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MarketScreener Homepage  >  Equities  >  Nyse  >  MasterCard    MA

MASTERCARD

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Mastercard : Investment Community Meeting

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09/12/2019 | 08:52am EDT

Mastercard

Investment

Community

Meeting

SEPTEMBER 12, 2019

Welcome

Warren Kneeshaw

Executive Vice President, Investor Relations

Agenda

8:30 a.m.

Welcome

Warren Kneeshaw

8:35 a.m.

Capitalizing on our opportunity

Ajay Banga

8:50 a.m.

Global Products & Innovation

Consumer - driving exceptional experiences

Michael Miebach, Jess Turner

Commercial - solutions for every business payment

Michael Miebach

At the forefront of real-time payments

Paul Stoddart

9:50 a.m.

Advancing trust and securing the ecosystem

Ajay Bhalla

10:05 a.m.

Data & Services as a force multiplier

Kevin Stanton

10:20 a.m.

Break

10:35 a.m.

Go-to-market updates

US

Craig Vosburg, Linda Kirkpatrick, Ron Shultz

Europe

Mark Barnett

Government engagement

Michael Froman, Tim Murphy

11:35 a.m.

Financial perspective

Sachin Mehra

11:55 a.m.

Q&A session

12:30 - 2:30 p.m.

Lunch and product showcase

12:45 - 2:00 p.m.

Breakout sessions -Europe, North America,

Regional: AP/LAC/MEA, B2B/Real-time payments,

Digital, Services

12:45 - 1:15 p.m.

Session 1

1:30 - 2:00 p.m.

Session 2

©2019 Mastercard.

3

Mastercard management presenters

Ajay Banga

Michael Miebach

Jess Turner

Paul Stoddart

Ajay Bhalla

Kevin Stanton

President and

Chief Product Officer

Executive Vice President,

President,

President, Cyber &

Chief Services Officer

Chief Executive Officer

North America Products

New Payment Platforms

Intelligence Solutions

& Innovation

Linda Kirkpatrick

Ron Shultz

Mark Barnett

Michael Froman

Timothy Murphy

Sachin Mehra

Executive Vice President,

Executive Vice President,

Division President,

Vice Chairman

General Counsel

Chief Financial Officer

Merchants and

New Payments Flows

U.K., Ireland, Nordics

and President,

Acceptance

& Baltics

Strategic Growth

Craig Vosburg

President,

North America

Warren Kneeshaw

Executive Vice President,

Mastercard.

Investor Relations

©2019

4

Additional breakout sessions hosts and management attendees

James Anderson

Gilberto Caldart

Dimitrios Dosis

Carlo Enrico

Michael Fraccaro

Sherri Haymond

Francis Hondal

Executive Vice President,

President, International

President, Advisors

President, Latin

Chief People Officer

Executive Vice President,

President,

Commercial Products

America & Caribbean

Digital Partnerships

Loyalty & Engagement

Jorn Lambert

Ling Hai

Ed McLaughlin

Carlos Menendez

Javier Perez

Blake Rosenthal

Raj Seshadri

Executive Vice President,

Co-President,

President, Operations

President,

President, Europe

Executive Vice President,

President, U.S. Issuers

Digital Solutions

Asia Pacific

& Technology

Enterprise Partnerships

Acceptance Solutions

Mastercard.

©2019

5

Forward looking statements

Today's presentation may contain, in addition to historical information, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements are based on our current assumptions, expectations and projections about future events which reflect the best judgment of management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by our comments today. You should review and consider the information contained in our filings with the SEC regarding these risks and uncertainties.

Mastercard disclaims any obligation to publicly update or revise any forward-looking statements or information provided during today's presentations.

Any non-GAAP information contained in today's presentations is reconciled to its GAAP equivalent in the appendices at the end of this presentation.

©2019 Mastercard.

6

Capitalizing on our opportunity

Ajay Banga

President and Chief Executive Officer

Our strategy

Grow

CORE

Credit

Debit

Commercial

Prepaid

Digital-physical convergence

Acceptance

Diversify

CUSTOMERS AND

GEOGRAPHIES

Financial inclusion

New markets

Businesses

Governments

Merchants

Digital players

Local schemes/switches

Build

NEW AREAS

Data analytics

Consulting

Marketing services

Loyalty

Cyber and Intelligence

Processing

New payment flows

ENABLED BY BRAND, DATA, TECHNOLOGY AND PEOPLE

©2019 Mastercard.

