Mastercard’s noncard efforts may be essential for the network moving forward


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This represents a slight deceleration annually and sequentially, as Mastercard’s annual GDV growth was 14% in both Q4 2018 and Q3 2019. Q4 2019’s growth is still far higher than the 8.4% YoY jump it posted in Q2 2019, but Mastercard will need to be careful that this quarter’s deceleration doesn’t become a trend that takes it back to that level.

The future of Mastercard’s growth may come down to its noncard businesses. Mastercard’s cross-border volume fees grew 16% YoY and its other revenue segment surged 25% YoY, both on a currency-neutral basis, and contributed nearly $2.7 billion in combined revenue, suggesting they’re already core parts of Mastercard’s business.

Meanwhile, its domestic assessments segment’s revenue growth decelerated, and its transaction processing fees — its largest segment in terms of revenue, bringing in almost $2.3 billion in Q4 — grew 18% YoY on a currency-neutral basis. However, its rebates and incentives expenses grew at the same 18% rate and were slightly larger than the fee revenue. So, Mastercard’s card-based business, while formidable, may not be delivering as much revenue and growth as it would like it to.

Mastercard has made a number of moves that have likely built up its cross-border and other businesses and could help them grow more in the future.

The card network has explored several avenues to improve its cross-border capabilities. Last year, Mastercard acquired cross-border account-to-account money transfer platform Transfast and partnered with Canadian debit network Interac to enable consumers in Canada to send money directly from their bank accounts to bank accounts in Europe.

And Mastercard appears to be interested in finding new ways to bolster its cross-border services since it’s also teamed up with blockchain software provider R3 to create a new cross-border solution. So, Mastercard’s position in the industry, and its revenue from cross-border fees, may only increase going forward.

Mastercard has also made a number of plays that may fall into its other revenue segment, potentially expanding its revenue opportunities. It recently acquired RiskRecon, a cybersecurity firm, which could help it offer more payments-related services.

It’s also piloting a digital identity program that can help a user verify their identity for instances like student registration in Australia, which is a service that it could one day sell to firms, allowing it to bring in revenue even though the offering is currently unrelated to payments. As Mastercard rolls out more tools and services that complement its payments business and expand its horizons, its other revenue segment could propel its overall performance in the coming years.


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