Does Mastercard's Expense Increase Reflect a Strategic Long-Term Focus?

Mastercard Inc. MA has seen a rise in operating expenses in recent years. The company continues to make significant investments in digital solutions, safety and security products, data analytics, geographic expansion and platforms to address new payment flows.

These higher expenses have limited operating margin expansion, though steady, despite solid revenue growth. While Mastercard’s scalable business model delivers strong operating leverage as transaction volumes rise, heavier spending on talent, cloud computing, advanced analytics and fraud prevention has moderated this benefit. Management expects adjusted operating expenses to increase at a high-teens rate in the fourth quarter of 2025 and at the upper end of mid-teens growth for the full year compared with the prior year, highlighting the company’s ongoing investment focus.

Although these costs weigh on near-term profitability, they are strategically important. Continued investment in cybersecurity and fraud detection is essential to address evolving threats, safeguard customer trust and reduce regulatory and reputational risks, given that Mastercard is an important player in the global payments ecosystem. Higher compliance spending is also unavoidable as the company expands across markets with increasingly complex regulatory frameworks.

In addition, technology and innovation investments are enabling Mastercard to diversify beyond traditional card payments. Expansion into real-time payments, digital wallets, data-driven services and open banking strengthens long-term growth prospects and broadens revenue sources. Marketing and partnership initiatives further reinforce ecosystem relationships and network effects.

Thus, while rising expenses may limit margin upside in the near term, they are critical to sustaining Mastercard’s competitive position and long-term earnings growth.

What About Its Peers?

American Express AXP is seeing rising operating expenses as AmEx increases spending on customer engagement and marketing. Expanded rewards programs, enhanced cardholder benefits, higher travel activity and increased cashback linked to stronger billed business are keeping reward costs elevated, pressuring margins for AmEx.

Client incentives paid to issuers, merchants and partners have risen as Visa V defends market share in an increasingly competitive payments space. Marketing and strategic investments continue to drive expense growth, with Visa reporting double-digit increases and guiding for low double-digit growth in 2026, modestly pressuring its margins.

MA’s Price Performance

Shares of MA have gained 9.7% year to date, outperforming the industry.

MA’s Expensive Valuation

Mastercard trades at a forward 12-month price-to-earnings ratio of 30.3, above the industry average of 21.1. It carries a Value Score of D.

Estimate Movement for MA

The Zacks Consensus Estimate for MA’s fourth-quarter 2025 EPS and first-quarter 2026 EPS witnessed no movement in the last 30 days. The consensus estimate for 2025 and 2026 earnings moved down one cent each, respectively, in the same time frame.
 

The consensus estimate for MA’s 2025 and 2026 revenues and EPS indicates year-over-year increases, respectively.  

MA stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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