8

The transformation of Mastercard

$5.9T

2012

2018

$3.7T

11%

46%

Commercial

Product

diversification

Consumer credit

centric

Early fraud tools

+

Strong debit growth

+

Prepaid leadership

+

Fast-growing commercial

solutions

+Full suite of cyber solutions

9%

41%

50%

2 0 1 2

GDV1

43%

2 0 1 8

Consumer Debit & Prepaid

Consumer Credit

Growth in

services

New payment

flows

Managed services

Card benefits

Virtual cards

+

Data analytics

+

Loyalty platforms

+

Processing assets

+

ACH infrastructure and

application assets

+

Cross-border account to

account capabilities

Services ~26%

of 2018 revenues

Multi-rail network

Mastercard.

©2019

1. Gross dollar volume as reported; Mastercard branded only

9

Staying ahead of the trends

Initiatives

Trends

Digital-first solutions

Streamlined user experience

Multi-rail provider

Demand for choice

Drive innovation; foster developer ecosystem

Emergence of new technologies

Cyber & intelligence solutions; AI focused

Heightened cybersecurity threats

Data analytics solutions; privacy by design

Focus on data and privacy

Proactive engagement model

New players emerging

Support governments' digital ecosystems

Regulatory oversight and nationalism

©2019 Mastercard.

10

Significant opportunity across multiple payment flows

Market size by payment flow

Volume in $ trillions

$501

$125

$60

$2351

13

68

Cash & Check

48

ACH

38

Carded

139

84

2

2

17

2

7

302

282

Note: Figures may not sum due to rounding

PCE

B2B/G2B

P2P/B2C/G2C

TOTAL

  1. Includes $12T ofnon-purchase consumption
  2. Includes $13T ofnon-PCE card purchases in China

Sources: 2018 - Oxford Economics, Euromonitor International, Kaiser Associates, McKinsey Payment Data; Mastercard internal analysis

87%

13%

©2019 Mastercard.

11

Mastercard's multi-layered approach

Applications

P2M

  • Consumer Credit
  • Consumer Debit
  • Pay by Account
  • Point-of-salefinancing

B2B / G2B

P2P / B2C / G2C

SME, T&E, P-card, Fleet

Mastercard Send

  • Virtual cards
  • Mastercard Track
    • Trade Directory
    • B2B Hub
    • Business Payment Service

Services

Infrastructure

Prepaid

Bill Pay

Micro payments / Kionect

Mastercard Send Cross-border / Transfast

Cyber & Intelligence - fraud solutions, AI

Data & Services - Loyalty, Advisors, data analytics

Processing - Gateway, Prepaid Management

Cards, Real-time payments/ACH, Blockchain

©2019 Mastercard.

12

Creating shareholder value

Total Shareholder Return2

Mastercard

Currency-neutral

$1,500

S&P 500 Info Tech

$1,459

S&P 500

5-Year CAGR % through 20181

Net Revenue

15%

$1,000

EPS

23%

$500

$500

$353

$100

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

AUG

2019

  1. Excludes special items as defined in Appendix A. Refer to Appendix A fornon-GAAP reconciliation
  2. Source: Factset - based on initial investment of $100 on 9/1/09 through 8/30/19; MA stock price of $20.07 on 9/1/09 vs. $281.37 on 8/30/19

©2019 Mastercard.

13

Key takeaways

Significant

opportunity ahead

Providing choice to our customers

Anticipating trends

and building solutions

to meet evolving

requirements

Doing well

by doing good

Differentiating

with services

Executing on strategy

and well positioned for long-term growth

©2019 Mastercard.

14

Global

Products &

Innovation

Michael Miebach

Chief Product Officer

Jess Turner

Executive Vice President,

North America Products & Innovation

Our product strategy - differentiate with experience, choice, and relevance

Grow, Diversify, Build

Who

What

How

Diverse partners

Best-in-class experiences

Enable our partners

Consumers

Payment choice & flexibility

Multi-rail network

Businesses

Locally relevant solutions

New tech & business models

©2019 Mastercard.

16

One-stop shop across payment flows

Product solutions

PCE (P2M)

B2B/G2B

P2P/B2C/G2C

ConsumerCards(Credit, Debit, Prepaid, Tokenization, Secure Remote Commerce)

Bill Pay(RPPS Biller Directory,Transactis,Nets Corporate Services Bill Pay1)

Person-to-Person & Disbursement (Mastercard Send™)

Core Commercial(SME, T&E, P-Card, Fleet, Prepaid)

Accounts Payable Commercial(Virtual Cards,Mastercard Track™ incl.Payment on Delivery)

Acceptance(Contactless, QR, Tap on Phone, Vyze)

Real-Time Payments Applications (Pay by Account)

Cross-Border(Mastercard Send, Transfast)

Open Banking(Connect, Protect, Resolve, Nets Corporate Services Open Banking1)

Real-TimePayments Infrastructure(Regional Expansion incl.Nets Corporate Services1)

Market size

$50T2

$125T

$60T

Recent additions

$235T

2

Opportunity

1. Mastercard announced an agreement to acquire the majority of Nets' Corporate Services business, subject to regulatory and other conditions

Cards

Real-Time Payments / ACH

Blockchain

2. Includes $12T of non-purchase consumption

Sources: 2018 - Oxford Economics, Euromonitor International, Kaiser Associates, McKinsey Payment Data; Mastercard internal analysis

©2019 Mastercard.

