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Published May 28, 2025 04:02PM ET
On Wednesday, 28 May 2025, Mastercard (NYSE:MA) participated in the Bernstein 41st Annual Strategic Decisions Conference 2025. CEO Michael Miebach outlined the company’s resilience amidst economic uncertainties and its strategic focus on technological advancements and global expansion. While Mastercard faces intense competition, its diversified model and strategic partnerships position it well for future growth.
Consumer spending remained stable through May, supported by a strong labor market. Cross-border travel transactions grew by 16%, reflecting healthy travel activity. Despite some regional volatility, Mastercard’s geographic diversification and focus on essential spending categories helped maintain stability.
In a competitive landscape, Mastercard emphasizes strong client relationships and tailored solutions. Recent client wins include partnerships with Grupo Pro America in Latin America, UniCredit across 12 European markets, and Citizens in the US. These partnerships focus on digital-first payment solutions and open banking.
Mastercard sees significant potential in international markets, with 70% of its revenue generated outside the US. The company targets cash and check conversion in emerging economies and partners with domestic schemes to capture digital payment volumes. The partnership with Alipay and GCash extends the use of local e-wallets cross-border, enhancing Mastercard's transaction capture capabilities.
Tokenization is a major focus, with 35% of transactions already tokenized, improving security and approval rates. Mastercard plans to phase out manual card entry by 2030. The launch of Mastercard AgentPay, supported by agentic tokens, aims to enable secure payments in agentic commerce, integrating with AI technologies.
Mastercard is prepared to enable network settlement in stablecoins, pending regulatory clarity. The company focuses on providing on-ramp and off-ramp services for stablecoins, partnering with exchanges like OKX and Crypto.com. Stablecoins offer potential in B2B and commercial spaces due to their programmability and transparency.
The serviceable addressable market for commercial payments is estimated at $80 trillion. Mastercard targets opportunities in commercial POS and B2B invoice payments, with plans to expand its specialist sales force globally. An expanded partnership with Corpay enhances cross-border payment capabilities.
Value-added services contribute nearly 40% of Mastercard’s revenue. These services include safety and security, customer engagement, data insights, and open banking. Mastercard’s competitive advantage lies in its extensive data and network, enabling it to offer more effective and personalized services.
For further details, readers are encouraged to refer to the full transcript below.
Harshita Rawat, Senior Analyst, Bernstein: Good afternoon again, everyone. I'm Harshita Rawat, Bernstein's senior analyst covering payments processors and IT services. I'm delighted to be joined today by Michael Meibach, Mastercard's CEO at Bernstein's forty first Annual Strategic Decisions Conference. Michael, thank you for joining us today.
Michael Miebach, CEO, Mastercard: Thank you for having me, Harshita.
Harshita Rawat, Senior Analyst, Bernstein: So before we jump into details from your perspective as the CEO of Mastercard, can you share some of the broad underlying market trends that you're seeing in payments?
Michael Miebach, CEO, Mastercard: If I go with my daily feed, emails, websites are falling. What's coming through is clearly there's this huge wave of tech driven change that's affecting financial services broadly, the payments industry more specifically. It's affecting the world of commerce, etcetera. What's also coming through is a lot of moving parts on geopolitical front and the macro front and then you overlay that with every day some government and some regulator somewhere is coming up with yet another initiative so that makes for a pretty complex operating environment and with that as a backdrop, one thing is when I see customers that comes up who look at the same environment that I just described, one thing that consistently comes up is the topic of trust. And if you don't know what the future is going to bring, you're looking for a trusted partner that together somehow you can work through that.
A partner that is flexible, that says you look ahead over the next two years and you have some sort of agreement together and then maybe things change and how do you pivot? How do you pivot in a world where consumers radically change their behaviors quite quickly and you offer them different solutions and so forth. So trust on with that through that lens is a big topic. Then trust on the lens of in an unclear regulatory environment, what do you do about data privacy? What do you do about regulations in spaces that haven't fully settled like stablecoins and so forth?
So I see that coming at us as a big uber theme. More specifically, if you look at the trends, I would cut them probably in two different buckets. One is cyclical trends and one is secular trends. The secular trends are actually the same despite everything that's going on that we've been talking about for a long time. One is consumers want seamless, they want instant, they want personalized, they want easy.
What also hasn't changed is this base building on that is why is B2B still clunky? So B2B modernization, that expectation is also holding. And then there's a few things that are more cyclical that has just picked up more recently. Stablecoins, Recently I went to see a regional sized bank CEO that's working to a larger degree with a competitor and you know we started to have a conversation and he says within the first five minutes what are you guys doing on stablecoins? So I explained what we're doing, How can we partner on that?
