Mastercard is a payment processing company that enables electronic payments connecting global consumers, merchants, high-risk merchant account processors, and financial institutions. The company generates its revenue from domestic assessments, transaction processing, and cross-border volume fees, among many other avenues.
The services that Mastercard offers make up 35% of its revenue. The 118% increase in revenue over the past 5 years comes from cyber intelligence, data and services, and others that are offered separately or in partnership with the company’s payment network.
Currently, Mastercard’s payment network manages 110 billion transactions spanning 220 countries. Its service segment has 2,200 clients in over 70 global locations. Mastercard hired additional 500 new Data and Services employees as part of the management’s commitment to growing its service platforms.
Mastercard’s growth made the organization the second-largest payment processor and it is continuously making advancements through innovations in service markets and data analytics. These markets drive higher margins and at the same time initiate further growth than the current credit card market.
Mastercard and the Future
Mastercard saw a large increase to $6.2 billion in its service revenue in 2021. And this is expected to grow more since the company has joined leading industries such as Data Security, Identification Verification, and Cyber Security.
Its Test and Learn data analytics software has seen success and has yielded an estimate of 67% ROI since Mastercard has partnered with American-Irish credit card reporting company Experian and McDonald’s.
The strong growth is expected to continue with the integration of the personalized engagement platform Dynamic Platform. The integration will not only boost revenue but also improve customer engagement and loyalty services, fostering excellent customer service experiences.
Cyber security is another revenue-generating service that Mastercard can greatly benefit from. Given the need to protect sensitive data, personal information, and personally identifiable information from theft and damage, Mastercard could be the leading solutions provider in cyber security.
Advantages of Open Banking
Open banking is another driving force that can boost Mastercard’s revenue. Today, the open banking practice is increasingly utilized and is poised to reshape the banking industry.
The fast-growing open banking industry does not only help consumers but also lenders and small businesses. Financial services consumers can now securely share their data with other financial institutions to help find the best financial solutions and services for them.
On the other hand, lenders through open banking can have accurate information on consumers’ financial situation, risk level, and other factors that will help them come up with offers and more profitable loan terms.
Meanwhile, small businesses can benefit from open banking’s online accounting. Open banking is also beneficial in fraud and problem detection.
Mastercard’s growth is just the beginning. For the company to outpace its main competitor Visa, Mastercard must show continued effort to innovate in its services to incite higher margins, bring more customers, and increase profits.
Growth in data analytics, cyber security, and open banking services will get Mastercard more market share while retaining its current profit margin. With its strong and established programs and innovative services, Mastercard will be the future leader in payment processing.