17

Sustainable momentum with strong results

Global

1H19

2018 market

GDV1

share trend

Consumer Credit

+9%

Consumer Debit

+14%

Prepaid

+19%

Commercial2

+13%

Mastercard.

©2019

1.

Local currency growth versus 1H18. Gross dollar volume as reported; Mastercard branded only

18

2.

Includes commercial credit and debit

Consumer - driving exceptional experiences

Innovating to provide best-in-class consumer experiences

Heightened consumer

Delivered by our partners,

Focus ondigital commerce

expectations

enabled by Mastercard

within P2M

Personalization

>4x

Privacy

Global digital commerce

growth vs.total retail1

Digital-first

Pay by Account

Choice & flexibility

Mastercard.

©2019

1. Retail sales projected by eMarketer, 2019

20

Digital commerce - solving for digital-physical convergence

1

Digital transactions

are growing at an

unprecedented pace

2

3

Digital and physical continue to

Technology, in particular AI,

connectivity, IoT and new

come together in everyday life

interfaces, will have a profound

impact on commerce

©2019 Mastercard.

21

Tokenization - enabling all forms of digital payment

DEVICES

Tokenization

CREDENTIAL

ON FILE

Issuers

Consumers

COMMERCE

PLATFORMS

GUEST

CHECKOUT

Use cases

E-COMMERCE

IN-APP

NFC

QR

TEXT

VOICE

Interfaces

Merchants

©2019 Mastercard.

22

Secure Remote Commerce - reinventing guest checkout

Optimizing Secure Remote Commerce with Mastercard

  • Acceptancepowered bymerchants andpayment services providers
  • No static passwords
  • Interoperablewith tokenization and authentication standards
  • Integratedwith Mastercard technologies, enabling our partners to scaleand differentiate

Authentication

NuDetect

Mastercard

Mastercard

Consumer

Tokenization

Identity Check

Enrollment

TOKEN

MDES

Via issuers

(Token Connect)

©2019 Mastercard.

23

Mastercard Digital Wellness - serving today's digital-first customer

Built on standards

Powered by Mastercard

EMVCo Secure Remote Commerce

Mastercard Secure Remote Commerce

EMVCo Tokenization

Mastercard Digital Enablement Service (MDES)

EMVCo 3DS 2.0

NuData

Cyber Readiness Institute

Global Cyber Alliance

PROVIDES MERCHANTS EASY ACCESS TO OUR PRODUCTS & SERVICES

©2019 Mastercard.

24

Debit Mastercard - enabling digital commerce

Upgrading debit portfolio

Driving consumer experience with Debit Mastercard

Debit card mix1

Consistent e-commerce and mobile-commerce experience

AP

LAC

Maestro

EUR

Debit

Mastercard

2016

Q2 2019

  • Digital wallet enabled for contactless andin-app use

Global acceptance

DMC Debit Yield

vs Maestro

2X*+

Greater access to value-added services

Yielding results

capturingup to2xConsumer spend with Debit Mastercard2

©2019 Mastercard.

1.

Card mix excludes Venezuelan cards

25

2.

When converted to Debit Mastercard from Maestro

Prepaid - innovating to grow our leading position

Distributing through new, digital-first customers

Empowering new consumers

Gig

Digital

Fintechs

Underserved

Vertical

economy

"giants"

expansion

Use case

Real-time

Digital wallets

Digital

Mobile banking

expansion

payroll

& marketplaces

banking

ENABLING OUR DIVERSE SET OF PARTNERS THROUGH

INTEGRATED, END-TO-END PLATFORMS

©2019 Mastercard.

26

Bill Pay - platform to address additional consumer flows

Targeting global bill pay opportunity and improving experience across the ecosystem

Consumer &

Small Business

"I can view all my bills in one Textapp, andgoespay howhereI want"

Bank

Mastercard Bill Pay

"Customers are spending

Pay in-app, in real time

more time in our app"

API integration

Payment choice

Dynamic messaging

User directory

Biller

"It's cheaper and more efficient to process bill payments"

Enabled by…

RPPS

Biller Directory

1

Mastercard.

