Earnings Review: Seeing the trends and maximizing opportunities

October 28, 2020 | By Sachin Mehra

Today marked the third time that we reported on Mastercard’s quarterly financial performance against the backdrop of the ongoing pandemic. As the medical and science experts continue to focus their efforts around therapeutics and vaccines, we’re placing our attention and resources against those areas where we can contribute.

As you likely heard from Ajay Banga, Michael Miebach and me on our earnings call this morning, even amidst society’s challenges, we are seeing and driving some positive trends such as the strong adoption of digital payments and related technologies by merchants and consumers. This is helping to fuel a more positive trajectory of spending domestically. In fact, if you look at our switched volume growth last month, excluding travel and entertainment, we had similar rates to what we saw in the fourth quarter of 2019.

The impact of the pandemic on travel, and in particular on non-intra Europe cross-border travel, remains significant.  While we believe that cross-border will ultimately recover, it will take time. And as travel does recover – as a result of improving consumer confidence, medical advances and restrictions being lifted – we will be ready to build on our historical strength in the cross-border travel space.

Looking at today’s environment, we continue to operate the business using our four-phase framework. And, we believe most geographies are in the Normalization phase domestically, with some approaching Growth. This reality helps us manage our priorities, controlling what we can including continued investment in our key long-term growth drivers – digital, cyber, data analytics, B2B and multi-rail solutions. 

These investments and activities – combined with momentum across the business – are playing out in a few key areas:

Fueling the shift to digital

Merchants and consumers continue to show a preference for more digital payments, both online and in-store. According to our research, almost 70% of people globally say this shift will likely be permanent and that cash will play a diminished role. We have been there to support them through contactless and  account-based payments, enabling acceptance and digital payments, and even buy-now-pay-later options. We continue to innovate and bring to life new ways to enable merchants of all sizes, as seen through the development and delivery of tap- on-phone standards that make every device a payments device and the extension of our Digital Doors platform for small businesses looking to create an ecommerce presence.

Supporting all customers

Our strategy has set us on the path to grow core payments  while diversifying our customers and building new capabilities. A key part of being the preferred partner for our customers has been through our services lines. Our teams are at the table with them, thinking about solving their business problems with holistic, integrated solutions - payments and services - that add value, as seen in our cyber, AI, Recovery Insights, and Test and Learn capabilities. Combined, this helps our customers see the changing trends and adapt quickly to meet the new needs.

Delivering on our multi-rail strategy

From the addition of the Vocalink capabilities in 2016 to the growth in cross-border and open banking more recently, we have developed and extended a core set of technology and services that allows us to more fully tap into opportunities beyond the card. We are deepening relationships and delivering infrastructure in all of our regions. And that technology is delivering for consumers and businesses, enabling more everyday spend alongside our debit products and complementing other features and benefits to support a broader range of business-to-business payments, related applications and services, and more.

It's important to take moments like this to recognize the work by our teams to deliver for our customers, our partners and our investors. But we also recognize that our work is not done and there's more for us to do. We will continue to focus on building on a strong foundation and maintaining our efforts to support our customers today and be able to capitalize on the opportunities to come.

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Sachin Mehra, Chief Financial Officer, Mastercard