Mastercard at Wolfe FinTech Forum: Strategic Insights and Growth Outlook

On Tuesday, 11 March 2025, at the Wolfe Research FinTech Forum, Mastercard Inc. (NYSE: MA) presented a comprehensive overview of its strategic direction. The company’s CFO, Sachin, highlighted Mastercard’s robust performance and strategic initiatives, while also addressing potential challenges such as FX volatility and tariffs. The forum underscored Mastercard’s resilience and strategic priorities in consumer payments and new technologies.

Key Takeaways

• Mastercard anticipates 2025 revenue growth at the high end of low double digits to low teens, driven by strong consumer spending.
• Significant portfolio wins include Varo Bank, Citizens, and Wells Fargo small business portfolio.
• The company is actively engaging with cryptocurrencies and blockchain, exploring stablecoins for B2B payments.
• Mastercard’s diversified business model and strategic M&A approach are key to its resilience in uncertain economic times.

Financial Results

• Q4 2024 saw a 16% net revenue growth on a currency-neutral basis.
• For the full year 2024, net revenue increased by 13% on a currency-neutral basis.
• Mastercard projects 2025 revenue growth to be at the high end of low double digits to low teens, considering factors like the leap year and pricing initiatives.
• Commercial GDV accounted for 13% of total GDV in 2024.
• 60% of value-added services revenue is network linked.

Operational Updates

• Portfolio migrations include Varo Bank’s debit and credit, Citizens’ full volume, and Wells Fargo’s small business portfolio.
• UniCredit’s multiyear portfolio migration spans 12 to 13 countries, starting in Q1 2025.
• Strategic priorities focus on consumer payments and commercial payment flows, with a $54 trillion P2M volume opportunity.

Future Outlook

• Mastercard is integrating its best estimates for the Capital One/Discover merger, focusing on debit migration and maintaining credit partnerships.
• The M&A strategy is strategy-led, emphasizing acquisitions that enhance Mastercard’s serviceable market and synergy realization.

Q&A Highlights

• Sachin discussed Mastercard’s approach to stablecoins, emphasizing the potential for monetization and the role of crypto credentials in authentication.
• The company is exploring both organic and inorganic strategies in the crypto space.

In conclusion, Mastercard’s presentation at the Wolfe Research FinTech Forum highlighted its strategic initiatives and growth prospects. For further details, refer to the full transcript below.

Full transcript - Wolfe Research FinTech Forum 2025:

Darren Peller, Payments IT Services Analyst, Wolfe Research: Okay, guys. Why don’t we go on and get started? Again, I’m Darren Peller, Payments IT Services Analyst here at Wolfe Research. Thank you guys all for being here, and good afternoon, everyone, for day one of the Wolfe Fintech Forum here in New York City. Really happy to have the team for Mastercard with us today, both Sachin on screen.

Great to see you’re doing well and great to have you with us, even virtually. Appreciate you being with us. As many of you know, Sachin is the CFO, and we have the Investor Relations team here in front of us as well. But as I said, Sachin, great to have you. So why don’t we just kick it off right away with you know, discussing what you’re seeing out there?

I mean, it’s been a very volatile, you know, market for sure, and a lot of headlines going on. So maybe just if you could kick off with what you’re seeing from, the macro environment, consumer spending trends right now, any any color on what you see would be really helpful.

Sachin, CFO, Mastercard: Sure, Darren. First, I want to thank you for having me here. I am absolutely thrilled to be able to participate in this conference. Unfortunately, I’m not there in person, but hope to be there pretty soon in person. So great to be here, great to be part of this conference.

As it relates to your question on what we’re seeing from a macroenvironment standpoint, look, I mean, if I just step back and I think about what’s going on more globally, here’s what I would tell you. I would tell you that we came out of our q four results, all of which you saw, with a pretty solid q four. We gave you a sense on what our thoughts were for 2025 from a guide standpoint. Again, positive thoughts around that. All on the back of what I would call strong consumer spending trends, you know, backed by low unemployment rates, strong wage growth, things which were fundamentally supportive of what consumer spending would look like.

And, you know, the reality is we are a well diversified business. We are, you know, diversified by geography. We’re diversified by product, and that that needs to be very much the case. As I look at trends and I look through quarter to date February, we see pretty steady consumer spending trends when adjusted for the leap year effect. So, you know, you know, that’s fact, and then there’s what the perception of the market is as it relates to what might happen on a going forward basis.