©2019

1. Mastercard announced an agreement to acquire the majority of Nets' Corporate Services business, subject to regulatory and other conditions

27

Commercial - solutions for every business payment

Comprehensive commercial card solutions

Small business cards

Travel & Purchasing cards

New capabilities, e.g.

Platform-based services, e.g.

Mastercard Receipt Management

Smart Data

Efficiency and simplicity for

Smarter, safer cards for

small & medium enterprises

corporates & governments

Virtual cards

Supplier experience enhancements, e.g.

Straight-Through Processing

Digitized payables &

receivables

©2019 Mastercard.

29

Addressing pervasive pain points in accounts payable

A significant B2B opportunity

Market size by payment flow

Volume in $ trillions

60

~$110T

Accounts payable

flowsprimarily

2351

addressable with

125

account-based

payments

501

Accounts payable pain points

  • Lack of visibilityinto supplier payment preference and acceptance conditions
  • Managing cash flowdue to inability to enforce payment terms
  • Limited remittance dataassociated with a payment makes reconciliation difficult
  • Limited automationdue to lack of established common standards

PCE

B2B/G2B P2P/B2C/G2C

TOTAL

©2019 Mastercard.

1. Includes $12T of non-purchase consumption

30

Sources: 2018 - Oxford Economics, Euromonitor International, Kaiser Associates, McKinsey Payment Data; Mastercard internal analysis

Mastercard Track- modernizing the B2B ecosystem

Addressing pain points in B2B commerce

Mastercard Track architecture

Tackling systemic challenges in B2B payments

Global

Multi-rail

Solving complexities adjacent to payments

Data-rich

Vast improvements to the way buyers and

suppliers conduct trade at scale

Scale through partners

©2019 Mastercard.

31

Mastercard Track- expanding our suite of solutions

Existing…

Features

Benefits

Mastercard Track

Over 200 million business entities

Supplier risk management

Trade Directory

170 countries

Mastercard Track

Accounts payable outsourcing service Accounts payable automation

B2B Hub

for mid-market customers

Distributed by customer bank

New…

Mastercard Track

Business Payment Service

©2019 Mastercard.

32

Mastercard TrackBusiness Payment Service - launching an open-loop commercial payment service

Buyers

Buyer agents

Large

Banks

Mid-market

Specialty players

Small

B2B networks

Cards

Mastercard Track

Business Payment Service

  • Buyer/supplier directory
  • Supplier payment rules
  • Rich remittance data

Real-time payments / ACH

Supplier agents

Suppliers

Banks

Large

Specialty players

Mid-market

B2B networks

Small

Blockchain

SINGLE CONNECTION ENABLES ACCESS TO MULTIPLE PAYMENT TYPES, GREATER CONTROL, AND RICHER DATA TO OPTIMIZE B2B TRANSACTIONS FOR BUYERS AND SUPPLIERS

©2019 Mastercard.

33

Payment on Delivery - use case on real-time payment rails

Buyer

Buyer agent

Local

Restaurant's

restaurant

bank

"I can manage all of my invoices and payments electronically"

Mastercard Track

Supplier agent

Supplier

Business Payment Service

Supplier payment rules

Wholesaler's

Liquor

ERP vendor

wholesaler

Rich remittance data

"My driver no longer has to wait for

payment and can make more deliveries"

Real-time payments / ACH

©2019 Mastercard.

34

Mastercard Send- fast, secure B2C disbursements

Features

Instant, scalable payments

Trusted services & security

Benefits

Partner examples

  • Faster funds availability for recipients

Superior user experience drives loyalty and engagement

  • Avoidance of check and wire fees for payers

Global reach

Transparent payment status

©2019 Mastercard.

35

At the forefront of real-time payments

Paul Stoddart

President, New Payment Platforms

The real-time ACH infrastructure opportunity is expanding

Enabled by Mastercard

Other planned or implemented

©2019 Mastercard.

37

Our full-service approach

Infrastructure

Underlying payment

technology and rails

Managed services & hubs

Directory

Applications

End-user solutions to

P2M

B2B / G2B

P2P / B2C / G2C

connect more senders

and recipients

Services

Capabilities that enhance real-time payments and facilitate adoption

Consulting

Data analytics

Fraud solutions

©2019 Mastercard.

