slow more than expected as pent-up travel demand diminishes—it anticipates percentage growth in the “high end of high single digits.” Analysts predicted Mastercard’s Q1 revenues would grow 10% YoY in a Bloomberg survey. The firm’s share price tumbled about 2% on Thursday morning after the warning.

Despite the warning, Mastercard is working on projects that can set it on a path for long-term growth—like its investments into buy now, pay later (BNPL).

• Mastercard is building out its own BNPL program with merchants and fintechs.
• It recently signed a deal with Switzerland-based fintech ZoodPay to expand its prepaid virtual installment card product in Eastern Europe, the Middle East, and Africa.

Related content: Check out our US Payment Card Networks 2022 report to learn about the competitive and regulatory threats affecting card networks and the growth opportunities they have.

This article originally appeared in Insider Intelligence's Payments Innovation Briefing—a daily recap of top stories reshaping the payments industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

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