So there is interest in emerging technologies that existing players might have not had. And then, of course, there's AI. So in the customer meetings I had since we announced Agent Pay, this is the one topic. This is the one topic everybody wants to talk about. What does agent e commerce mean?
Where's my role in that? And how can we partner? So these are it's kind of a landscape that I see around us. Interesting if you think about our strategy, which I always love to talk about, is it kind of hits on all of those points.
Harshita Rawat, Senior Analyst, Bernstein: So Michael, I want to really zoom in on a bunch of the things that you just highlighted. But let's just get some of the macro questions out of the way first. What are you seeing in terms of the consumer spending trends?
Michael Miebach, CEO, Mastercard: Right. So last time that we all spoke was at our earnings call. We had the first quarter data and we had up until the April 28 and spending trends were stable at the time. Now if you include the May, we should see exactly the same. So spending trends have largely been the same.
Now if you look at this a little bit closer and then you'd say, why is that? If you look at the headlines, if you look at the sentiment surveys and we just seen one yesterday, it was surprisingly positive. So you see a lot of rhetoric there and you see a lot of headlines and it hasn't really translated into consumer behavior. So why is that? Because the underlying support of the labor market continues to be there.
We have low unemployment and we have wage growth that is kind of keeping up with inflation above inflation. So purchasing power is solid, are both key drivers. So that's fundamentally the picture that we've seen and that's why we said what we said in terms of our outlook for the year in the earnings call. The other thing that is important in this context is, you love asking about macro and colleagues as well. And then we talk about it, but we also say, you know what, it's also important to consider that what we do matters in any economic backdrop, because there's a secular trend.
Number one, people that are employed will spend and when it's spent on cards, then we care about it and we can help with that. It's a very, very diversified model. So if certain macroeconomic footprint plays out in this part of the world, but differently in another part of the world, consider we are the most geographically diversified network. So I find it's important to look beyond the macro, consider both.
Harshita Rawat, Senior Analyst, Bernstein: And just one follow-up on that, Michael. Cross border. Can you maybe talk about what you're seeing there? Help us also understand the sensitivity of your business towards different corridors and e commerce travel spend, assuming you're quite diversified as well.
Michael Miebach, CEO, Mastercard: It's interesting you asked this question. There's, again, a lot of headlines on how travel behavior is changing and where consumers are not traveling to and so forth. So here's what we're seeing. Again, for the first quarter and into April, we had a more detailed look into the travel behavior. And you saw the growth rate at 16% of our overall cross border, which is very healthy.
So that continues gives and takes within that. Let's take a little bit of a closer look. So if you look cross border travel, we start with that and we can take a look at Xtravel. On the travel side, overall very, very solid. But then you start to look through the lens that we have, which is a very detailed lens and which corridor kind of stands.
Is there anything that we see that's noteworthy? And we give you two things and I want to repeat those is we saw some volatility and some moderation in select markets in Middle East and Africa. But those are generally volatile markets. Now I worked there for nine years and I've lived there. So it's up and down.
So I wouldn't say that's secular trend in one particular direction here. It's just something that we noticed. There was also some moderation into The U. S. This is something that we have seen in some of the headlines.
But it's also true that we've seen increases elsewhere, increases in Europe, for example. So always important to look at it and then come back to the diversification piece geographically all adds up to a stable trend for us. On the ex travel piece, which is largely cross border e commerce, been very strong, consistently very strong, no change in that. The behavior that changed in COVID and people stuck with it. They like to buy stuff that they found interesting in other parts of the world and that continues.
So overall, good picture. Now one thing is you have the underlying trend, obviously, you need to be well positioned to actually make use of those trends and work them hard from a product perspective, from a portfolio perspective and so forth. We continue focus on the travel sector, the OTA relationships that we have with Agoda, with Booking.com, what we do in the airline co brands Lufthansa, AA, hotels, IHG, etcetera. So it's a good portfolio and we put a lot of effort in engaging helping our customers engage consumers so that when they decide to travel, which they want to do, that they travel with them. And then the spend comes to us.
Harshita Rawat, Senior Analyst, Bernstein: So now on to more exciting topics, Michael.
Michael Miebach, CEO, Mastercard: I thought that was already actually quite exciting.
Harshita Rawat, Senior Analyst, Bernstein: Over the last several years, you've had a lot of notable client wins. How is the competitive environment in your view? And what's enabling your wins in the market?
Michael Miebach, CEO, Mastercard: Right. So the market is competitive, no question. And it's competitive from an economics perspective. It's competitive simply from the breadth of competition that's in the market. So that has changed.