38

Nets1provides complementary value

1

Infrastructure

Larger markets

Smaller markets

Extended global coverage

Sophisticated &

Fast deployment

Industry-leading solutions

customized

Region-specific capabilities

US Bill Pay (C2B)

Europe Bill Pay

Proven applications

Applications

(e.g. Pay by Account)

Transactis

E-invoicing & new billing

New flow penetration

Pay by Account (P2M)

platform

(e.g. bill pay)

Extensive roadmap

Suite of services &

Services

analytics

Additional market access

Broad opportunity to sell

Mastercard.

Can be provided across

suite of services & analytics

technologies

©2019

1. Mastercard announced an agreement to acquire the majority of Nets' Corporate Services business, subject to regulatory and other conditions

39

Infrastructure - real-time connectivity, worldwide reach

Live or signed in

11/50Top GDP markets…

…representing

30%+Global GDP2

1

…andsupporting

60%+World population

©2019 Mastercard.

1.

Mastercard announced an agreement to acquire the majority of Nets' Corporate Services business, subject to regulatory and other conditions

40

2.

World Bank national accounts data, and OECD National Accounts data files

Applications - addressing a range of use cases

P2M

B2B / G2B

P2P / B2C / G2C

Mastercard Track

1Business Payment

Applications

Service

Pay By Account

Bill Pay Exchange

Send

Partners

Built on real-time payments infrastructure

Mastercard.

©2019

1. Mastercard announced an agreement to acquire the majority of Nets' Corporate Services business, subject to regulatory and other conditions

41

Extending our cross-border capabilities

Providing our partners broad reach through a single API connection

Consumers

Consumers

Businesses

125+ countries

Businesses

Banks

Banks

150 currencies

300+ banks &

Governments

financial institutions

Governments

ENABLED BY CARDS, REAL-TIME PAYMENTS/ACH AND BLOCKCHAIN

©2019 Mastercard.

42

Services - scaling through new flows

Financial crime solutions

Reporting & analytics

Consulting

Prevent

Report

Strategy

Trace

Benchmark

Optimization

Account alert

Predict

Financial crime

Verify identity

Classify

Risk & resiliency

>100 real-time payment services contracts executed since 2015

©2019 Mastercard.

43

Global

Products &

Innovation

Conclusion

Michael Miebach

Chief Product Officer

Future frontiers - emerging commerce ecosystems

Beyond

payments

extension

New payment

Strategy

services

New payment

flows

Card services

Card

payments

Frontiers

©2019 Mastercard.

45

Key takeaways

Building innovative

Enabling scalable

Supporting all forms

products for our

digital solutions

of payment with our

diverse partners and

multi-rail network

their customers

Powering choice, convenience and security

©2019 Mastercard.

46

Advancing trust and securing the ecosystem

Ajay Bhalla

President, Cyber &

Intelligence Solutions

Rapidly changing world presents new opportunities & risks

Digital convergence & IoT

Exponential growth in data

Weak built-in security

Concerns over data security and privacy

Age of AI

Digitally native generation

Disrupting industries and crime

Expects experience comes with security

©2019 Mastercard.

48

Cybersecurity needs of our stakeholders are evolving

Consumers

Impacted bydata breaches - looking forcontrol andtrusted brands

Merchants

Protecting againstcyber attacks whileoptimizing customer experience

Businesses

Seeking expertiseand solutionsto mitigate threats and reduce risk

Financial

Increasingly targeted by cyber criminals;investing heavily to stay secure

Institutions

Governments

Introducing and enforcing cyber lawsto protect critical infrastructure

Mastercard.

©2019

49

A multi-layered strategy that advances trust

Prevent

Identify

Detect

Experience

Secure the physical

Identify genuine

Stop cyberattacks,

Physical and digital

world, the digital

consumers and

reduce fraud

experiences that

world and the IoT

devices

grow commerce

Artificial Intelligence

Powers products and enables customers

Governments

Banks

Merchants

Consumers

Cards

Real-time payments

Beyond payments

©2019 Mastercard.

50

Securing the ecosystem and unlocking new opportunities

Prevent

EMV chip Digital EMV

Recent successes

88%1

Card transactions

chip enabled

Future focus

Securing theInternet of Things

Identify

Detect

SecureCode

Identity Check

Safety Net Decision Intelligence

3.5 billion2

SecureCode

authentications

$10 billion3

Saved in attempted

cyber attacks

Collaborating on Digital Identity

Detectingcyber vulnerabilities

automatically

Contactless

22%4

Biometrics

Transactions are

Experience

contactless

  1. As of July 2019
  2. July 2018 - June 2019
  3. Mastercard estimates July 2018 - June 2019
  4. As ofyear-end 2018; contactless transactions as a percentage of card-present transactions, excluding Venezuela

Embedding AIfor every solution

©2019 Mastercard.

