NEW YORK (AP) -- MasterCard is expected to report an increase in net income for the spring quarter even though its international earnings could likely be watered down because of weak currency translations.
Consumers also put the brakes on spending in the second quarter. But MasterCard Inc.'s results are expected to be bolstered by market share gains in the debit card business.
The credit card processor will report its second-quarter results before the markets open on Wednesday.
WHAT TO WATCH FOR: Like most multinationals, a big part of MasterCard's growth in recent years has been in overseas markets. In the last couple of years, MasterCard has focused on expanding its international business by acquiring the international card processing system DataCash and the global prepaid travel card manager Access Prepaid Worldwide.
Its decision to focus on international markets has been paying off.
In the first quarter, for instance, the amount of purchases by consumers using MasterCard branded cards grew 21 percent to $393 billion, while they grew 14 percent to $236 billion in the U.S.
In the second quarter, the dollar's value against most international currencies soared, which will likely hurt MasterCard's earnings when converted to dollars. The euro declined about 4.5 percent against the dollar over the quarter.
Rival Visa reported its results last week and its revenues also took a hit from weaker currency translations in the quarter.
In the April-June period, consumer spending slowed. In the U.S., retail sales fell for three months in a row for the first time since the fall of 2008, the height of the financial crisis. Recession hit some countries in Europe, while the economies of China and India slowed.
Lower spending hurts MasterCard, which makes money from processing charge card transactions.
However, MasterCard might be able to make up for some of these hits from market share gains in debit cards.
New regulations that went into effect in October limited how much banks can collect in fees from stores on each transaction. It's led banks to eliminate some debit card rewards programs leading to a slide in debit card usage. The same law also freed stores to send even Visa card transactions to MasterCard for processing.
That led to an increase in debit card processing volumes for MasterCard in the first quarter. If the trend continues, MasterCard's revenue and income from this business could pick up.
Another worry is the recent litigation settlement between the stores and MasterCard and Visa. As part of the settlement, stores can now charge consumers an additional fee to use a credit card. Analysts fear that this would shift customers from all credit cards into cash or checks long term.
WHY IT MATTERS: MasterCard is one of the world's largest processors of debit card and credit card payments. Its results are closely watched because they reflect the health of the consumer.
WHAT'S EXPECTED: Analysts, on average, expect earnings of $5.57 per share on revenue of $1.88 billion, according to FactSet.
LAST YEAR'S QUARTER: MasterCard's earned $4.76 per share excluding one-time items on revenue of $1.67 billion.