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Mastercard’s (MA) Digital Drive to Aid Transcation Volumes


Mastercard Inc. MA has witnessed immense growth in its business with the help of vast amount of investments in technology, made over years. The need for the same is driven by changing trends in the digital economy, which call for faster payments via electronic means. Last year, global digital payment volume exceeded cash for the first time in history.

This technology company in the global payments industry connects its consumers, financial institutions, merchants, governments, digital partners, businesses and other organizations worldwide via its digital platforms — Masterpass, Mastercard Send and Masterpass QR.

One of the most notable achievements of the company is Masterpass, which is a global digital payment service that allows consumers to make fast, simple and secure transactions using any device and across any channel.

Mastercard Send connects more people, businesses and governments to facilitate the transfer of funds quickly and securely, both domestically and cross-border, in over 100 markets.

Masterpass QR allows mobile phone users to make safe, in-person purchases without any card and it also helps to avoid any expensive point of sale equipment.

To speed up its technological capabilities, the company also opted for related acquisitions. In the same vein, last year, the company snapped up Vocalink, which operates systems for Automated Clearing House (ACH) payments and ATM processing platforms in the United Kingdom and other countries.

ACH payments constitute a significant amount of all payments made by consumers, businesses and governments. The addition of ACH payments to the company’s core card-based business will expand its ability to offer more electronic payment options to consumers, businesses and governments, and will also help it capture more payment flows.

Mastercard’s technological investments bore fruits by increasing payment flows, led by transaction growth. This has driven revenues, which witnessed a CAGR of 11% between 2012 and 2017. The company projects revenue growth in the "high end of low double-digits" for 2018. In 2017 revenues grew by 15%.

In a year’s time, the company’s shares have gained 63%, outperforming the industry’s growth of 37.5%.

The company is also in the process of using blockchain technology to provide a new way for consumers, businesses and banks to transact. It is the key strategy of the company to provide payment solutions that will meet every need of financial institutions and their end-customers.

Other players in the industry, including Visa Inc. V, Total System Services, Inc. TSS and American Express Co. AXP, are constantly investing money in technological innovations. Visa’s digital platforms — VisaNet, Visa Direct, Visa Checkout — have enabled it to garner increased transaction volumes.

Mastercard carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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