Is MasterCard Still Priceless?
Financial Services

Is MasterCard Still Priceless?

Posted on 6/8/2021

MA

Plan Summary

2.9

risk/reward ratio
level 1

2.1

risk/reward ratio
level 2

1.2

risk/reward ratio
level 3




International Outlook
MasterCard is a global company with locations in over 210 countries. In 2016, 31% of MasterCard's gross net revenue came from the United States while $4.3 billion worth of its total revenue came from outside the US. Its first-quarter earnings with net revenue for the well-known credit card firm reported $4.16 billion, up 4% from the same time last year. This was supported by an increase of 8% in retail dollar volume and a 10% increase in purchase value during that time period as well. However, MasterCard’s adjusted net profits dropped by 6% to $1.7 billion, or $1.74 a share, though this was an increase by 8% due to increased costs incurred last year.


Investment in Technology
MasterCard's investments in the changing world of retail and international payments seem to be paying off, with billions of dollars invested over the last two years alone. However, while they may have been on top at first as the COVID-19 pandemic accelerated change towards cashless transactions worldwide, recent signs offer caution to this investment prospect unless they pivot successfully to other new technology. 

One of those is Wirex, the first crypto company to be awarded a principal membership license by MasterCard. Through programs like its Crypto Card Partner Program, Wirex will explore how laws might change and how it can best help customers use their cryptocurrency.


Increased Competition
The Visa and MasterCard duopoly is prominent in the money processing industry. Visa, however, trades at a much higher rate than MasterCard. This season's research show that Visa has a market capitalization index of about $508 billion and an overall purchase value of $11.6 trillion with 335 million cards being issued this year alone. MasterCard, meanwhile, has a market capitalization index of $359 billion and an overall purchase value is expected to be at about $12.75 trillion with 288 million cards issued this year. 


In addition, the demographics suggest the Millennials and Generation Z use less credit cards than previous generations making it more challenging to secure market share with new technology.

The intersection of opportunity
Being an international conglomerate in the financial industry, MasterCard has enjoyed a significant tailwind for the past 12 months. While they may not be positioned in China, they are not one to back down from innovating a comparable solution to compete in the marketplace.

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