It’s always hard to predict what will happen on a going forward basis. But what I can tell you is from what we are seeing from a trend standpoint, quarter to date February, stable consumer spending trends. That’s certainly true from a switch volume, switch transaction standpoint. And all of this is adjusted for the leap year leap year effect, which, you know, you guys all know and understand pretty well.

Darren Peller, Payments IT Services Analyst, Wolfe Research: Yep.

Sachin, CFO, Mastercard: And then when I look at cross border trends, cross border trends are holding up pretty well as well. So, you know, net net, I would tell you the business continues to perform. The diversification of our business model is actually playing out pretty nicely. So I feel, like, so far so good. Hard to predict what the future looks like.

We keep a close eye on it. You know, we see positives as well as potential for negatives on a going forward basis, but we stand ready to act. And we’ve been there before. We’ve seen these kind of environments in the past, and we’ve been able to adjust how we actually manage the business to realize opportunities even in uncertain times, which we would expect that we would do on a going forward basis as well, Darren.

Darren Peller, Payments IT Services Analyst, Wolfe Research: That’s really helpful, Sash. And it’s great to hear someone that actually has insights into the data versus just scary headlines around the world. So thank you for that. Look, you guys guided to the high end of low double digit to low teens revenue growth in ’25. You exited the year at 16%.

And I know there were some nuances in fourth quarter. So maybe just if you could help us unpack the bridge between the two and any notable areas of conservatism or changes to the cadence that we need to monitor?

Sachin, CFO, Mastercard: Sure. So, you’re right. We exited, q four at about 16% net revenue growth on a currency neutral basis. You know, here’s what I tell you. On a full year 2024 basis, we grew net revenue at about 13%, again, on a currency neutral basis.

And, you know, what we’ve guided for, like you said, is for 2025 full year to be at the high end of low double digits to a low teens range, which I view as pretty positive in in a from a from a contextual standpoint. A couple of thoughts to keep in mind when you think about exit rates for q four relative to what the full year guide is is one is the leap year effect, which you better take into consideration. The second is we had several new wins which came onto our portfolio in 2024, which we’ll start to see the lapping effect from a growth rate standpoint of that take place. And we can talk a little bit more about what those are. You know, we always have wins every year, but there were some fairly sizable ones which came in in 2024, which we’ll see the lapping effect come through.

The third piece is from a pricing standpoint, there was several pricing initiatives which we put in place for the value we deliver in the market, which again we expect to lap as the year progresses. And then the last point I’d point out, Darren, is you’ll remember that in the second half of twenty twenty four, FX volatility started to come back into play. And so that creates for tougher comps as we go into the second half of this year. Again, hard to predict what FX volatility looks like in a going forward basis. Right.

Darren Peller, Payments IT Services Analyst, Wolfe Research: But when

Sachin, CFO, Mastercard: I kind of bring all of that into consideration, that’s kinda the way we think about 2025, all backed on strong consumer spending trends, as we had laid out as part of, you know, our q four earnings call. So nothing unusual to call out per se from a fundamental standpoint. There are certain mechanical issues which are there as it relates to leap year and some lapping effects which will play play out when you start comparing exit rates from Q4 to the full year guide.

Darren Peller, Payments IT Services Analyst, Wolfe Research: Alright. That’s really helpful. Let’s shift gears. This this may be a little bit higher level, but just given again all the noise in the market right now and the fixation, I should say, on the tariff news, maybe just discuss the implications from your perspective of tariffs or the potential inflation impacts on the business. How do we think through that for your model?

Sachin, CFO, Mastercard: Yeah. Look. I mean, this is obviously it’s all real time stuff. Right? I mean, as you can see every day, there are new things happening from on the tariffs front.

Certainly, as it relates to the announcement effects of this, it’s still early days. I I gotta tell you, until we see tariffs come into play and come into play for a certain duration, it’s really hard to predict what the impacts are gonna be. And I say that only because there is what you hear about potential tariffs and then what you see in terms of actual tariffs being implemented. And then also you’ve got to actually assess what the duration of such tariffs is likely to be. So a little hard to predict.

What it does do is it certainly creates a level of, uncertainty in the minds of people just because they they’re not entirely sure as to how this will all play out. From our perspective, as I sit back and I think about it, I say Mastercard’s a well diversified business. It is diversified across geographies. Certainly, we have a strong presence in The US, but we have a a very strong presence in several other markets across the globe, Europe included. And when I sit back and I think about this, I think the diversification from a geographical standpoint, from a consumer payments vis a vis our services revenue growth standpoint, as well as from a product diversification standpoint, debit, credit, prepaid, commercial.

