This brief piece is in a Fortune newsletter and the headline claim, “Mastercard Isn’t Just a Credit Card Company, According to its CEO”, will likely not surprise anyone. If folks did not get the real message behind Mastercard’s nameless, rebranded logo, well, this is it.
The digital world is here and legacy cards will trickle down over the coming years, so the former bank-owned associations and other card rails providers are broadening their appeal. We have covered this closely now for years in various member reports as the process has unfolded, with multiple partnerships and acquisitions, along with clear strategic moves into the world of B2B payments.
‘Many companies claim, in a trite sort of way, to be technology companies. They do this because tech earns a higher valuation and because, at least in an aspirational sense, they believe the technology behind their businesses is their secret sauce…Few of these companies would be willing to repeat their claim in their securities filings, where it’s easy to be verbose and redundant but extremely difficult to fib. Not so for Mastercard, which most people think of as a credit card company. Here’s how the company describes itself: “Mastercard is a technology company in the global payments industry that connects consumers, financial institutions, merchants, governments, digital partners, businesses and other organizations worldwide, enabling them to use electronic forms of payment instead of cash and checks.” ‘
The expansion of technology services that support electronic payments by Mastercard (and others) has been an ongoing process for more than a decade, but surely accelerating in the past few years as the global commercial consumption expenditure has become centered on the radar. Borderless commerce and increased demand for modern, safer and faster methods to exchange value has become the new normal.
‘Last week in San Francisco, I met with Ajay Banga, the long-tenured CEO of Mastercard. He genuinely believes “cash and checks” are the competition and what accounts for his company, once owned by banks, being worth more than $300 billion today. About 85% of the world’s transactions are still in cash, says Banga. He likens his company’s core technology to a railroad that’s willing to put any sort of “freight” on its tracks, so long as the purpose is moving money legally. “We are the rails of the railroad,” he says. “Trains can have different models.” ‘
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group