51

Growth strategy accelerated by acquired capabilities

Internet

Intelligence

Digital

of Things

everywhere

experience

ethoca

Behavioral biometrics

Globally scalable

Collaborative platform

Block bots/synthetic ID

Ultra high speed

Eliminate chargebacks

Trust devices in the IoT

Unique proprietary IP

Quick resolution

©2019 Mastercard.

52

Key takeaways

Ensuring

Creating sources

Delivering new

ecosystem security

of differentiation

sources of growth

©2019 Mastercard.

53

Data & Services as a force multiplier

Kevin Stanton

Chief Services Officer

Data & Services - end-to-end value proposition

Advice

Execution

Data

Analytics &

Consulting

Test &

Loyalty &

Marketing

Labs as

Management

Insights

Learn

Rewards

Services

a Service

Fully plugged into other Mastercard capabilities

Differentiated by Mastercard data, brand, network

Best-in-class delivery efficiency

Recurring-revenue focused

AI-enabled

Mastercard.

©2019

55

Our strategy

Grow

CORE

Credit

Debit

Commercial

Prepaid

Digital-physical convergence

Acceptance

Diversify

CUSTOMERS AND

GEOGRAPHIES

Financial inclusion

New markets

Businesses

Governments

Merchants

Digital players

Local schemes/switches

Build

NEW AREAS

Data analytics

Consulting

Marketing services

Loyalty

Cyber and Intelligence

Processing

New payment flows

ENABLED BY BRAND, DATA, TECHNOLOGY AND PEOPLE

©2019 Mastercard.

56

Mastercard strategy - drill-down on services

Incremental revenue opportunity

Build

Fast growing

Pursuing recurring revenues

Diversify

New geographies

New industry verticals

Differentiate in deals

Grow

Portfolio performance

Embedded

Mastercard.

©2019

57

Diversify - case studies

New geographies |Latin America

  • Retail, financial services behemoth
  • 100+ locations, ~3M cards
  • Portfolio conversion to spur growth
  • Leveraged
    • Marketing Services
    • Consulting Services
    • Analytics
    • Labs as a Service
    • Test & Learn
  • Developedmass-market footprint in market

New industry verticals |Healthcare

  • Large healthcare network
  • 1 of ~600 in the US alone
  • Optimize revenue management, marketing,clinical-care quality
  • Leveraged
    • Test & Learn platform
    • Industry-specificveneer
    • Scalable
    • Beachhead for other services and core
  • Access to new customers and revenue pools

©2019 Mastercard.

58

Grow - case studies

Differentiate in deals |Australia

  • 9M+ customers
  • Improve spend and engagement
  • Holistic solution leveraging Analytics, Consulting Services, Marketing Services, Test & Learn, andLabs-as-a-Service
  • 2M+ cards converted, key in winning deal

Portfolio performance |Italy

  • 400,000 cards converted
  • Improve activation, launch installments
  • Leveraged Consulting, Analytics, Marketing Services
  • 19% uplift in activation

Embedded |UK

  • 14.5M customers
  • Embedded
    • Loyalty: Pay with Rewards, LoungeKey, Boingo Wifi
    • Marketing Services
    • Consulting Services
    • Security Services

©2019 Mastercard.

59

Key takeaways

Fast-growing,

Accelerating entry into

Core growth

incremental revenue

new markets and

force multiplier

opportunity

verticals

©2019 Mastercard.

60

Go-to-market update: US

Craig Vosburg

President, North America

Linda Kirkpatrick

Executive Vice President, Merchants and Acceptance

Ron Shultz

Executive Vice President, New Payments Flows

The US market has significant room for growth

2018 market size by payment flow

Volume in $ trillions

$141

$22

$19

$551

5

13

16

Cash & Check

ACH

8

Carded

12

27

3

1

2

7

5

PCE (P2M)

B2B/G2B

P2P/B2C/G2C

TOTAL

Largest Mastercard market(2018 data)

% total revenue

33%

% total GDV

30%

GDV growth

10%

PCE growth

5%

©2019 Mastercard.

Note: Figures may not sum due to rounding

1. Includes approximately $4T in non-purchase consumption62Source: 2018 - Oxford Economics, Euromonitor International, Kaiser Associates, McKinsey Payment Data and Mastercard internal analysis

Executing against five strategic priorities to drive growth

Expand product

Grow

Win in

Scale

Address new

distribution

acceptance

digital

services

payments flows

Growing market share

Increasing quantity and

Partnering to enable

Delivering added value

Capturing B2B, P2P,

in all products

quality of acceptance

seamless and secure

to customers

and B2C flows

end points

digital payments

GROW

DIVERSIFY

BUILD

©2019 Mastercard.