I think, you know, you know and and this has not just happened by chance. This is by design. All of that kind of creates a level of resilience in the business model to allow us to withstand these uncertain times. And not to say we will not be impacted by the impact of tariffs to the extent, you know, they they happen to be negative. But then on the other hand, you know, there are certain areas from a tariff standpoint depending on whether they’re on crowded or non crowded categories.

You know, we might see, you know, it actually playing out slightly differently. And so I guess the short answer is, start to predict what the impact is going to be from a tariff standpoint. We’ll closely watch it. We’ll adjust our business model. We’ll adjust the way we operate our business to reflect what the reality is.

And, we’ll keep your prices to how things are going as it relates to that.

Darren Peller, Payments IT Services Analyst, Wolfe Research: I appreciate that. I mean, we’ve estimated it’s just a volume based analysis that somewhere around 1% inflation could be actually a net positive near term by somewhere around 0.6% impact to EPS or so. But that’s obviously just pure volume lifting from the pricing potential uplift of inflation. However, we have to watch for obviously demand implications as well as you said. Satya, maybe we’ll talk a little bit about some of the strong deal momentum you’ve had over the past, really the last few years.

But if you talk about some of the several notable wins we’ve seen and just talk about how this is driven by the value added services that you’ve been selling and the differentiation. If we could unpack that a little bit, including how you partner, what’s been differentiated that’s allowing you to win those businesses?

Sachin, CFO, Mastercard: Yeah. No, Darren. Absolutely. Look, we’re we’re actually very proud of, the way our teams have executed from, overall market presence standpoint. And as we mentioned at Investor Day, since 2020, we have grown share across all products with debit, credit, prepaid, commercial, and we’ve grown it at a healthy pace.

Right? And you know that our growth algorithms is a composition of not only what happens from an economic standpoint, but the secular trends. And then there is the market share piece, which is what you’re talking about. The market share piece, which we’re actually exercising, you know, growth on is being driven by a combination of factors. One, it’s certainly about the suite of services we offer our customers.

But having a suite of services is important, but equally important is the approach with which we sell our customers. And this is the solution selling approach that we have adopted as a company, which is about making sure we truly understand what our customers need and what are the appropriate services and or digital capabilities that we might be able to offer to them. Because this is not about saying, you know, we have a set of services and you must buy them because we, Mastercard, like them. It’s about understanding what your needs as a customer are and how our services best best cater to those needs. And I think to bring this to life, it’s probably good to talk about a few examples as to how this actually plays itself out.

So let’s take something like, Varo Bank. I think you’re aware about the fact that that’s a portfolio which is going to flip over to Mastercard. It’s across debit and credit. And, you know, Varo Bank had certain interests and desires as it relates to how we would actually service them. One of which is our merchant funded offers platform.

They very much care about our merchant funded offers platform. It suits them well. It’s what they see as a differentiating factor. But in addition to that, our ability to integrate into that tech stack was something which was helpful in helping them get over the hump as to their willingness to take the leap to actually flip that portfolio to massive part. So it’s a combination of how you approach the customer, how you go after understanding what their needs are, and then meeting those needs the way they come around.

So for example, if you think about some of our services, right, we have services which deliver on trying to drive revenue for our customers, so helping grow their top line. And these would be the equivalent of our marketing services, our consulting, our data insights and analytics. And then on the flip side, you’ve got services which help to rationalize the cost base of our customers. And these would be our security solutions. These are the kinds of things which would help reduce their fraud experience, which would help reduce, and that’s a big cost as you know for our customers.

So everything we can do to actually meet them where their needs are helps us win their portfolio. That does not mean we don’t need to be competitive on the on the switching the base switching capabilities. But if you have to differentiate and win, you’ve got to come come across with more than just saying, I’m a switch provider and I can provide you the rails to drive payments volume. I I I’m gonna help you actually grow your revenue. I’m gonna help you reduce your cost base.

I’m gonna help you do customer acquisition. These are all capabilities which help us win share. And frankly, this interaction model with our customers not only helps us win the portfolio, but also helps us inform what our future roadmap should look like from a product and services standpoint in order to say, here are the things we need to invest in a going forward basis if we have to continue to win portfolios going forward. So I give you the Varo example. I can give you the Citizens example, another big deal, right, where they moved their volume entirely to Mastercard.

