Former SVP at Mastercard Inc
- Mastercard's (NYSE: MA) multi-rail strategy and its approach to A2A (account-to-account) and real time payments, open banking and crypto
- Mastercard’s buy now, pay later instalment APIs (application program interfaces) – outlook for adoption, UX and economics
- Long-term trajectory for network fees amid friction between Visa (NYSE: V) and Amazon (NASDAQ: AMZN)
- Broader competitive dynamics with Visa and its network-of-networks strategy, including profitability and longer-term outlook
- Outlook as Mastercard and Visa acquire to sustain respective presence in the payments industry
What is your updated overview on the cash-to-card transition? How long does the transition have to run and when might that core revenue stream align more with GDP and personal consumption expenditure growth? I believe roughly 50% of the target opportunities are carded.
What are your key considerations around deviation from cards? The pandemic facilitated a drastic move towards card payment or card-not-present but how are you assessing the potential move away from card towards digital wallets, which enable the A2A [account-to-account] payments?
What key catalysts in tech infrastructure would enable the movement away from cards? How might this impact Mastercard and its role in the payments ecosystem?
Is the multi-rail strategy enough to keep Mastercard in a key role in the payment ecosystem and not lag behind emerging tech innovations? Certainly, other rails are emerging on the A2A side which could significantly disrupt what Mastercard has traditionally sat on. What is your outlook for the company’s profitability as it moves towards this multi-rail strategy?
What is your assessment of the impact of FedNow on Mastercard? What about the impact of central bank digital currencies and stablecoins on Mastercard? What role can Mastercard take with these developments? Presumably it will want to provide those value-added services but it seems it could get pushed out from that.
What do you make of other emerging rails and the developments across emerging markets? India and Brazil have their own versions of real-time payments which are being pushed heavily by the governments and gaining serious traction. Is there any difference in how Visa and Mastercard are positioned when considering FedNow vs these other international payment schemes?
What’s your take on Mastercard’s recently announced buy now, pay later instalment APIs [application program interfaces]? How might the product work and do you think strong adoption is likely? What could the UX be given the likely embedding into the checkout flow? Do you think that is a better UX vs Affirm or Klarna’s?
What’s your take on the buy now, pay later economics? Is there still a network fee which might be spread over four different payments? What could happen to Mastercard as buy now, pay later players move to A2A funding and bypass network fees, especially given the company still benefits because players are typically paying with card?
You said Mastercard’s buy now, pay later instalment APIs comes down to whether the company is in a better position given it works with issuing banks vs directly with merchants vs buy now, pay laters that have gone directly to the merchants. Who do you think is better-positioned?
What’s happening with the Visa and Amazon dispute over cross-border transactions and network fees?
How might Mastercard and Visa respond given Amazon and Walmart are reducing their payment costs? How low could the network fee be? Obviously, it won’t fall to the same level as an A2A transfer because the chargeback and fraud protection needs to be there. What could be the floor in network fees to compete with A2A, buy now, pay laters or even FedNow? What’s your longer-term outlook?
Why is pricing so much higher for a cross-border transaction? What’s the respective threat as open banking comes through and compliance potentially becomes more standardised? How might cross-border pricing change in the longer term?
What do you make of Visa’s network-of-networks strategy vs Mastercard’s multi-rail strategy? I understand Visa is more focused on the value-added services, while Mastercard is focused on the infrastructure and those payment rails. How might profitability differ? I believe Visa claimed it didn’t actually want to own the infrastructure because it will drive margin compression in the longer term. What’s your take?
Which strategy do you have more confidence in, maybe being a little more sustainable and profitable in the long term?
Mastercard alluded to disbursements or remittances, commercial point of sale, B2B account payable and consumer bill payments for new payment flows. What is your outlook for volumes, economics and differentiation vs existing alternatives?
What’s your outlook for commercial point-of-sale or merchant acceptance volumes, economics and differentiation from existing alternatives?
What’s your outlook for economics and differentiation across B2B account payable flows and consumer bill pay? Obviously very different flows.
Using a base case, what do you think is the most likely trajectory for gross margins? Do you think they can be sustained or is a significant fall-off likely in the near future?
What do you think are Mastercard’s top three risks, in order from greatest to smallest, and why?
What key questions should investors ask Mastercard’s management to gain a deeper sense of the outlook for gross margin and the trajectory of network fees?
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