63

Three drivers of market share growth

Enhance value propositions

Optimize portfolios

Win new business

Develop compelling core value

Drive growth by increasing:

propositions for consumers and

Cardholder acquisitions

small businesses:

Activation

Spend

Transaction approval rates

©2019 Mastercard.

64

Winning in co-brand

Mastercard Differentiators

Our

Differentiated

Products &

Priceless

Partnership

Data & Analytics

Innovation

Experiences

©2019 Mastercard.

65

Expanding acceptance in a safe and seamless way

US network reach

48M

37M

30M

20M

8M

8M10M 11M

2014 2017 2018

Incremental network endpoints

Traditional acceptance locations

Network upgrades

EMV

~65%1

US volume EMV enabled

Contactless

~60%1

US card-present volume originates at contactless-enabled merchants

©2019 Mastercard.

1. As of June 2019

66

Source: Kaiser Associates and Mastercard analysis

Diversifying acceptance solutions to fuel partner success

Enhancing

Driving

Delivering

innovation

Enabling

next gen

value-added

at the

new flows

security

services

point of sale

©2019 Mastercard.

67

Partnering to enable and secure the digital ecosystem

Securing and

Scaling

Enabling

streamlining

card-on-file

digital

guest checkout

tokenization

wallets

EXCEPTIONAL CUSTOMER EXPERIENCE

LEADING SAFETY AND SECURITY

©2019 Mastercard.

68

Value-added services as a differentiator in the US

Data &

Used by over 700customers

Services

Over 60%of top co-brand issuers use APT

Loyalty &

Over 70 millionaccounts managed on loyalty platform

Innovation

Over 40innovation partnerships conducted in 2019

Safety &

Over 1B1transactions handled daily

Security

Tens of millions2of dollars in fraud losses saved annually

DIFFERENTIATING THE CORE BUSINESS

DRIVING INCREMENTAL REVENUE

©2019 Mastercard.

1.

Global transactions, including payment and non-payment transactions, on Decision Management Platform

69

2.

Estimate based on Mastercard analysis

Momentum in capturing new payment flows

Examples

Virtual cards

Single use card primarily for B2B /

supplier payments

Mastercard

Domestic and cross-border

Send

disbursement

Mastercard Track

Real-time buyer/supplier receipt

payment on delivery

billing and payment platform

Bill Pay Exchange

Digital consumer bill presentment and

payment platform (includes real-time

payment option)

Progress

Market leader in high growth segment

Broadening applications in P2P, B2B, and B2C payments

Launching in Q4

Launching in Q4

Mastercard.©2019

70

Key takeaways

Significant

Increasing market

Expanding through

value-added services

opportunities for

share and accelerated

and by capturing new

ongoing growth

revenue growth

payment flows

71

Go-to-market update: Europe

Mark Barnett

Division President,

U.K., Ireland, Nordics & Baltics

Europe - a diverse and dynamic region with strong growth

2018 market size by payment flow

Volume in $ trillions

$131

$31

$16

$601

2

14

11

Cash & Check

ACH

5

Carded

25

42

4

3

4

4

PCE (P2M)

B2B/G2B

P2P/B2C/G2C

TOTAL

Note: Figures may not sum due to rounding

1. Includes approximately $2T in non-purchase consumption

2. Data for 2018

3. 2018 gross dollar volume as reported; Mastercard branded only. Growth rates on a local currency basis

Source: 2018 - Oxford Economics, Euromonitor International, Kaiser Associates, McKinsey Payment Data, Mastercard internal analysis

European region

Population

900M

# of countries

56

# of languages

24

PCE growth2

6%

Mastercard Europe

% total GDV3

29%

GDV growth3

19%

  • Market share increasing

over the last 3 years

©2019 Mastercard.

73

New market forces are changing the payments landscape

Traditional

E-Commerce

PSD2

Domestic

Digital-only issuers

schemes

GDPR

New and

Frictionless

evolving

Nationalism

experiences

New

opportunities

Regulation

Digitalization

Competition

and challenges

©2019 Mastercard.

74

Making Open Banking more secure, efficient and scalable

Open Banking Ecosystem

Solutions for Third Parties

Third Parties

Financial Institutions

Open Banking Connect

Solutions for

Financial Institutions

Open Banking Protect

Ecosystem (two-sided) Solutions

Open Banking Resolve

©2019 Mastercard.