Right? And then, like likewise, if I move outside The US and I go to Europe, there was UniCredit, which is a migration which is currently underway. It’s across multiple countries. It’s across, you know, I think close to 12 or 13 countries where we’re doing this migration. You know, for a bank to actually take a punt and to say, yes, we’re going to work with Mastercard on our entire portfolio and go through a conversion, it’s a big bet that they’re taking.

But they expressed that confidence by virtue of the fact that we’ve been able to show them that we can do successful migrations. And that comes through our services, that comes through our ability from a tech stack standpoint to meet what they what they need are. And these are things which have been very positive in terms of driving that shared growth which you’re talking about.

Darren Peller, Payments IT Services Analyst, Wolfe Research: That’s that’s really helpful. I mean, you talked about a couple of the deals just a moment ago. But I mean, when we think about Citizens as an example or just some of the others you mentioned, there those have been big, big wins and actually big decisions by the banks to convert, but they also do have impact on growth. Right? And so from a lapping standpoint, just remind us what we need to keep in mind, for this year ahead of us when it when it comes to timing.

Sachin, CFO, Mastercard: So look, I’ll talk about the big ones. Right? Because you’ve got several smaller portfolios which will migrate over time and things will happen. But let’s take something like Citizens. Let’s take something like the Wells Fargo small business portfolio.

Let’s take something like UniCredit. Like, I’ll just talk about the three of them. So Wells’ migration was completed in the second quarter of twenty twenty four. So you should expect the lapping of that to take place in twenty twenty five second quarter. Citizens was completed in the third quarter of twenty twenty four.

So you’ll see some lapping effects of come true. And this ties back to your first question to me as to, you know, you know, when you were asking about revenue growth rates, and I was alluding to the fact that there are some some wins which are gonna be lapping as part of that process. As it relates to UniCredit, that’s a multiyear migration. So I kind of see that as, you know, come on slowly and it’ll come on over multiple years. The migration has started.

It’ll go through through the course of this year. I don’t expect there to be a big lapping effect as a result of UniCredit just because of the way it’s kind of rolling on. Right? But then you’ll have others which will be smaller portfolios which will actually lap through. But net net, I would say, here’s the upside on this or the positive part of this is winning a portfolio is important, certainly.

Getting the volume on is important. But then what you do with that volume to drive growth at an accelerated pace is what’s really important. And this is where our teams work very actively with not only the migration ensuring seamless migration, but what we can do to actually drive growth on those portfolios in excess of what they were doing in the past. But, candidly, if I put myself in the shoes of the customer, moving a portfolio from the competition to Mastercard is not really why they’re doing it. They’re not doing it just because they’re moving a dollar volume from one network to the other network.

They’re doing it because they believe that dollar volume can actually grow at a faster pace with Mastercard and can help grow their business. And that’s what we’re very focused on post migration and that will continue to remain focused on.

Darren Peller, Payments IT Services Analyst, Wolfe Research: All right. Very helpful, Sachin. Maybe just touch also as far as this year goes on what you embedded in your guide. I know it was helpful you did, but what did you actually think? How did you think through the Capital One Discover implications?

I know you talked on the call last call about incorporating into guidance, but maybe just assumptions on impact, especially on U. S. Debit.

Sachin, CFO, Mastercard: Sure. So Darren, like we said on the last earnings call, we we provided you our thoughts around 2025 with what our best estimate is as it relates to the migration of the the debit book from, off of off of Mastercard’s Reals as it relates to Capital One. You know, I I think things will move around. It’s our best estimate. And the reason I say things will move around is the deals got to get approved.

Once the deals got approved, what the pace of migration will take place will be dependent on how quickly they wish to migrate that volume over. What we have done is we have built into our forecast what we think our best estimates are as it relates to the migration of the debit portfolio. Things could move around from there. We will keep you apprised as quarters go along as to whether there are changes in terms of what our thoughts are for the year based on what our most recent information is as it relates to the migration path. And that’s on the debit side.

But remember, we have a big credit book with Capital One as well. And that big credit book with Capital One is something we very well expect that we will continue to work and partner with them very actively to not only retain but grow. And that’s very much more and parcel of what we do. And one might ask the question, but why is it that, you know, they would look to keep the credit book with you Yeah. And not move to their proprietary network?

And candidly, I would tell you, I think there’s a lot of value we can bring on credit, both in the domestic environment and the cross border environment from an acceptance footprint standpoint, from a services capability standpoint, from a tokenization standpoint. And candidly, the interchange arbitrage is not something which is actually prevalent on the credit side as it is on the debit side. So, you know, there’s there’s lots of reasons why we believe that we can actually deliver some some tremendous value on the credit front.

