By Nikhil Subba
(Reuters) - MasterCard Inc <MA.N>, the world's second-biggest payments processor, reported lower-than-expected quarterly revenue on Tuesday, reflecting an increase in rebates, incentives and a stronger U.S. dollar.
The company, which deals in 150 currencies, also warned that the strong dollar was likely to constrain revenue and earnings growth this year.
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Purchase, New York-based MasterCard, whose shares were down 3.2 percent, reported revenue of $2.76 billion for the quarter ended Dec. 31 - a rise of 9.5 percent from a year earlier but short of the average analysts' estimate of $2.79 billion.
The strong dollar is expected to negatively impact revenue growth by about 2 percent and net earnings by about 3 percent in 2017, Chief Financial Officer Martina Hund-Mejean said.
The dollar, already near a 14-year high against the euro, is expected to appreciate further if the U.S. economy picks up speed and inflation rises under the Trump administration.
MasterCard's fourth-quarter net income rose 4.8 percent to $933 million, or 86 cents per share, from $890 million, or 79 cents per share, a year earlier.
On an adjusted basis, the company also earned 86 cents per share, beating the average analysts' estimate by a cent, according to Thomson Reuters I/B/E/S.
MasterCard reiterated its 2016-2018 guidance for low double-digit percentage revenue growth and EPS growth in the mid-teens.
Revenue growth in the first half of 2017 is likely to be lower than in the second half due to higher incentives, Hund-Mejean said on a call with analysts.
Full-year operating expenses are expected to increase by a high single-digit percentage on a currency-neutral basis.
MasterCard, which processes more than 65,000 transactions a minute, said gross dollar volumes rose 9 percent to $1.2 trillion in the quarter on a local currency basis.
The United States, the company's largest market, accounted for a little under a third of the total.
MasterCard, said cross-border volumes - the value of transactions made by card holders outside the home country of the card-issuer - increased 13 percent.
Up to Monday's close of $109.30, the company's shares had risen about 23 percent in the past 12 months.
Visa Inc <V.N>, the world's biggest payments processor, will report quarterly results on Thursday.
(Reporting by Nikhil Subba in Bengaluru; Editing by Ted Kerr and Shounak Dasgupta)