Mastercard Is Well Prepared To Navigate The New Payments Landscape

Following Mastercard Inc MA's Investor Day on September 7, Argus’ Stephen Biggar mentioned that “management’s presentation showed that MasterCard is actively preparing for the new payments landscape.”

Biggar maintains a Hold rating on the company.

Addressing Concerns

Mastercard revealed it is specifically addressing concerns regarding payment security, privacy and differentiated products, as customer payment options expand.

“While MasterCard has had success in renegotiating sizeable co-brand deals, it has also faced considerable competition in this area,” Biggar stated, while adding that management once again “emphasized the strong secular growth opportunities in the payments industry, with cash still accounting for over 90 percent of transactions in emerging markets and over 83 percent globally.”

Strategy

The analyst pointed out that cash accounts for a significant percentage of consumer and person-to-person transactions, a large part of which would become electronic transactions going forward.

Related Link: Paypal's Mastercard Deal Could Be First Step On Path To Peace With Payment Processors

Biggar also noted Mastercard’s strategy in North America included expansion of product distributing, increase in merchant acceptance, investments in digital products, scaling of service offerings and extending the company’s network to capture payment flows in areas such as government, business and person-to-person.

“For 2016–2018, MasterCard continues to project low double-digit revenue growth, an operating margin of at least 50 percent, and mid-teens EPS growth,” the analyst added.

Full ratings data available on Benzinga Pro.