Despite Economic Uncertainty, MasterCard Chugs Ahead (Digitally, Too)

Despite a macro-backdrop that has been marked by headwinds (depending on where you look), MasterCard managed to beat expectations on Thursday (April 28) morning on transaction growth that could be summed up as robust.

The payments firm said that transactions were up 14 percent in the quarter, and revenues, as a result, were 9.7 percent higher year over year, to $2.45 billion, edging the $2.38 billion that was expected by The Street.

Despite rebates, the firm managed to beat The Street with a net income report of $0.86 a share, better than consensus by a penny.

As for that backdrop, CEO Ajay Banga said during the investor and analyst call following the pre-market print of results that the U.S. has remained solid, marked by a confident consumer, with at least some deterioration in Europe. India is doing fine, but the rest of Asia is marked by unevenness. In Latin America (specifically, in Brazil), things are relatively worse, though stable in Mexico.

But, alluding to the contrast between double-digit core business growth against all of that uncertainty: “Steady as she goes is what our focus is,” said Banga.

One steady course has been the digital payments initiatives that have been a hallmark for MasterCard. The CEO said that, in reference to digital wallet MasterPass, the outlook is: “We are in a marathon … We are making great progress with our digital-by-default strategy,” a movement to enable “issuers to auto-enroll cardholders onto the MasterPass platform without any additional effort having to be made by the consumer.”

Banga said his firm is “closing in” on signing 270,000 merchants, with more than $160 billion in addressable volume. Key wins in this space have involved Vodafone Egypt bringing 2 million cash wallets onto MasterCard’s mobile gateway service, furthering the theme of financial inclusion.

As for the company’s digital enablement service, progress in the quarter was “significant” and marked by a cumulative 30 issuers in Asia signed up. Banga noted MasterCard’s participation in the U.K. Android Pay launch and the movement of both Samsung Pay and Apple Pay into Singapore, while Facebook continues to pilot tokenization for transactions to be completed within the app itself.

Of some particular interest during the call, Banga pointed out that McDonald’s locations abroad, in the Middle East and also South Africa, have been using analytics delivered through the cloud (through MasterCard and, specifically, through the APT unit it acquired last year) to track performance. The relationship here “goes beyond the core” of payments and focuses instead on actual food offering, predicting what people might want to buy and nudging them with those recommendations to streamline ordering and increase basket size.

When asked about potential acquisitions, a veiled reference to the rumored purchase of Vocalink for $1.5 billion, Banga was mum. A topic on which he wasn’t was the forthcoming implementation of the Payments Systems Directive (PSD) in Europe which will require the separation of scheme from processing. Banga acknowledged that PSD will have an impact on MasterCard but how much and how is something that they continue to explore.