Competitive dynamics across global payment networks
“All of the trends that we saw before, very strong, global secular growth, secular conversion of cash to electronic, those will continue,” he told Third Bridge Forum.
The long-term defensibility of Visa and Mastercard in an increasingly digital environment, and their biggest threats, were also discussed. Among the expert’s observations was that it’s “very, very hard to challenge a well-established network”. He listed the main disruptors – including digital wallet systems such as PayPal and Google Pay – and explained which of those are most likely to gain traction. For example, in Turkey, Visa and Mastercard are “gradually being wiped out of all domestic transactions” by the Troy network. The specialist gave further examples of this happening in Russia, India and Kenya.
The Interview then considered how the competitive dynamics between Visa and Mastercard might evolve in Europe, in light of the fact that Visa Europe has now been integrated. While both have historically been strong in different markets, Mastercard has gained momentum in the UK, the biggest payments market in Europe. However, Visa is stronger in France, Italy, Spain and Sweden.
The likelihood of Visa or Mastercard gaining share in China or APAC was also on the agenda. “I wish I could be sanguine on China, but I’ll say the chances that either Visa or Mastercard will do any material business in China in the foreseeable future are almost nil,” the expert said. In other observations, Pakistan and Bangladesh are 95%-plus cash markets and “potentially very interesting” in the long term. Visa and Mastercard’s growth prospects in Latin America were also examined, with the Interview painting a positive picture overall.
Other areas of focus in the Interview were the European Payments Initiative and real-time payments as a threat to traditional card rails. The conversation ended with a near-term and 10-year outlook on Visa, Mastercard and the other payment networks.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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