MasterCard Inc's first-quarter profit rose 24 percent, beating expectations, as people around the world spent more money and U.S. consumers even started using their credit and debit cards to buy more than the necessities.

The company's shares rose 3.1 percent to $283.83 by midday Tuesday after the world's second-largest card processing network said revenues increased more than expected.

People with MasterCards are swiping them more often than they did last year, and to a large degree, that's a sign of the global economic recovery, said Jim Tierney, chief investment officer of money management firm W.P. Stewart, which owns MasterCard shares.

U.S. consumers have recovered from the worst of the recession's belt-tightening, and are even spending more on discretionary items like travel, MasterCard Chief Financial Officer Martina Hund-Mejean told Reuters in an interview on Tuesday.

This was a good quarter for the United States, she said, adding that MasterCard saw growth pretty much across all regions, despite the impact of political turmoil in the Middle East and the earthquake and tsunami on Japan.

Companies are also ramping up their travel and entertainment spending, including on foreign travel, which helped MasterCard's cross-border volumes increase 18.5 percent in the first quarter. Larger rival Visa Inc is also expected to show a boost in business travel when it reports quarterly results on Thursday.

But MasterCard remains cautious about the economic outlook, as concerns linger about continued high U.S. unemployment, a slow recovery in housing markets, and a run-up in gasoline and food prices.

We're watching that very carefully. If people have to pay more for food, as well as for gas, they might not be able to do the kind of discretionary spending that we are seeing at this time, Hund-Mejean said.

REGULATORY RECOVERY

Chief Executive Ajay Banga, who took the company's helm last year, is increasingly turning MasterCard abroad for growth, in the face of U.S. regulation and Visa's dominance of the U.S. debit card processing market. The payments industry hopes to find new sources of revenue through processing mobile or e-commerce payments in developing countries, where most consumers do not yet use credit or debit cards.

Like Visa, MasterCard is facing several challenges to the fees it collects from merchants for processing credit and debit card transactions. The Federal Reserve has proposed rules under the U.S. Dodd-Frank law that would cut some $13 billion of the banking industry's $23 billion in annual debit card processing fee revenue.

Some industry members are increasingly optimistic that a last-ditch effort in Washington will blunt the law's impact -- or even delay it for two years.

Banga told investors during a conference call that MasterCard is continuing to lobby in Washington to delay or to change the Fed's proposal on limiting debit card processing fees.

The Fed was supposed to finalize its rules on debit fee limits two weeks ago, but said in March it needed more time to sort through an overwhelming number of comments on its proposals. Banga told investors he does not have any further insight as to when the Fed will actually release its final regulation.

Hund-Mejean told Reuters that MasterCard has no idea how successful its lobbying efforts will be. But investors are broadly more optimistic. The company's shares, which fell more than 10 percent on the December day that the Fed proposed its rules, on Tuesday hit their highest point since July 2008.

Right now the regulatory environment looks a lot better than it did five months ago, Tierney said.

MasterCard, like Visa, does not lend at all and was not directly affected by the surge in credit losses during the financial crisis. But the transaction processing industry's growth slowed during the recession as consumers and companies cut sharply back on spending.

MasterCard's first-quarter revenue rose 14.8 percent to $1.5 billion. Worldwide purchase volume increased 12.9 percent on a local currency basis, and the company said the amount of dollars it processed globally grew at the highest quarterly rate since the third quarter of 2008, as the financial crisis unfurled.

The company reported a profit of $562 million, or $4.29 per share. That compares with $455 million, or $3.46 per share, in the year-ago period.

Analysts on average had expected $4.10 per share, according to Thomson Reuters I/B/E/S.

(Reporting by Maria Aspan; editing by Dave Zimmerman, John Wallace, Phil Berlowitz)

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