I don't think there was ever more competition in payments than we have today. So you've got local schemes, you've got international networks, you've got the wallets, you've got all sorts of specialist players. So it is a very diverse competitive landscape. Within that, why are we winning in that broader competitive landscape? I think it starts off with maybe coming back to the trust point I made earlier, the kind of relationship that we build with our customers, we hear it back, we do these surveys and we ask, do you think of us?
What do you think about our client team? And the approach is you listen, you understand what is the customer's problem, what are they trying to do. And then you understand how do you find a way to driving their top line, how do you find a way to reduce their cost or improve their fraud line or whatever it is. And then we take a set of as a former Chief Product Officer, a set of productized components of our solutions, you put them together into a solution that fits that customer at that moment. But then we have all these changes that I talked about.
So people are saying right now, well, in a higher inflation environment, I need to pivot. I need to find a different way to engage my customer than I did before. So you take your standardized product box and put them together in a different way. On the services side, that's something that we regularly do. Right now, we're just out there today with all the tariff things.
So everybody is thinking about that. So there's different data assets that we put forward to our customers to help them understand what the impact could be and how do they get ready for that. So listening, engaging, solution selling, I think that makes a real big difference. And then of course, it's our product propositions that need to be differentiated. There was a bunch of announcements on that just recently.
But I'll give you a couple of specific examples. In the last earnings call, I talked about Grupo Pro America. You're not some not a name that isn't like a big household name, but it's a huge financial group across Latin America. They're partnering with us across our digital first payment solutions, consulting and data analytics. So they hit across the board.
This is an emerging relationship that's growing rapidly. UniCredit, more established in some markets, but they flipped over the whole business to us across 12 markets in Europe, 20 Million cards, again hitting on services and payments across the board. Here in The United States citizens, they shifted their whole debit business to us, open banking, SME focus, consulting, same thing again, we shifted the whole debit portfolio in half a year. So that's quite something. We're actually very good at conversions, which is one other thing in a scenario where you there is question is you go with a competitor, you go with us or you just do nothing.
If I can make a point and I make a point by proving it with data that conversion is an opportunity to activate dormant carts and dormant customers, well, then people start to listen. So that's the approach. Listen, drive top line, bottom line. And of course, we need to have attractive economics as well.
Harshita Rawat, Senior Analyst, Bernstein: So Michael, let's talk more about the core of Mastercard, consumer payments. How would you frame the growth opportunity within The US and also internationally, which is a bigger market for you? There's so much focus on The US, but I feel like the opportunity is much bigger internationally, not just with respect to cash, but also domestic schemes.
Michael Miebach, CEO, Mastercard: I'm so happy you say that. And I agree with that. 70% of our revenue is from outside of The United States. So that's something to keep in mind. So which clearly proves, you look at our overall revenue in absolute terms, that's a huge amount.
If I take us back to November in our Investor Day, we resized the market at $11,000,000,000,000 overall globally. That's the global opportunity. And then rather than looking geography, we also said, well, within that is a tremendous transaction opportunity because where we price on volume, also price a number of transactions 1,500,000,000,000 transactions. And if you look at it from that perspective, you see a significant chunk of the transaction opportunity in markets where you have a higher degree of new emerging business model shared economy that is for example, The United States. If you look at the cash and check opportunity, you find a lot of that highly attractive in some of the more emerging economies.
So that we go after, example, mobile based financial services in Africa, those kind of partnerships. What we also talked to you about, which I'm personally very excited about is kind of new ways to get a volume that are not just about transferring cash and checks. It is also taking volumes from cash and checks equivalents of less evolved digital solutions. For example, domestic schemes, for example, some local wallets that are very grown dramatically in some countries. So domestic schemes, we've partnering and winning for a long time.
Tokenization is a good differentiator for us to get that volume over and realize that consumer opportunity by taking it from somebody that had already digitized it. On the wallet side, give you the example of Swish in Sweden, so exciting that that's a you know it's a pretty prominent wallet there and we basically brought to the party contactless payments. Said how about you are a Swish user and you want just tap and pay in a shop where you have Mastercard acceptance 150,000,000 times. That's a pretty cool proposition for every Swede. And so you just log your Mastercard, those transactions then come to us, which is a great way for us to continue to execute against consumer payment opportunity.
Now we thought about this in a bigger way and excited to announce something right now, right here with you on stage. So we have agreed a partnership with Alipay, Alipay in Hong Kong and GCash to partner to enable 36 local e wallets to extend their use cross border through the and international Alipay Plus wallet gateway. This is a very long word. But it's basically the same thing as I just described in the context of Swish. You log your card.
You have this particular wallet out of Hong Kong. You travel somewhere in the world. You can use this app to pay. This is a really interesting opportunity for us to help those consumers and those wallet partners who are very good at digitizing cash in these markets. And those are transactions we normally would not see.
