Mastercard CEO Sees No Sign of Consumer Spending Slowdown

Mastercard CEO Michael Miebach said the payments giant is not seeing consumer spending slow down despite the consumer sentiment surveys indicating that people are worried about the economy.

During a fireside chat at the Semafor World Economy Summit on Wednesday (April 23), he said that “hard data” from Mastercard’s Economics Institute tells a different story.

The payments giant, which tracks real-time spending across its network and the broader economy, said it saw a 1.4% increase in consumer spending for March, contrary to what consumer confidence surveys showed.

The hard data “is not reflecting where the consumer is,” Miebach said. “The consumer today is an empowered consumer that will still stick to what they want to do.” While consumers may be paring down on how much they’re spending, “they still want to make that trip.”

“We don’t see any change at this point,” he added.

But if an economic slowdown does come, how will Mastercard cope?

Miebach, who took the helm at Mastercard at the start of the pandemic in 2020, said the company’s diversification across services and geographies — it operates in 210 countries and territories — would be a buffer.

While Mastercard is known for facilitating the purchasing of goods and services, less known is that it also provides a whole range of services that are “tied to powerful underlying secular trends that have nothing to do with the economy,” Miebach said.

One example is cybersecurity, he said. Mastercard is one of the largest providers globally.

“Our scenario planning isn’t one of dark clouds,” he added. “Right now, there isn’t a scenario … where this is a dramatic impact on us.”

Read more: Report: Visa Offers $100 Million to Get Apple Credit Card Business

That Rumor About Apple Pay

Miebach was asked if reports that Visa might take over Apple Pay from Mastercard were true. Miebach said he has seen the headlines but flatly denied that Apple is ditching Mastercard: “It’s not happening.”

Earlier this month, Visa offered Apple about $100 million to take over Apple Pay from Mastercard, which processed the Goldman Sachs’ Apple credit card.

The paper said there is fierce competition not only to take over from Goldman Sachs — among big banks including JPMorgan Chase and Synchrony Financial — but also among the payment networks that process the transactions: Visa and American Express.

As for how Mastercard differentiates itself in a crowded digital payments landscape, Miebach acknowledged the explosion of payment options available to consumers today — from cash and cards to stable coins and crypto balances.

Miebach said people should think of Mastercard in a different way, not as a business-to-consumer provider. “We power the Sonys and Walmarts with our solutions on the backside,” he explained, claiming, “We love the competition. We love the choices that are now on the market.”

Miebach said Mastercard focuses on solving customer problems rather than fixating on competition.

For example, for retailers, one pain point is the checkout experience. “Who wants to stand in line, or who wants to have a complicated checkout page on the web?” he asked.

Mastercard’s answer to this challenge is biometrics. “If that can work on your phone [and] if that can work on anything, wouldn’t that be wonderful? We created that standard,” Miebach said.

By 2030, Mastercard plans to phase out the need to enter card numbers, static passwords and one-time codes for online purchases. It will replace the process with a new one enabled by a combination of tokenization and biometric authentication, to make checkout smoother and more secure.

Currently, Mastercard is further retooling its customer experience by leveraging generative artificial intelligence (GenAI).

Adding GenAI

It had been using machine learning and rules-based AI to process 160 billion transactions through its system. Now, the company is leveraging GenAI for what Miebach calls “agentic commerce” — smart AI agents that know the customer and simplifies things like gathering reward points and applying them to travel planning. The agents will even book the trip.

“In the world of agentic commerce, you have a smart agent that knows all your preferences, all of your (credit, debit and loyalty) card balances,” he said. “We enable travel, we enable commerce, and we have a lot of data.”

When asked where AI has delivered the most financial impact for Mastercard, Miebach pointed to cybersecurity and fraud management. “Since 2018, we’ve invested $11 billion in keeping our own four walls safe and putting out safety and security products for our customers,” he said.

Mastercard’s goal is to save $120 billion in fraud by 2030, in part by using GenAI to scan the dark web for compromised card data and alert banks in real time, analyzing 1 trillion data points.

Photo: Mastercard CEO Michael Miebach from livestream