Darren Peller, Payments IT Services Analyst, Wolfe Research: Alright. That’s helpful. And I guess just very quickly on that note, I mean, the competitive dynamic, we get this question often of whether or not they’re merging or not. I mean, from Discover, is it gonna become more powerful of a competitor? I mean, just what are your thoughts on the industry now, or implications of the deal?

Sachin, CFO, Mastercard: Look. I mean, again, I think Capital One is a very important partner for Mastercard, has always been and will continue to be an important partner. We have always worked with folks who compete with us on certain areas, but also partner with us on other areas. And I expect that to be the case with Capital One as well. You know, I would expect on the debit side, there will be, you know, the competitive piece, which is there.

On the credit side, we would continue to partner. So this is we’d continue to partner. So I think from an industry dynamic standpoint, you know, they’re a formidable player. They are, one who, you know, certainly will look to try and continue to grow at the pace they’ve been growing in the past and probably even more. That being said, you know, these things are hard to do.

You know, there’s an integration road map. There’s things to be done as it relates to integration. There’s making sure you don’t have customer disruption as part of the migrations which take place. All of those things, all of which I believe Capital One is very adept at handling. But but then again, you know time will tell us to how this all plays out from a competitive dynamics.

Okay.

Darren Peller, Payments IT Services Analyst, Wolfe Research: Okay. That makes sense. Sachin, just maybe we can shift and get into some maybe an update on some of the key three strategic priorities of the company, including the consumer payment side, the commercial and new flows, and then value added services and solutions, starting just with consumer payments. I know you guys embedded a high single digit type algorithm on that front in your medium term outlook at your Investor Day. But maybe just touch on the runway that remains and how you’re going after it, maybe just providing some more details on the approach and develop versus emerging markets there as well.

Sachin, CFO, Mastercard: Sure. So on consumer payments, it’s like we said at Investor today, we continue to see tremendous opportunity on consumer payments. And the opportunity exists both from a market share standpoint, which we already talked about, but more importantly, as far as I’m concerned, there’s tremendous amounts of secular opportunity which remains. So let’s talk about let’s size the opportunity, and let’s talk about what the approach is on consumer payments. Right?

So we talked about at Investor Day how we see p two m representing roughly a $54,000,000,000,000 volume opportunity and about 2,400,000,000,000.0 transaction opportunity. And as it relates to the amount of that 54,000,000,000,000, which remains to be carded, right, we think it’s substantial. It stands at about 11,000,000,000,000, which still remains in cash payments and about 1,500,000,000,000 transactions, which are still happening on non card rates. And this is important because when you think about $11,000,000,000,000 of volume opportunity still in cash and 1,500,000,000,000 transactions, that is a tremendous amount of runway which still remains to be had for us to actually get going on, on on the carded front. The good news is we’ve been very successful over the past decade to migrate a bunch of volume from cash and check to cards.

The even better news is there’s even there’s a tremendous amount of runway going forward. And so the logical question is how and where. And let’s talk about both how and where. The how is gonna happen through a lot of the initiatives which we have on in flight. You know, you think about things like contactless.

So now we have about 70% of all, in store transactions, purchase transactions, which are taking place on contactless. That’s a a remarkable difference from where we used to be from a contactless technology standpoint. Now one when I asked the question, why is contactless important for driving secular shift? And the reason is is because contactless tends to go after what would be lower ticket spend, which has historically been in cash. And you can go after that and convert it to card based forms of payment.

The other reason why contactless is important is because the safety and security which comes with contactless and the convenience which comes with contactless helps to actually migrate volumes from what are closed loop environments to open loop environments. So the case in point would be transit. And, you know, we’ve been wildly successful in terms of moving transit volume into an open loop environment in markets across the globe. Certainly in Europe, you can see that as happening now in The U. S.

And it’s happening fairly significantly in The U. S, but also in markets like China. You’re seeing that happen in China, both for domestic and cross border volumes, where we’re moving what was previously closed loop into open loop. So that’s really important to actually migrate cash and check into electronic forms of payment. The second element is around tokenization.

And tokenization is something which has been a long time coming, but I think you’ve kind of Keith, you’ve reached that inflection point. We are seeing meaningful amounts of volumes being tokenized. And one might say, why does tokenization help? Once again, tokenization provides for an incredibly safe and secure experience, which allows for not only greater conversion from cash and check to electronic forms of payment, but also helps improve approval rates. And approval rates are important because what happens oftentimes is false positives result in volumes getting impacted and poor consumer experience and then tokenization addresses that and addresses that pretty well.