And now we do see those. So there's a whole range of ways to go after the CHF 11,000,000,000,000 and it doesn't stop. Consumer doesn't stop there because there's a counter account, it's another CHF 10,000,000,000,000. There is on the domestic scheme that I talked about, that's another CHF 3,000,000,000,000 and then there's China with $10,000,000,000,000 which we are obviously very busy in China as well.
Harshita Rawat, Senior Analyst, Bernstein: That's a very exciting partnership. Congratulations.
Michael Miebach, CEO, Mastercard: Thank you very much. I had to write it down because it was such a long name. But I think I got it right.
Harshita Rawat, Senior Analyst, Bernstein: Speaking of China, so it's been about a year since you launched domestic processing in China. How are things progressing in the market? There's a perception that the ship might have sailed in terms of domestic China opportunity given the local market dynamics. Why do you think that perception may not be right?
Michael Miebach, CEO, Mastercard: I'm not sure that perception exists. But let's just speak about it anyway. Consistently hearing that. So let's start off with why is China important. It's the second largest economy in the world.
So from that perspective, of course, as a global network, we should be there, tremendous opportunity. Now if you look at the market today, the market today has a large established bank card player. And the market has significant digital giants that have developed a QR payment ecosystem in the country. So one could say, why is Mastercard needed? The first thing to say is we have built good relationships with all of these people over the years.
We're there since the mid-80s on our cross border business and with our services proposition. Now there was one thing that has changed and that is the regulator coming in and starting to balance out the market between bank cards and digital payments. We could all observe that over the last couple of years. The next thing that also happened is that is now permissible to have a card proposition that can use domestically and cross border. Now we got our license last year, this particular change
So we're really the only party that can provide this particular single use card because we are the only ones that have international acceptance and we are the only ones have a domestic license at scale. And that is the unlock where we believe that gives us a tremendous ability to compete. We need to build out our capability as said on the ground. We've just launched on sale tokenization there, which is another important tool to bring us to life. So we've been busy since May, because that's great in theory what I just said, what you have to do is get the issue and going solve for the chicken and egg issuance going and get the acceptance going.
We had a good start on the acceptance side by partnering with the wallets to ensure that you can start to pay through wallet acceptance on the QR side by just logging your card there. That's kind of a bridge, but we're building our traditional acceptance. And the Chinese broader ecosystem is very interested, including the government, to have traditional acceptance because they want travelers travelers to come in and be able to just pay the way they are used to in their countries, which is not QR. So everything has come together. Very busy with the teams rolling this out.
We're very encouraged. And it's not just about consumer payments. It's also about commercial payments. So we struck 10 deals on the SME side. We're staffing up.
The team is humming. This is a joint venture, just to keep that in mind. But I recall a few questions from the Investor Day, how excited are you? It said, well, German excitement. I keep it relatively low key because we do have a geopolitical landscape to consider in all of this.
But so far, so good.
Harshita Rawat, Senior Analyst, Bernstein: That's great. And definitely exciting. So Michael, let's talk about tokenization and usage A foundational layer of growing payment use cases and services enabled by Mastercard, Can you talk about how tokens enable the ecosystem with respect to security programmability of transactions? And why is this so important for Mastercard?
Michael Miebach, CEO, Mastercard: Right. So when it comes to tokenization, let's just put it in context when this started to happen. Was really with the rise of mobile based payments around 2014, '20 '15. We had a strong partnership with one of the big wallets at the time. So we brought it up and it scaled beyond anything that we've seen before.
If you think contactless today, 73% of all transaction that took us about decade to get it there globally. But now it is the predominant way to pay. So you got to have patience in this in the payments business to really create these global propositions ubiquity. On tokenization, it's growing at a tremendous speed and today we have 35% of all switch transactions are already tokenized. So that's very impressive and why is that?
Why the pull? The pull is really coming from the user experience that it enables. So firstly on safety and security, you don't need to make any argument to anybody that's good not to have clear card data flying around. So the impact on fraud lines is very clear and measurable for our customers, but it's also good for consumers because in terms of fraud levels on consumer transactions, so far very positive. But then you have to look at the throughput and the approval rates, three to six percentage points higher than what you see on a non tokenized transaction.
So has clear economic and security and UX benefits that top everything else. For us, it's also very important because this is complicated technology, not everybody can do this and positions us as a very attractive partner for when we show up with some markets where there might be a local payment scheme and say, well, we actually can do tokenization and makes us an attractive alternative for a global company really, really important. If you take a look ahead and say, could this go? Where do we want it to go, we made a clear statement that we will push for phasing out manual card entry by 02/1930. That is a statement that's very much welcome by many players in the market.
