UPDATE 1-Mastercard beats profit estimates, shares rise

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July 27 (Reuters) - MasterCard Inc, the world's second-biggest payments processor, on Thursday reported a better-than-expected 20 percent jump in quarterly profit as people spent more using credit and debit cards.

Mastercard's shares were up 2 percent at $133.60 in premarket trading.

Consumer spending in the United States, which accounts for more than two-thirds of nationwide economic activity, has been on an upswing, supported by a tightening labor market and cooling inflation.

Purchase, New York-based Mastercard, like its bigger rival Visa Inc, generates revenue by facilitating credit- and debit-card transactions and both their revenue streams are closely linked to consumer spending power.

Mastercard also benefited from consumer spending outside the United States, with its cross-border volumes the value of transactions made by overseas card-holders rising 14 percent on a local currency basis in the second quarter ended June 30.

The company's net income rose to $1.18 billion, or $1.10 per share in the quarter, from $983 million, or 89 cents per share, a year earlier. http://mstr.cd/2vMmERM

Analysts on average had expected earnings of $1.04 per share, according to Thomson Reuters I/B/E/S.

Revenue climbed 13.3 percent to $3.05 billion, helped in part by Mastercard's acquisition of payment systems company Vocalink.

Last week, Visa reported a better-than-expected quarterly profit and raised its annual earnings forecast, as more people across the U.S. and Europe used its payments network. (Reporting by Pallavi Dewan and Diptendu Lahiri in Bengaluru; Editing by Sai Sachin Ravikumar)