MasterCard posted a lower-than-expected quarterly profit and said its net revenue for the year would come in at the low end of its three-year forecast range as customers migrate to Visa as part of a previously announced deal.
In 2013, JPMorgan Chase, which issues both MasterCard and Visa-branded cards, signed a 10-year agreement under which the bank will commit more credit and debit card transaction volumes to Visa.
"We don't have any specifics on how these cards will migrate, but we are now assuming an impact in 2014. Given the size of this portfolio we can offset some, but not all, of this attrition with our wins," MasterCard Chief Financial Officer Martina Hund-Mejean said on a post-earnings conference call.
MasterCard shares were down 5 percent at $75.98 in late-morning trading. They fell as much as 10 percent. (Click here to track the company's shares following the report.)
The company had forecast net revenue growth of between 11 and 14 percent for the period between 2013 and 2015.
(Read more: Visa earnings top expectations)
MasterCard reported a 21.1 percent rise in operating expenses at $1.21 billion as the company set aside $95 million for litigation settlements.
The company also saw its rebates and incentives it offers to customers increase 23 percent to $925 million as it signed up more business.
In the fourth quarter, MasterCard signed an agreement with pan-African bank Ecobank Group and also extended its agreement with U.K.-based Tesco Bank. MasterCard also renewed its agreement with Bank of Montreal.
MasterCard joined its larger rival, Visa, in urging U.S. merchants and banks to hasten the adoption of a more secure technology for credit and debit cards after security breaches at several retailers.
"What we would now like to see is that all players within the payments ecosystem come together with a sense of urgency to ensure that the highest payment security standards are put into place," MasterCard Chief Executive Ajay Banga said.
Profit misses estimates
MasterCard's net income rose 3 percent to $623 million, or 52 cents per share, in the fourth quarter, from a year earlier.
Adjusted earnings were 57 cents per share, below the average analyst estimate of 60 cents.
Net revenue rose 12 percent to $2.13 billion. Analysts on average had expected $2.14 billion, according to Thomson Reuters I/B/E/S.
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MasterCard's worldwide purchase volume increased 11 percent to $805 billion from a year earlier, while annual growth in its U.S. purchase volumes rose 7.4 percent to $275 billion.
The company announced a 10-for-1 stock split and raised its quarterly dividend by 83 percent last month.
Shares of MasterCard have risen 66 percent in the 12 months ended December, outperforming the broader S&P 500 Index which rose 30 percent in the year.
Visa reported a better-than-expected rise in quarterly profit on Thursday as more people used cards instead of cash to make payments.
Visa shares were down 1.7 percent at $217.15. (Click here for the latest quote.)