In Europe, I just came back from a trip in Europe, new commission, they're like, this is really good for safety and security standards, American company bringing that in the current environment that's a really helpful thing for us. So we'll work hard on achieving that. Other things that you can see though, you can tokenize anything. You can take tokenize data. Thinking about our consumer data, your data, if that were a token network that allows you to tokenize that, you consent to data and you ship it to somebody else in order to get a better service proposition that is pretty cool.
So the world of multi token networks, which we have already built, we are ready for that and in the end anything can be tokenized. A step in between that I kind of overlooked is PASCII biometric that's also token technology, which actually you need when you want to go to when you want to get rid of manual card entry. So there's a lot in there. It's complicated. We have invested a lot of money in this and it's been a significant enabler of our going after consumer and the commercial opportunity.
Harshita Rawat, Senior Analyst, Bernstein: And I think the point you made was also so interesting around local schemes, domestic schemes. They are just not able to keep up with this level of investment, this level of technology that also differentiates Mastercard. So speaking of technology, Michael, you recently announced Mastercard AgentPay, which will be Isn't
Michael Miebach, CEO, Mastercard: that a cool name? AgentPay, yeah, think so.
Harshita Rawat, Senior Analyst, Bernstein: Which will be supported by your agentic tokens. So my question for you is, how are payments changing in the era of agentic commerce? And what evolving role can Mastercard play in that? And also, how does this fit into your broader AI strategy?
Michael Miebach, CEO, Mastercard: Right. I think I would probably building on your question, let's start at the other end. How is commerce changing? And then how can payments enable changing commerce? So today if you think about it online commerce involves search, you go and you try to find out, let's say you want to buy a running shoe and and you start to look at different sites, maybe you look up what the latest ratings and the tests are and then you see as the best offer and then maybe you look at your airline website and see if you have any burn miles to burn and it might actually have a link to one of those
You do all of this and you've just wasted an hour. And at that point you still not have you haven't purchased anything. So at some point in time you will actually make a purchase transaction. So search is complicated. Natural language doesn't really work and the purchase transaction is in the second flow.
So imagine a world where people are using chatbots and other agents to help them with their commerce decision. And that isn't theoretical, it's actually happening. Just look at the study just recently that since 2023, '20 '5 percent more people are starting to use chatbots over traditional search engines for their search use. Now if you then think how about the chatbot could also complete the transaction. So it all just goes in one go.
You say I want the hookah and I have the size and just get me what is available from my preferred merchant etcetera, etcetera and it flows all the way through. Very interesting. That is where it could go. From a consumer perspective, it might be very scary though. Even from a bank perspective, it might be scary.
If somebody uses a payment credential that's issued by a bank, so how do you know that that chatbot is actually real? How do you know that behind the person that is making that request to the chatbot is actually the person who claims to be that person. So all of that, which is a very known set of issues in payments today. How do we solve that today? We solve that by using tokenization, by using a whole set of fraud tools to keep the payment safe and authenticate everybody that is in the transaction.
And this is where Mastercard AgentPay comes in and say, let's recognize there will be new players initiating instructions payment instructions And we will apply all of those technologies around tokenization, making sure it's safe, secure and sound. And at the end of it, you could also go even further and say there will be disputes and chargebacks and all those things that has been established over the decades and say, well, you go back and you prove is there sufficient data to flow through that we can say, well, you actually did ask for this particular product. So you close the circle very much the same way that we have done it. So it is not how payments is dramatically changing. It's taking the components of what we have built across the ecosystem and technology with partners who are in the agent building business and say these components are available for you today.
So announced this with Microsoft with OpenAI and said, let's start to build out this ecosystem. This is also very early days. So we shouldn't get carried away by that. But the proposition in itself makes sense. And I'm sure in the end, the consumer will decide if they get comfortable with it.
But Mastercard agent pay can help people to get comfort with it and the banks get comfortably with it. And we might see search evolve. But we also see that traditional search engines are also upgrading. And you heard what Google IO what Google announced at Google IO with the AI mode. So there's more coming.
And I think the whole industry is just right now evolving very, very quickly. So good for us as a player, fundamental leader in tokenization all along, because that's the core of all of this.
Harshita Rawat, Senior Analyst, Bernstein: And Michael, some of the other announcements that came from Mastercard just in the last couple of weeks have been around stablecoins. Interestingly, they're also an area which are perceived as a risk for cards at times. Can you talk about how you see the role of stablecoins evolving within certain kinds of payments, B2B, cross border, and why they're not a solution for card payments and also Mastercard's approach within stablecoins. So
Michael Miebach, CEO, Mastercard: there's a lot more activity around stablecoins right now. And why is that? I think that is driven by that there's a potential for reaching some regulatory clarity around it. So the Genius Act is kind of going through the motions in Congress as we speak. It was very close first time around and we'll see if it goes through and we'll settle some of the questions on where this is landing from a regulatory perspective.