So we like that. We like that approach we’ve taken and we’re taking that on a global basis. The third element I kind of point you to as it relates to how we’re going after the secular opportunity is with the work we’re doing around targeting underpenetrated verticals. And underpenetrated verticals are those of the likes of utilities, the likes of rent. These are important.

There’s a sizable amount of flows which takes place, which have historically taken place either through cash and check or through traditional ACH rails. And we’re starting to see good traction take place by moving those volumes over into card rails. I’ll give you a case in point. The program we have with built in Wells Fargo in The US, right, is, it’s doing really well. I mean, we’re seeing some significant volumes come through.

I think it’s incredibly creative on the part of Bilton Wells Fargo to be able to pull that program together. We, bring our digital capabilities as part part of that solution, and you’re seeing good traction come through. And it’s particularly relevant to, I would say, the younger generation who is looking for convenience in terms of rent payments, where you’re seeing that volume pickup take place. So again, I I will tell you there will be different approaches by different markets as it relates to how you go about doing this. I’ll give you an example.

You asked a question around, you know, developed markets versus emerging markets. Is the approach different? Let’s take a market like Africa. And Africa is a big market. It’s a varied market by country.

But the commonality in a market like Africa is a lot of the African population does a lot of their banking work through MNOs, mobile network operators. We have struck partnerships with some of the largest mobile network operators, the likes of Airtel, the likes of MTN, the likes of Vodafone, all of whom have digital wallet capabilities where we are embedding our card capabilities and we’re helping up open not only the use of cards but also acceptance across the merchant footprint. So there are different ways in different markets in which you’re going to go after what is the cash opportunity as it relates to consumer payments. And we’re seeing good traction across the board of that.

Darren Peller, Payments IT Services Analyst, Wolfe Research: Yeah. That’s great. That was really helpful. Thank you for that. Just shifting to the new flows and the commercial new flows area, just remind us the biggest opportunities you see there and just how you’re pursuing them first?

And just how do you balance driving card acceptance and really the education of how to continue driving penetration in the commercial opportunity also? It’s an area that we’ve honestly been spending a lot of time for years on. Feels like it’s always like early days in commercial and we haven’t made an enormous amount of headway. But at the end of the day, it’s such a big TAM that maybe there is some progress. I just wanna, you know, say anything more on that degree.

Sachin, CFO, Mastercard: So first, let’s level set where we are on the commercial opportunity as a as a company. Right? So in in 2024, commercial GDV stood at approximately 13% of our total GDV. Yep. So it’s it’s not insignificant.

It continues to grow at a rapid clip. You know, sometimes I kinda sit back and I think, would I much rather have commercial grow a lot faster than consumer, or am I really happy that consumer is growing at a really fast pace, and that commercial is also growing at an equally rapid clip, which which actually happens to be the case. If you look at how we’ve performed on commercial in 2024 relative to the competition, I would argue that we have done really well on commercial relative to how the competitors have played out in that regard. And this is true both from a share standpoint as well as tapping into the secular opportunity. So let’s talk about what the total opportunity in commercial and new payment flows is.

At Investor Day, we had sized this opportunity at about $80,000,000,000,000 right? About $16,000,000,000,000 of that $80,000,000,000,000 is in what we call commercial point of sale. And the remaining 64 ish trillion dollars is in what we call invoice payments. So you have to break the two up because the solutions are slightly different as it relates to that. So the way you should think about that 16,000,000,000,000 opportunity, which is there at the commercial point of sale is

Darren Peller, Payments IT Services Analyst, Wolfe Research: Yep.

Sachin, CFO, Mastercard: It is more akin to consumer payments, but not exactly consumer payments. Right. So it’s about going after the small business universe, and we’re going after that and growing seeing tremendous traction come through. Case in point, winning the Wells Fargo small business portfolio. And the way we’re doing it is by bringing in what I would call proprietary platforms, which are catering to the needs of the small business community.

Two examples. Number one, we have something called the easy savings platform, which is an always on offer, which is a merchant funded offer catering directly to the small business community. So if I’m a small business owner, I use a Mastercard card, that card is enrolled in our EZ Savings platform, I go on a business trip, I rent a car. If that rental car company is part of the EZ Savings platform, I get an always on discount for the spend I do with the rental car company. Or let’s move somewhere else.

