During MasterCard's Investment Community Meeting on Wednesday (Sept. 9), the remarks from CEO Ajay Banga and his executive team gave a pretty good indication into how MasterCard views its role in the fast-moving digital payments ecosystem.
Starting with his "three concentric circles" theme (to underscore the core value of MasterCard) as he does at similar meetings, Banga kicked off his comments by focusing on electronic payments in general.
"There are certain sets of strategies you can take to [grow the share of electronic payments], from working on acceptance from trying to get after the kinds of payments that have traditionally been in cash, be there very small, low-value payments in the more developed countries in payments or be there also the larger, high-value payments, like college fees and the like, which tend to go outside of the traditional electronic payment system. So, there’s work to do there."
That led him to jump into financial inclusion and where MasterCard plays a role in that arena.
"There’s always work to do as well in financial inclusion. And that’s something you’ll see us talk about periodically, but there’s now still 2 billion adults who don’t have access to any form of an account and therefore no way for them to participate in the marketplace, which we think could be continuously driving our growth for many years to come," Banga commented.
"And so [a] certain amount of our energy and efforts is spent on being a leader in the states of financial inclusion, just purely to make sure that that pie keeps growing but also to make sure that governments view us in a form as being helpful to being a part of their transformation of their country and their economy."
[bctt tweet="There’s now still 2 billion adults who don’t have access to any form of an account."]
Banga then turned his comments toward the payments industry and the accelerating trends being seen in the sector. That conversation brought back the concept of inclusion, emerging payment methods, the concept of going cashless and how the push from governments is growing.
"That clearly is an accelerating trend in the space of moving payments from cash and check to electronic, there is by the developed world, by the emerging world. Countries in the emerging world have never talked about electronic transactions [and] are now openly saying, 'We want the cashless country, a cashless Nigeria, a cashless Egypt,'" Banga said.
"But even the Indian prime minister has out stepped publicly talking about the idea of a cashless society. That’s very different from five or six years ago, when every person we met in the world outside never paid any heed to the importance of this. So, their efforts, combined with digitization, combined with all the secular trends of urbanization and the like, is clearly changing the way this pathway to electronic will operate."
The push for more digital commerce experiences, Banga said, is a natural consumer progression. With more consumers demanding the "omnichannel experience," he noted, it's about applying the same concepts to the payments networks. After all, customer demand and experience is the real driver behind payments and commerce innovation.
[pullquote]We’re in the middle of what I call it "Walletpalooza," with Google Play, Apple Play, Samsung Play, you name it; everybody has got a wallet. Our money is on MasterPass. [/pullquote]
"We search online, buy in a store and return by mail. We will want that to happen in every f[o]rm of commerce and business we are doing. And so I don’t think one replaces the other. It’s the seamlessness of the consumer experience that will determine how well that system works," Banga said. "And that rapidly evolving consumer experience is also very much a part of what’s changing in our world. And then, of course, there is all industry dynamics."
"You’ve got new and innovative companies coming into the space. You’ve got digital giants looking for their space in the sun. You’ve got banks saying, 'We’d like to operate the way we want to and do the things we think we can do the best with our consumer.' You’ve got merchants who clearly are occupying a different role than they used to in the payments ecosystem and the power they exercise and how that works. And so, there is a lot of things going on in this place."
[bctt tweet="It’s the seamlessness of the consumer experience that will determine how well that system works."]
Wrapping up his comments, Banga shared his thoughts on what's next for the industry, what he is optimistic about for the future of electronic payments and how he thinks the financial ecosystem has evolved with the multiple players in the mix.
"The one thing I do feel relatively good about is that, in addition to the acceleration of the trend for electronic payments and a runway that provides [it], [there] is this demand for adjacent services that I see coming up from every client and every single merchant and bank and government," Banga concluded.
"When you talk to them about loyalty, when you talk to them about safety and security, when you talk to them about the power of data and analytics, when you talk to them about managed services and about the power of payments consulting, there is a very different dialogue that results. It’s not that we don’t have to discuss how to win or lose the deal, you still have to do that. But there is a very different dialogue, and there is a very different revenue stream, with a very different form that we’re building consistently and steadily. And that to me is all that’s going on inside the industry."
Following Banga, the meeting included comments from Chris McWilton, MasterCard's president of North American markets. He spoke specifically about payments innovation as it related to MasterPass.
"I don’t think it's a better time to be in payments than right now. We’re in the middle of what I call it 'Walletpalooza," with Google Pay, Apple Pay, Samsung Pay, you name it; everybody has got a wallet. Our money is on MasterPass. It’s our wallet strategy, but it’s more than a wallet, it’s a platform. It enables you to deliver loyalty and solutions and rewards, etc. And we’ve had great momentum on both the issuance and the acceptance side," McWilton said.
He also shared more about how MasterCard plans to scale MasterPass and how MasterCard plans to remain technology-agnostic. He named the big payment players in his talks, sharing how they fit into MasterCard's mobile payments offerings.
"This is a chicken-and-egg game. You have to have issuance, you have to have acceptance and we’re doing that ... While our money is on MasterPass as our wallet, we’re continuing to support the rollout of other wallets. We’re going to play with the digital giants in a meaningful way and a thoughtful way. So, Apple Pay was announced exactly a year ago today, so we launched that. Samsung Pay and Android Pay are now rolling out, and it's just important to remember that these wallets — while they are branded Apple Pay and Samsung Pay and Android Pay, etc. — they run on our platform, our MasterPass Digital Enablement platform, which also fires up MasterPass."