So I think there's a whole ecosystem that's ready to move. And if you then start to look at, so why do people why are they interested in stablecoins? And there are some folks that are interested in for stability, for example. So stablecoin, as the name says, if it's dollar denominated, that is certainly a way to be paid or store value in emerging markets right now. So that's clearly one of the use cases.
Another one is speed. So stablecoins if you put it in the context of cross border payments where speed is not always the key hallmark of these payments that can take days with stablecoins you could be a lot quicker. So there's a lot of good reasons also why stablecoins make sense. For that very same reason, we've invested it for the better part of ten years in blockchain based and other kind of digital asset technologies. In the days of Libra, when I was a Chief Product Officer, we were very close to even launching it and then we didn't, mainly for regulatory clarity reasons and I think we're coming back to that point.
So one thing that we are doing today where regulatory clarity hasn't fully achieved is all of whatever use case it is, it needs an on ramp and an off ramp. And that's been really the focus of our business. We have a whole range of partnerships on ramp, off ramp with various exchanges. In our last call, talked about OKX, I talked about Kraken, talked about Crypto.com, some of the big names. And only in the last couple of weeks in May, we announced MoonPay.
It's a fun interview that the CEO of MoonPay did with Ivan So to did with Andrew Ross Sorkin. I think he had like a billion views of that interview. And he's talking about the amazing way of paying and being paid in stable coins, well, that's exactly what we're enabling because we're building that bridge as well. Now it is also important, which is something that we actually did say in 2019 that we will enable our network for stable coin settlement, so directly in stable coin. And we have done that.
So it's just not that anybody wants to use it right now because the regulatory clarity isn't quite there at this point, but we're ready to do that. Where is this all going? Is this interesting? Yes, that's bringing significant volume to us on an off ramp. That's exciting.
The settlement piece is ready that isn't doing anything yet, but we have that optionality any moment. I'll you the example of the banker that I saw that wants to do something in this space. So there's a lot of customers that are coming and they're seeing that we've invested and we have some really good folks that know something about it. So what's the use case? Let's work on it together.
I think the real area where we're going to see these use cases in the B2B space and the commercial space, because there is issues to address on speed, on transparency, programmability matters in those kind of businesses. Oftentimes payments are linked to complex scenarios and say, well, these five things need to happen and you can build that straight into the payment. There's governments who want to build out that kind of an ecosystem, central bankers who are working on that, who are reengaging with. So I'm excited in the medium term for more fundamental changes coming out of it. It's pretty clear.
We've always been a multi rail player. That is an interesting technology that can solve issues with parties that don't know each other, which is what we've been doing since 1966. So it's just a plug in. And from that perspective, I see it as a significant opportunity.
Harshita Rawat, Senior Analyst, Bernstein: Fantastic. So Michael, let's talk about commercial now. It feels like you're increasingly putting together more of the building blocks for that opportunity with respect to partnerships with the SAPs, the Oracles of the world, and now a little bit more targeted verticals. So can you maybe talk about your approach to commercial, and how is that evolving?
Michael Miebach, CEO, Mastercard: Right. So earlier we talked about consumer and you said like it's 11,000,000,000,000 number that looks comparatively small to commercial. So back in 2017 when we first sized markets, we gave you like outlandish numbers, but now we are focusing more on SAM, serviceable addressable market and we sized that up at 80,000,000,000,000. And commercial is such a big word, we look at it really in two buckets and one is commercial POS, which has SME in it, T and E cards, fleet cards, we're the leader in open fleet cards, for example, who would have known. But that's it's an attractive business.
And then the other is the B2B payments, which is invoice payments. So those are the two buckets and maybe we take them one by one. On the 16,000,000,000,000 opportunity in commercial POS, when I look at that, there it's existing tools. We're differentiated on the SME side. We're winning in SME.
Wells Fargo, we just completed the migration. But it's a geographically concentrated business. So what do we have to do? We have to build out a specialist sales force in SME and take this opportunity elsewhere. It's on every government's agenda.
The building blocks are there. It doesn't really require us to do very heavy investment on it. Get the sales force out, get the specialists out and repeat what we have done. Certainly in a big way in The United States, to some degree in The UK and initially now in Europe and take it around the world. So SME very exciting.
That's also our near term focus. I think ready to convert those is important. Oftentimes there's the link into the consumer side of the business, so we can have joint proposals for our banks. And there I think there's a lot of momentum there. On the invoice payment side, that's the other 63,000,000,000,000 to add it up to 80.