I mean, you might have other such offers which are there in in place. It could be for a whole host of services which is there on EZ Savings. It’s a global platform. It’s not just available in The US as it’s how we’ve created a two sided market for this, where the merchants want to bring offers and the cardholders want to spend at those merchants, which creates affinity for driving the shift which we’re talking about here. So that’s kind of first first example.

Then we have something called Business three sixty, which is providing a whole suite of services to the small business community to make them want to actually work with Mastercard. So you think about something that Mastercard’s had for now decades called our smart data platform, which is an expense reporting platform. Small businesses need to be able to know how they’re spending and to be able to to account for that spend through that expense reporting process. But they don’t need the most sophisticated expense reporting platforms like large multinational corporates too. And this is where smart data is made available to them to allow for that to happen.

So while the spend is taking place at verticals, which are akin to what would be consumer verticals, You do need platforms to make that spend accelerate, and that’s what we’re focused on. That’s going after that commercial point of sale opportunity. Then there’s that 60,000,000,000,000 ish opportunity, which is there in invoice payments. And I argue that in the in the near to medium term, our approach on that is very much focused around our industry leading virtual card capabilities. We continue to see tremendous traction in virtual cards.

We’re seeing that come through certainly in the travel vertical, but we’re seeing that open up in several other verticals, such as in the logistics space, such as in the media space. Look, it’s not easy, I’ll tell you, just because you have to come up with a proposition which appeals to opening up acceptance in these spaces. And we have learned over time the things to to cater to are, let’s make sure we can provide the relevant data necessary to allow for invoice reconciliation. Let’s make sure we’ve got what is known as a flexible interchange model to allow for the targeting up and down of what the cost of acceptance might be relative to the vertical in question. These are two important criteria, and let’s provide a safe and secure experience.

Okay. So, Darren, we launched something called Mastercard Receivables Manager, and Mastercard Receivables Manager essentially caters to these three needs.

Darren Peller, Payments IT Services Analyst, Wolfe Research: Right.

Sachin, CFO, Mastercard: It provides data on what invoices are being paid to allow for better reconciliation. It provides a flexible interchange model to allow for the issuing bank to work with the the the acceptor of those payments to say, what is the appropriate level of cost you’re willing to bear for the working capital advantage you’re going to get by virtue of accepting a virtual card? And so if you create the right environment for issuers and acquirers to work in this environment, you start to see traction come through, and that’s what we’re seeing come through.

Darren Peller, Payments IT Services Analyst, Wolfe Research: Sachin, just in the interest of time, maybe a quick minute on value added services and solutions. And just remind us the percentage of that that’s coming from transactions. I think it was I think it was 60% if I remember from the Investor Day. But more importantly, you know, what gives you the conviction that what’s been such a strong growth part of your business has sustainability now in the next year or two?

Sachin, CFO, Mastercard: Yeah. So at Investor Day, we we pointed you to the fact that approximately 60% of our value in service and solutions net revenue is network linked. And by network linked, you think about it as, you know, transactions, but then in several in several instances, it’s the mix between card present versus card not present. So that’s why we call that network link. It’s not necessarily specific only to transactions, but it’s in some way, shape, or form related to payments.

Okay. So I think you touched upon you asked the question, what gives us confidence in the growth potential? Right? The confidence comes from the fact that if you believe that on the payments front, there is good runway which remains as it relates to payment volume growth and the fact that 60% of the net revenues come from network network linked capabilities, you’ll tend to ride that secular opportunity both across consumer and commercial payments up on the services side as well. So that’s point number one.

Point number two is around deep penetration across our existing customer base, as well as tapping into new customers with our existing services. Back to your original question as to how we win share and how we expand. Because when we win share, we not only generate more revenue on the payment side, we also charge for the services we lever, so we’ve got the opportunity there. And then third piece I’d mentioned to you is on the services front, we are very actively looking at opportunities to expand what we call our serviceable addressable market. So there is the total addressable market and then there is the serviceable addressable market.

And the best example I’m going to give you is that of Recorded Future. So we announced the acquisition of Recorded Future, which is the world’s leading independent threat intelligence company. And really what these guys do is they allow us to play in a space we never played in before. And that’s about expanding your serviceable addressable market. And we will continue to do that going forward.

It’s relevant. And we do that because not only they bring a set of capabilities, but we can take their capabilities along with our data and our capabilities to make it an even stronger proposition. So that’s kind of how we’re driving our services capabilities.

