Charging forward

Mastercard (NYSE: MA) has taken a hit from the ongoing COVID-19 pandemic, as more people staying home means less spending overall — especially in categories such as travel. The payment processing giant’s profit dropped 9% year over year in the first quarter of 2020, while revenue growth slowed to only 3%. But the headwinds from the coronavirus outbreak will only be temporary.

The pandemic could even boost Mastercard’s prospects over the long run, by further accelerating the expansion of e-commerce. Consumers have shopped online more while they’ve been stuck at home — and they haven’t used cash or checks to make purchases. They’ve either used credit cards or digital payment methods, many of which rely on Mastercard’s huge payment processing network.

It’s not just individual consumers who are shifting away from using cash and checks, either. Mastercard recently launched a business-to-business platform called Track, which enables businesses and their suppliers to use multiple electronic payment methods in their commercial activities.

The future seems likely to feature significantly lower use of cash and much higher use of digital payments — and Mastercard is poised to profit from that transition. In the near term, though, it has more than $10 billion in cash (as of the end of its last quarter), enough to withstand a lot of coronavirus-related disruption to its business. (The Motley Fool owns shares of and has recommended Mastercard.)