There's really three things we need to do and we have been busy with that's first on the buyer side you just mentioned it is the ERP system make it easier that you are in the process with your invoice with your invoice payment capability in the back end process of a company. So there's Coupa, there's SAP, there is Oracle, there is GEP. So we've done that. That's great. But that doesn't mean there's volume.
So I think here a little bit more work is to do on activation and really driving the volume and enhancing that. And I'll come back, there's also a question of economics around that. Then on the supplier side, so how do you get the payment? And if you get a card payment, this is all BCN based, which we're the leader. And if you get the payment, how this is a straight through process.
So Mastercard Receivables Manager is the key tool there. We announced that I think last year that we put that out into the market. And the combination of being in an ERP system having the receivables mentioned on supply side buyers and suppliers come together. What is needed is the one other thing is flexible interchange programs. So B2B rate manager which we talked about in our last call is kind of the last tool.
So bilaterally, they can find a way to find the economics that incentivize both sides to use virtual cards. In a world of higher interest rates, card payments generally are interested because there is a working capital advantage. So you don't need to explain this long to some people that said, we should start to look at this. So overall, I think it's pretty clear approach. If we zoom back out to the overall commercial opportunity, this was I think 13% of our 2024 GDV, I think was the number that we shared with you growing at 11%.
And we have been winning in the market and outpacing. So overall, we gained share four percentage points since 2019. Those numbers are very clear and understandable for us. We're ahead of the market because we have differentiated propositions. We approach the way that I just shared with you.
So I'm excited. I'm a little tired of this question, why does it take forever? No, it doesn't. It's growing at 11% and it's a tremendous opportunity. And we're going to go after it.
And you didn't ask that question, but others do.
Harshita Rawat, Senior Analyst, Bernstein: And you've also recently announced an expanded partnership with Corpay. Can you tell us more about this partnership? And how does this fit into your broader commercial So
Michael Miebach, CEO, Mastercard: there's a cross border opportunity in commercial. So everything I just said, there is cross border elements, but there's a lot of domestic payments, specifically on the cross border side. We've long invested in this space. We had a joint venture with HomeSend. We acquired Transfast.
But we had a footprint in kind of medium ticket size, smaller to medium ticket size and with a big focus on P2P payments. But because we think the commercial opportunity, the B2B opportunity is so big, we need to build out our proposition there. And as we always do, when we look at M and A, the strategy says, this is a big opportunity for us. So how do we do it? Do we build it?
Do we buy it? What do we do? And we said, well, for now, I think it's good for us to bring together our existing solution, which we didn't want to throw away. It's working particularly well and it's great reach. We're reaching about 90% of the global population with that existing network that we have.
We just can't carry larger transactions at this point in time. We don't have the full range of the FX capability that you need for that. So why don't we partner with the leader in that space and that is CorPay. So we're not investing in CorPay We're investing and partnering with CORPAY, the cross border business of CORPAY.
That's important to note. So what is the agreement? The agreement is that their capabilities, are larger ticket size, which are different types of corridors and which is a lot to corporate customers is merged with our capabilities, which is lower ticket size, more FI oriented, different kind of corridors and different payout points. So we've overlaid the two of them. This is highly synergistic.
So very attractive for Ron Clark and his team and for me and our folks on that side. And the other thing that we have done is we had a long standing exclusive relationship with VCN and we will continue to we extended that. Part of what we do is in very specific terms, when we bring together these capabilities, Mastercard move will be fully made available to their existing customers. That's just one of the first things that we will do. So this is an exciting deal, long term partnership that I think will do wonders, two leaders coming together, the best proposition for our customers.
Harshita Rawat, Senior Analyst, Bernstein: Very exciting. So Michael, let's talk about value added services and solutions, which is such a big business for you. $11,000,000,000 yes. Another strategic priority. Can you talk about your offerings, how they set you apart relative to the competition?
And maybe also remind us why value added services are really expanding your opportunity to services before and after a transaction, not just your own transaction?
Michael Miebach, CEO, Mastercard: So it's a huge part of our business. We have nine minutes and we have not talked about the virtual cycle. So you know how we talk about this when we say more payments the more payments we see, the more data we produce, the more data allows us to provide better services solutions and then you're in this virtuous cycle. It's a big part of our strategy for that reason. We want to have all payment propositions.
At the same time, we want to have differentiating services that make these the most differentiated payment solution that's out there. So that's always been the strategy. I keep getting the question what is in your services? I feel we're actually very clear about it, but this is you're giving me opportunity to talk about it again, which I love to do. When think about it in terms of around the payment transaction, the first thing I want to say is 60% of our services are network linked.