Darren Peller, Payments IT Services Analyst, Wolfe Research: Very helpful. I mean, on that note, you know, talking about Recorded Future, just generally, when you’re thinking about M and A and buy versus build and partner going forward, you know, where’s your what’s your thought process around weighing one versus the other going forward from here?

Sachin, CFO, Mastercard: So, look, I mean, our philosophy around m and a is pretty much unchanged from what it’s historically been. It’s going to be strategy led. It’ll how does it fit into our strategy? Number one, you know, when we think about a strategy, we think about what are the things we need in order to actually execute on it. Are we gonna actually build or we’re gonna buy?

If you’re gonna build, then it’s organic. If you’re gonna buy, it’s gonna be through M and A, and we’ve done that. So we’ve done that historically. We’ve done that. We’ve been very active in the services space.

I expect we will continue to be active in the services space as it relates to M and A. Not for any other reason, because a lot of the times when we buy these companies, we buy them for the capabilities they bring from a technology standpoint. And then what we do is we embed those capabilities into our network and drive the go to market and scale by virtue of what we can do from a Mastercard standpoint. And we’ve been very successful in being able to do that. And that’s kind of the playbook we’re gonna follow on going forward basis as well.

That doesn’t mean we’ll exclusively do acquisitions only in services. We will selectively look at opportunities across the other two areas of growth, which is commercial and new payment flows as well as in consumer payments. But the philosophy is very much around, can we do this internally or not? Or is it better for us to buy and can we get faster to market with a buy opportunity? And that’s what we’ll do.

We have the balance sheet capacity. We think it’s the right thing to do. We have to be smart about not overpaying for them. The thing which I worry most about is when we make acquisitions, we’ve got to be clear and very open eyed about the fact that we wanna integrate them and integrate them well. And number two, that we have to realize the synergies we’re talking about Because you will invariably end up paying fair value on some for the acquisition as it stands.

In order to drive real shareholder value creation, we’ve got to deliver on synergies. That’s what we’re gonna do.

Darren Peller, Payments IT Services Analyst, Wolfe Research: Okay. I think we only have time for about one more minute. So maybe a quick one on cryptocurrencies. I mean, just given how, you know, how topical it is of late, if you could just touch on how MasterBird thinks about digital currencies, underlying blockchain technology, and strategically, how you think you’re positioned for it.

Sachin, CFO, Mastercard: Look. I think this is a very active space. It’s one we’ve been very involved with, and we certainly see crypto as something which we’ve engaged in from a card network standpoint, and you’re aware about this. We play as the on ramp, we play as the off ramp, things you’re familiar with. We see the volume benefits of that come through on the card side.

As people wanna buy crypto, they use card based products. As they wanna actually encash the crypto into fiat, they’ll again use either a card based products or a Mastercard move, which is our other way to actually off board crypto into fiat. But beyond crypto, there is the stablecoin space, and then there is the work we’re doing around tokenized deposits and the work we’re doing across our, MTN network, all of which, again, is for a much longer discussion there. But suffice it to say, what we’re doing from a stablecoin and crypto standpoint is we’re not only dipping our toe in the water, but we’re playing a fairly active role because we feel like there’s a future to be had here, particularly as it relates to b two b payments. And b two b payments in domestic hit arena, but certainly in the cross border arena as well.

And we’ll continue to stay active in that space.

Darren Peller, Payments IT Services Analyst, Wolfe Research: Great, great. Maybe we have time for one question from the audience, if anyone has or maybe we have one right here in the middle.

Sachin, CFO, Mastercard: How would Mastercard potentially approach monetizing stablecoins in the next three to five years. Is that largely an internal build? Or are you actively contemplating some kind of tuck in acquisitions in the way Stripe brought bridge and all that? So just give us a sense of how would you go about it? Look, I think it’s going to be a combination of organic and inorganic is the way we kinda think about it.

We’re gonna be very deliberate in terms of what role we wanna play in the Stablecoin universe. I think there’s a level of what I would call services we can deliver to the Stablecoin universe, right, which we, stick something like crypto credentials. Right? This is something which we kinda talked about where as you have multiple stablecoin providers, you have to have authentication as it relates to allow for, not only the closed loop environment in which they currently work, but to allow for interoperability take place. I think Mastercard could play a role in that.

How we do it could be a combination through both organic and nonorganic as part of the playbook going forward. But, I guess I’ll say stay tuned. We’re working through that right now. Right now, we’re very actively focused on the organic piece.

Darren Peller, Payments IT Services Analyst, Wolfe Research: Great. So, Achin, thank you so much for joining us. You’re looking well and it’s really great to have

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