Michael Miebach
Chief Executive Officer at Mastercard
Thank you, Warren, and good morning, everyone. So here are highlights of the quarter. The strong momentum we started the year with accelerated this quarter, with net revenue up 31% and EPS up 37% versus a year ago, all that on a non-GAAP currency-neutral basis. On that same basis, quarter two net revenues are now 10% over 2019 levels even though international travel is in the early stages of recovery, which is showing the strength of our diversified revenue streams.
The domestic switched volumes are well above pre-pandemic levels with all the regions growing in a healthy rate. We're seeing improvements in both domestic and cross-border travel with significant upside potential. Within this context, we're making progress against our strategic objectives and have expanded our relationships with key partners like Citi, JPMorgan Chase, Barclays, Stripe and Verizon. Let's dive in, looking first at the broader economy. Domestic spending levels continue to show improved in-store sales and strength in e-commerce. According to our quarter two SpendingPulse report, which is based on all payment types, including cash and checks, U.S. retail sales at auto, ex gas, were up 14% versus a year ago and up 10% versus 2019, reflecting improved consumer mobility and some residual effects of fiscal stimulus.
SpendingPulse also indicated that overall European retail sales in quarter two were up 13% versus a year ago and 6% versus 2019. The vaccine rollout has scaled in the U.S., U.K. and Germany and several other countries with over 35 countries now reporting that over 50% of their populations are at least partially vaccinated. Broadening this effort is critical and will of course take time.
Turning to our business, specifically in the 4-phased framework we established for managing through the COVID environment. We believe that most markets are at a growth phase domestically as cross-border spend is now starting to normalize and border restrictions are being relaxed. Looking at Mastercard spending trends. Switched volumes continue to improve quarter-over-quarter, with strength across all products. Debit spend remains elevated, and we are seeing further recovery in credit, driven in part by the return of travel and increased discretionary spending. This recovery is led by consumer credit, but it's important to note that commercial credit is also improving and has now reached pre-pandemic levels as well.
In terms of how people are spending, they are definitely getting out more as we're seeing improvement in card-present spending, particularly in the travel, retail and restaurant categories, while e-commerce continues to be strong. Now turning to cross-border. Proforma card-not-present spending, excluding online travel spend, continues to be very strong. On the travel front itself, it is clear people want to travel and they do so where and when able to. We've seen this domestically and across borders where there are limited restrictions.
For example, we're seeing strength between the U.S. and Latin America as well as an increase in travel within Europe. Our industry reports, there has been a recent increase in bookings for travel between the U.S. and Europe, and the quarantine requirements for entry into Canada are starting to be relaxed, so that's a further opportunity. Overall, we expect more borders to open in the second half of the year, depending, of course, on infection rates, including the recent variants and progress on the vaccination front.
Against this improving backdrop, we are focusing on our strategic priorities: one, growing our core products supported by our services; second, driving digital enablement, both in stores and online; third, ensuring the ecosystem is safe and secure; and fourth, providing choice through our multi-rail capabilities. As always, we will do this with an eye towards driving top and bottom line growth over the long term by continuing to manage our expenses carefully.
We'll look at them one by one. First off, we're driving growth in our core products and are leveraging our comprehensive services to do so, working with new and existing customers solve their pain points, both in payments and beyond. We're well positioned to capitalize on the return of travel and remain focused on building on our strength in this area by expanding relationships with our travel partners. For example, we have renewed our exclusive co-brand with JetBlue Airlines in the U.S.
We also entered into a long-term global partnership with Cathay Pacific and Asia Miles, who will migrate their existing co-brand portfolio to Mastercard. In the Middle East, we have expanded our British Airways co-brand and in Latin America, we are now the preferred brand for LATAM Airlines. It is important to note that our services played a critical role in enabling all these deals, including our data analytics, Test & Learn, loyalty, consulting and cybersecurity solutions.
Of course, we also continue to drive growth in the core outside of travel. Here are a few examples. We're excited about our partnership with Citi to launch the new Citi Custom Cash Mastercard, offering card members cash back in the top eligible spend category. JPMorgan Chase, we've extended and deepened our agreement in the commercial space, and we have renewed our Maestro brand relationship with Chase in the U.S. We also continue to partner closely with community banks throughout the U.S., including a flip of First Southern National Bank's debit portfolio to become their exclusive network brand. On the digital front, we're well positioned to drive the acceleration of the secular shift with our digital capabilities no matter how consumers want to shop: in store, online or both.
As consumers return to in-person shopping, adoption of contactless continues to grow. In the second quarter, contactless penetration represented 45% of in-person purchase transactions globally according to our switched transaction. That's up from 37% a year ago. At the same time, e-commerce continues its strong growth, and we are providing consumers choice on how they want to pay online. For example, Click to Pay, to improve the guest checkout experience, it's now rolled out in over 10 markets, and we continue to launch significant new merchants such as the Canadian Tire group. On to the buy-now-pay-later space.
