The shift in payment space to e-commerce works in Mastercard Inc.’s MA favor because of its resilience and differentiated business model. This includes a global payment network, technologically advanced products and services, security and a strong brand name that is well-acknowledged by the consumers.
The COVID crisis accelerated the use of electronic modes of payment with greater adoption of digital and contactless solutions. Changing consumer trends include a preference for contactless remittances, rapid uptake of e-commerce and an increased aversion to cash, a merchant requirement to omni-channel acceptance and a need for automating B2B payments. Notably, each of these provides an opportunity for Mastercard to capitalize on.
Mastercard is pushing forward its click-to-pay service, which is a smarter and a secure way to make online payments. The company is differentiating its click-to-pay offering through an additional layer of security enabled by new data, AI and machine learning technology.
Along with serving consumers, the company is supporting merchants comprising small and medium enterprises, which have been hurt the most via its digitally enabled solutions. In this vein, it launched its Digital Doors initiative, which provides a gateway, cybersecurity and other resources for merchants to quickly establish an online presence and start accepting electronic payments.
The company is also providing a comprehensive suite of installment capabilities more popularly known as buy now pay later facility through API (Application Programming Interface)-based solutions, partnerships and acquisitions. This service offer a greater choice in lending solutions for merchants and consumers, both online and in-store, which is particularly important in a credit-challenged post-COVID environment.
Its Mastercard installment solution has been available market-wise for several years. The acquisition of Vyze allowed the company to advance its presence with marquee merchants in the United States and internationally. It forged strong relationships with Pine Labs and Afterpay to provide tailored regional solutions.
In addition, Mastercard recently announced a new alliance with Splitit to provide interest-free installments for e-commerce purchases.
Now while the pandemic expedited the consumer acceptance of digital payment solutions, the crisis spurred demand for the company’s offerings including cybersecurity and data analytics capabilities. These services enabled it to deliver distinctive solutions that are valued by a wide variety of customer segments, further aiding the company to diversify its revenues.
As the shift to a digital economy speeds up, demand for open-banking services rises. In Europe, the company’s open-banking operations which were unveiled last year and still continue to gain traction. The company added a few good fintech players like Modulr, DiPocket and Aion in addition to the recently-announced Tesco win. The acquisition of Finicity will further advance its open banking strategy in North America.
The company’s digital and multi-rail solutions are helping it leverage the key opportunities by providing customers with choice aplenty and the abilities required to address a wide range of payment flows in this fast-changing industry. The domain also houses other players like American Express Co. AXP, Visa Inc. V and Discover Financial Services DFS et al.
Mastercard carries a Zacks #3 (Hold), currently. In the past six months, the stock has gained 27% compared with its industry’s growth of 18.2%.
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