Devin explains how Mastercard’s varied revenue streams, many operating seamlessly behind the scenes, have propelled the company to achieve a $9 trillion global payment volume. He also shared insights into Mastercard’s strategies for scaling in an increasingly digital financial world and cashless society.
In this article we provide highlights from the podcast. You can listen to the full podcast from the link provided below.
Recorded on 8 March 2024
How has the landscape changed over the last decade?
Devin Corr: If you just look at even the last 10 years, the evolution we’ve had, it’s really about diversification. And what I mean there is right now, we’re in 210 countries and territories across the globe. Our revenue is around 70% outside of North America, so we are truly global, truly local.
Along that journey, if you take it in buckets, one from a product perspective, we started off predominantly credit. Today we offer credit, debit, prepaid and commercial products, we’re very diversified. From a services’ perspective, we started off with some card benefits, some consulting, some marketing. Today we offer AI-powered, best-in-class fraud solutions. We offer personalisation solutions, we offer AI-powered data insights and analytics like benchmarking tools. Just from a numbers’ perspective, if we think about that, we’ve gone from what was about mid-teens percent of our services in 2012 to about a third of our revenue coming from services.
It’s been a huge growth driver for us, and one we’re really invested in because it brings differentiation, diversification. When you think about payments itself, obviously cards are a preferred form of payment, but we’ve added areas like account-to-account, real- time payment and blockchain. So really why have we done all this? It diversifies our revenue, it makes us more resilient, as you think about the economic cycles and over time. At the end of the day, it positions us very well for the long-term in general, so 10 years, 50 years is a long time, but we continue to innovate and we have to keep doing so to make sure we maintain the growth that we’ve continued to deliver to you over time.
I think it’s also very much embedded in our strategy. All of this, even the evolution falls into just continue to execute on expanding in payments, extending our services and embracing new networks. And if we continue to sit underneath that and grow in the right way, we can continue to see a long future ahead.
Why is network effect so valuable and how has it enabled you to generate attractive returns?
Devin Corr: MasterCard operates one of the fastest and most secure payment networks in the world. I’m happy to be able to say that we’re focused on delivering a network that provides customers and cardholders with a convenient, secure way to pay anytime and anywhere.
But even more than that, the debit network means trust. To your point, people think about consumer payments, “I can make a
payment,” right? But our brand and the network itself matters, the fact that you believe you can make that transaction. The merchant knows that they’ll get paid at the same time so you can walk out with that pair of shoes or whatever it might be that you have in your hand.
If you think about the network, the way the four-party model works, it’s a B2B2C. We set a number of franchise rules and standards, and if people adhere to those, they can join the network. We welcome all issuers, acquirers, which reach out to the merchants etc…, as long as they follow those standard rules. Within those standards and those rules are certain capabilities or rights for cardholders. We talk about zero liability, we talk about chargeback rights and that’s regardless of income, age, identity, whatever it might be. But what that really brings is scale, and scale’s a very good thing, right? Both for us and for you as investors.
Looking towards the future, what are you most excited about?
Devin Corr: There’s a lot we’re investing in for the future to the point of, we need to be ahead of the game. That’s blockchain technologies, what that’ll mean from a B2B perspective, AI, which I can talk a little bit about. But given my finance background, the most excitement in what we’re launching is what’s ready to scale. So that’s things like MasterCard instalments. We have it live here in Australia where you can use buy-now, pay-later-like instalments right within your credit card app. If you think about how quickly that can scale because now you can use it at any merchant with your issuer, and issuers have it here in Australia.
Things like biometric authentication. In a card present environment, we’ve launched in Latin American and the Caribbean (LAC). You can literally check out at a grocery store with a smile or a wave, and it’s a really safe and secure transaction. There’s a new technology called FIDO technology, and that moves that same experience online. So, there’s a lot of transactions done online with just a password or not even a password. We’re moving to an area where that can be done using a face ID. Knowing that’s Devin, buying a pair of shoes online, can be done quickly with a biometric authentication. Just makes it much more safe and secure and easy. You’re not getting up to go type in your PIN number. It’s making a much more simple solution.
And of course, there’s AI, right? I have to say, have to talk about AI. We’ve been investing in AI for over a decade. We have predictive AI that’s supporting a lot of our products today: fraud solution, the personalisation I mentioned, some of our insights and analytics. it’s something we’re very involved in and it’s across all of our products. On a GenAI perspective, we’re dabbling. So, we’re looking at how it can help with efficiencies. You think about deployment of code, you think about one of our loyalty solutions is actually offering call centres to our customers, and it can help with that. How can it help with forecasting? And we’re dabbling in products as well. We launched something called the Shopping Muse, which is an enhancement to our personalisation tool. And what that does is it brings the in-person experience online. You can show up at a merchant who has this tool and type in, “Devin’s going to a wedding in Bali. What should he wear?” And it’ll pop up, white linen suit or whatever I’m supposed to be wearing to that. But it helps bring a colloquial conversation to that purchase environment. And it’s just another way to enhance that consumer experience and in turn, hopefully, get more sales. So, there’s a lot of potential there. We’re investing now, but we’ll see where it goes. But I think a short story is there’s so much opportunity ahead. View the full transcript of the podcast here: Transcript
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