In Australia, we're partnering with Citi and Commonwealth Bank of Australia to offer installments to consumers wherever Mastercard is accepted. And whether in store or online, we are securing and streamlining the consumer experience through our tokenization services. Tokenized transactions across in-store, online and in apps surpassed one billion per month throughout the second quarter. We continue to partner with major digital players to expand the reach of our digital capabilities. For example, we just entered a strategic partnership with Stripe to give business a small control of the how they spend their money by enabling Stripe users to create, manage and distribute virtual and physical cards for small business, commercial and consumer across credit, debit and prepaid.
We've also entered a partnership with Verizon to bring 5G innovation to the global payments industry. Leveraging our services and insights in pairing Mastercard solution with Verizon's 5G connectivity will allow us to create better experiences from the checkout lines to being billed, even through how businesses are run. The increased capacity and reduced latency of 5G will enable us to take another step towards making every device a commerce device. Now on to securing the ecosystem. As more merchants and consumers shift to digital, the importance of keeping the ecosystem safe and secure is paramount and is creating a strong demand for our cyber solutions. In addition to organic growth, a number of our acquisitions in the space continue to perform well. For example, Ethoca had strong deal momentum, including a fraud and dispute management agreement with EBANX, a payment solution provider operating across 15 countries in Latin America. RiskRecon, which monitors and then tests those customers' third-party cybersecurity risk, is now scanning millions of companies globally, up from thousands when we acquired them at the end of 2019.
NuData is providing biometric fraud prevention tools to Major League Baseball and the neobank, Nickel. We're happy to advance our digital identity capabilities with the acquisition of Ekata that has now closed and off to a strong start on the deal front. Last but certainly not least, let's turn to our initiatives focused on addressing a broader set of payment flows with our multi-rail capabilities.
The key here is to provide choice, essentially the right tool for the job. With our multi-rail approach, including our expertise and capabilities in cards, real-time payments and support for digital currencies, we are able to deploy the right combination of assets to meet our customers' needs. And more than just having this range of capabilities, we're making these solutions work together seamlessly. Let me give you a few examples. In B2B, we're making progress with Mastercard Track building out our global open-loop network by working with buyer agents and supplier agents such as banks, software companies and ERP vendors.
On the bank side, we're very excited to have signed Box e-card payments who will use Track to connect their global business customers on both the buyer and the supplier side of the ecosystem across multiple rails. We also signed FreshBooks, a premier accounting software platform with customers in over 100 countries. In the Bill Pay space, we continue to scale the Mastercard Bill Pay Exchange, which leverages our real-time payment capabilities to provide a transformative mobile-first experience to bill payments with Citi Treasury and Trade Solutions now connecting into the platform.
In Mastercard Send, we continue to penetrate a variety of new payment flows beyond traditional card payments. These enabled dozens of use cases and hundreds of programs across every region of the world. For example, we're partnering with innovative digital messaging platforms to offer P2P services to consumers. Today, uses of WhatsApp in Brazil can transfer money directly in-app, leveraging Mastercard Send. We're also partnering with MoneyGram and Checkout to enable near real-time cross-border P2P transfers across Europe. And on the B2C front, we continue to support the fast-growing gig economy, and I'm partnering with PayFair to enable instant earnings payout to some of the largest gig platforms in the U.S. Through open banking, Mastercard is empowering people and businesses across the globe to easily and securely gain access to their financial data to create new opportunities for themselves. In the U.S., our efforts with Finicity are running ahead of expectations as we continue to enhance direct API connectivity for banks and fintechs.
For example, we're partnering with Jack Henry to enable consumers back up more than 400 community financial institutions to use its digital platform to access, use and benefit from their own financial data. The Navy Federal Credit Union vis-a-vis signed direct data access agreements with Finicity. Finicity is also leveraging best-in-class data connections to launch new products in new verticals, such as its Mortgage Verification Service. Finally, in terms of cryptocurrency, we're making it easier for cryptocurrency wallets to connect seamlessly to our network through a pilot with Paxos, Circle and Evolve Bank & Trust, which simplifies the conversion of crypto into fiat. Separately, we're partnering with ConsenSys, the Ethereum software engineering firm, to accelerate the development of crypto applications and services to our customers.
Now summing all this up. We delivered strong revenue and earnings growth this quarter, benefiting from our revenue diversification efforts. We believe that most markets are in the growth phase domestically and there's upside potential in cross-border travel. We're winning significant new deals, and we continue to focus on our strategic priorities to drive growth over the long term.
Sachin, over to you.
