MasterCard CEO sees emerging markets growth

The MasterCard logo is seen on two credit cards April 28, 2008.

PURCHASE, New York (Reuters) - MasterCard Inc (MA.N), the world's second largest credit card network, may increase investments in emerging markets despite the global financial crisis, its CEO said on Tuesday, adding that the U.S. economy could start recovering by the end of this year.

President and Chief Executive Robert Selander said in an interview that Brazil and China are among the markets where he expects strong growth opportunities. Both countries, with huge populations and a low penetration of credit and debit cards, are part of MasterCard's 15 biggest markets. Those 15 markets constitute 90 percent of the company's businesses.

"We are making investments in some of the emerging markets where we continue to see growth. We will probably increase some of those investments as the relative growth rate in those markets is better than some of our more mature and struggling economies," Selander said.

Emerging regions from Asia to Latin America have reported double-digit growth in gross dollar volume in credit and debit transactions in the fourth quarter, while they fell 5 percent in the United States.

Selander said it was a priority to expand MasterCard's debit business, seen as the fastest growing electronic payment tool.

"We are working hard on debit. If you think about conquering cash and checks, which is our principal competition, that is going to be done more by debit than is probably going to be by charge or credit," Selander said.

Debit is still a small part of the company's business, with credit transactions representing around 70 percent of its gross dollar volume.

LIGHT AT THE END OF THE TUNNEL?

MasterCard is partially insulated from the credit crisis because it processes transactions rather than lends.

However, the company, based in Purchase, New York, has reported a slowdown in transactions as consumer spending declines and the global economy deteriorates.

MasterCard posted higher-than-expected quarterly earnings in February, helped by lower expenses and an increase in the fees it charges banks.

Selander said he believed "things will get worse in some of the economies before they get better".

"Unemployment will continue to rise in the United States and probably in some of the Western European countries," he said.

"We're going to continue to see housing prices fall. We are going to continue to see challenging volumes of consumer spending in terms of retail sales," Selander said.

But he forecast that the U.S. recession should ease by the fourth quarter of 2009 or the first quarter of 2010, boosted by government efforts to stimulate lending and changes in the behavior of banks and consumers.

(Reporting by Juan Lagorio, editing by Jeffrey Benkoe, Toni Reinhold)