So that's important to note. So if we look at that and that part before the transaction, what is it said, what's the service before the transaction? For example, digital identity. You got to authenticate kind of who is behind the transaction during transaction is a fraud score, which is an example. And then you come to after the transaction take consumer clarity, is our product that's related to avoiding chargebacks by giving more information to the consumers that you actually did make this transaction.
So carefully curated around the transaction and then there is the other 40% that are not transaction related where we say well, across the board, our customers will need consulting, our customers will need marketing services, our customers might need a whole of other things that don't have to do immediately with the payment transactions, but a second degree related to that to help them devise a payment strategy executed and so forth. So that is the approach that we had on curating the portfolio over time. If we run through that, what that portfolio is, it comes in categories. The first is anything safety security. Back to the first question on big trends and what's going on underlining security, there is an expectation of security from our customers and from their customers.
So we build out that business. We always talk about powerful underlying secular trends in the digital economy. We could choose any service, but security will not go away. If anything, the risks are rising. So we're banking on a business that will continue to grow for a long time in the security space.
So there's a whole set of solutions in there. Most recent addition is the recorded future acquisition on threat intelligence. But it starts always with the transaction side and then we move around the risks, the broader cyber risk that a customer of ours might be facing. This also opens up a whole different set of buying centers. Originally, would have sold to a retail bank, head of a bank.
Now we sell to the CSOs of any kind of company. So different much, much broader proposition. So security is the first one. The second one is on customer acquisition and engagement. Any one of our customers, particularly in this world is trying to cut through the clutter of offers and rewards and everything that's out there trying to engage their customers in different ways and those we build out a portfolio of tools to do that.
In particular, I want to call out personalization here. How do you get an offer to somebody at the right channel at the right time at the right moment that feels like it's Harshita's offer or Michael's offer. That's what Dynamic Yield does bought in 2021, tremendous asset for us. One example in the engagement and acquisition and engagement space, data insights. Earlier I talked about the macro picture and this is a fast moving world.
We as a source of high frequency global data on what's going on in the world, we can take that data and translate it into messages from our customers, business insights at the macro level through our economics institute and you break it down and you get into more detailed propositions through our analytics and insights business. That is a significant differentiator for us. We built that out a few years quite a few years ago and been a winner for us. Then you go into the world of open banking, of real time payments, that's another category and finally you have the whole space of gateway payment processing and tokenization, because tokenization is a service for us as well. So it's a very broad spectrum.
It's in these five categories that I just described. It's around the transaction, But it's also very flexible, we can pick and choose. Digital identity isn't just for payment transaction. I could do digital identity for account opening and we've done exactly that. So it's a very versatile portfolio anchored in safety and security and data insights and somehow linked 60% of that linked to our payments transaction, all powered by the data that's underlying.
We have a lot more data than many of the services competitors that are out there. So to your point about the competitive landscape, yes, there are some networks who are also building out services strategy. We've been at it the longest and this is why this is such a substantial part of our business, 40%, nearly 40%, the 11,000,000,000. But there's a lot of other competitors who are specialists in these individual areas that I just talked about. And for us to win against specialists, really the differentiator is the data that we have that they don't have.
We might have similar technology on personalization, but we also have a lot of data to put this in perspective and make an even better offer. So we're excited about all of that. And it is the big differentiator on the payment side, back to the virtuous cycle.
Harshita Rawat, Senior Analyst, Bernstein: There's so much to unpack there, Michael. But we only have a few minutes left. So before we close out the session, what are the key messages you want to leave the audience with?
Michael Miebach, CEO, Mastercard: So I want to come right back to the beginning. There's this fascination with the macro. And we all do think about it. But I'm seeing it when I talk to our customers. They are tired about it.
They want to talk, I need a partner, I need solutions now that help me pivot and drive my top line and that is the kind of tool set that we have. It's important to understand in the macro also that we are one of the most diversified businesses that you can imagine. We are in every country. We are in payments. We are in services.
We're tied to digital economy. We're tied to a desire for safety and security. We're tied to desire for more data insights. All of these are fundamental secular trends. Keep that in mind when the next headline process and say, oh, what does it mean for the networks?
Well, there's a lot of the big part of our business that will just power on as we've seen in COVID, as we've seen in the period of high inflation and supply chain rewiring and as we are seeing today. So I think that's important and it's also it's a team that has now seen all of this. The current management team, there's always changes, but we're basically together since COVID and we've gone through that and we've seen the levers that we can pull and how to react and pivot and meet our customers wherever the latest headline takes us and be flexible and a trusted partner.
Harshita Rawat, Senior Analyst, Bernstein: Fantastic, Michael. I learned a lot. Thank you so much for your time.
Michael Miebach, CEO, Mastercard: Thank you, Harshita. There you go. Thank you.
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