Services business growing faster than overall company: Mastercard

Mastercard Data and Services encompasses offerings to help businesses drive smart decisions with better outcomes. The services piece secures and enhances the value of payments, whether it’s new value propositions or the ability to engage consumers and merchants. Services come in two flavors — one is around cybersecurity, risk, fraud, and the other on data, insight software platforms, AI, etc. We also have a very large, professional services firm that does a lot of marketing and consulting and data sciences.

We’ve grown many of these services organically and the others built inorganically. We buy, we build, we also partner across payments and services. We are good at aggregation, annonimisation, privacy, enhancing technologies, etc. We have lots of partners, some of are in the early stages and others are established vendors. It’s important to make the most of the ecosystem when you’re innovating.

Globally, we see around 112 billion transactions from 3 billion cards in 209 countries. We also have a very large loyalty business where we manage over a trillion points. We have lots of sources of proprietary data; we cleanse, tag, warehouse and then combine the data with hundreds of available third party sources. We’ve created these domains of intelligence — location, portfolio, cyber and fraud, and macroeconomic intelligence, — that power our services. That’s what makes our services unique.

We also have access to data in many parts of the world that may not go through Mastercard, but we have copies of it because of the services we provide on it. The proprietary data is with us and we pull in third party data that’s either available publicly or their customers data and couple it with our data to tease out the insights. We do merchant loyalty for very large players like a McDonald’s, wherein we ingest data from the company to provide insights. Post pandemic, we’ve been working with airlines on travel recovery, which routes to turn on, what offers to create and which customer segments to target. We also do a lot of pricing work.

We are seeing demand across the board. Some of the other verticals we work with are tourism insights for government and tourism agencies. We also work with all types of retailers, department stores, telecom companies and e-commerce companies. We work with CPG companies on everything from pricing to maximising distribution to which products work.

We think about it in different layers. If a consumer wants to use crypto, we want to facilitate it, provided it meets all the legal and regulatory obligations. The underlying technology behind blockchain, is very interesting. We’ve seen a lot of pattern in this space because there are many different use cases; some of which have nothing to do with currency and money. The more important thing is intellectual property, because as we come up with certain use cases of the blockchain, we make sure we have the patent on it.

We’re working with a lot of central banks around the globe and we have a sandbox that some of them are using to model out what the CBDC might do in the economy. At the end of the day, the question is that if you introduce CBDC into the economy, what is the incremental value it provides and what is the central bank focussed on. For some countries, it is the cost of issuing the currency, for others it’s about tourism or getting through the lending system of the country. The Jamaican sand dollar is public, that’s an experimental CBDC.

Our payments business is quite healthy and growing, and as consumers spend more, it is growing. There’s a ton of potential growth across the board and we’ve also gone beyond cards. We’re looking at open banking, account-to-account payments, etc depending on the country. We’re also diversifying into new payments types because at the end of the day it’s about moving money and reducing cash in the system.

Less cash is circulating which is a good thing. The other trend is that before the pandemic, consumers preferred experiences over things. During the pandemic, we saw a shift, but now we’re seeing experiences gain over things and you see that in the spending. Consumers are travelling and are actively seeking experiences around going out, eating out, going to concerts. There’s lot of pent up demand, sort of this revenge-spend mentality around the globe.