75

We have a clear strategy

Grow Diversify Build

Everyday spend

Partner with governments

Real-time payments to

Cross-border and e-commerce

Deepen engagement

penetrate new payment flows

Acceptance

with merchants

Open banking solutions

Continue to lead with fintechs

Increased B2B payments

Digital roadmap

Strengthen local presence

penetration

ENABLED BY OUR SOLUTIONS SELLING APPROACH

©2019 Mastercard.

76

The UK: a case study

Product lines

Consumer

Business

Core Consumer Card Solutions(Credit, Debit, Prepaid, Link)

Core Commercial Solutions (SME, T&E,P-Card)

Accounts Payable Commercial (Virtual cards)

Person-to-Person(Mastercard Send/ Send to Account / PayM)

Bill Pay(Overlay service)

Real-TimePayments(Faster Payments, Pay by Bank, MITS, Open Banking)

Acceptance(Contactless, QR, PIN on Glass)

Banks

Fintechs

New payment flows

©2019 Mastercard.

77

Key takeaways

Strong

growth potential

Multi-rail solutions providing choice to customers

Digital and Open

Banking solutions to address market needs

Focused strategy

to drive

long-term growth

©2019 Mastercard.

78

Go-to-market update: Government engagement

Michael Froman

Vice Chairman and President, Strategic Growth

Tim Murphy

General Counsel

Engagement with government is critical

Sizable business

opportunity with flows still based in cash and checks…

…and strong interest in consulting services

andnew technologies

Becoming an

indispensable partner…

…complementing our efforts to

mitigate nationalism

Social benefits, pensions and payrolldisbursed by governments to citizens

Government spend with business, including procurement and travel

Indirect channelsof payments, like public transit

©2019 Mastercard.

Source: McKinsey Payment Data and Mastercard analysis

80

Our government approach focuses on three priorities

Helping governments

Promoting

Supporting

deliver services

inclusive growth

governments in

efficiently

advancing their

digital ecosystems

©2019 Mastercard.

81

Government engagement mitigates nationalism

Nationalism is not new and is here to stay...

…but is a challenge we've proven we can navigate…

  • Strong growth in nationalism markets
  • Partnerships with national champions

…with some important new trends…

  • Evolving approach to trade presents challenges and opportunities
  • On-soilswitching mandates
  • Data localization requirements

…and Mastercard is responding proactively:

  1. Enhanced government coverage
  2. Leveraging new capabilities in ACH
  3. Focusing on "showing up local"
  4. Investing in public policy

©2019 Mastercard.

82

Our commitment to sustainability and commercially sustainable social impact

Environmental

Social

Governance

Environmental

Inclusive

Inspired

stewardship

growth

workforce

Ethical and responsible standards

Financial

Inclusive economic

Future of

Data

security

development

workers

for good

©2019 Mastercard.

83

Financial perspective

Sachin Mehra

Chief Financial Officer

©2019 Mastercard.

Our business has diversified

2012

2018

Product diversification -

50%

57%

debit/prepaid/commercial mix1

Services as a % of net revenue

16%

26%

% of net revenue generated outside of the US

61%

67%

% of total transactions that we switch

49%

56%

Contactless transactions2

1%

22%

©2019 Mastercard.

1.

Debit/prepaid/commercial share of total GDV volumes

85

2.

Contactless transactions as a percentage of card-present transactions, excluding Venezuela

2019 business drivers

As-reported

Switched

Growth (local currency)

Q1

Q2

Q2

Aug QTD

Worldwide GDV1

11%

13%

15%

15%

US GDV

7%

10%

12%

12%

Rest-of-world GDV

13%

14%

18%

18%

Switched transactions2

17%

18%

18%

19%

Cross-border volume2

13%

16%

16%

16%

©2019 Mastercard.

1.

Gross dollar volume as reported; Mastercard branded only

86

2.

Growth rates normalized to eliminate the effects of differing switching days between periods

2019 full-year financial outlook - reiterated

Netrevenue1

Low-teensgrowth

Operating expenses1,2

High-end of high-single-digitsgrowth

Effective tax rate

~19%

©2019 Mastercard.

1. 2019 forecast versus 2018 results (currency-neutral, excluding acquisitions). Refer to Appendix B for reconciliation of non-GAAP measures

87

2. Excluding special items as defined in Appendix B. Refer to Appendix B for reconciliation for non-GAAP measures

Investment priorities

Grow

CORE

Network

Acceptance

Digital:

Tokenization,

Secure Remote Commerce

Commercial

Diversify

CUSTOMERS AND

GEOGRAPHIES

Digital players

Emerging markets:

India, China,

MEA, LAC

Governments

Build

NEW AREAS

B2B

Real-time payments

and applications

Cross-border B2B and P2P

Cyber solutions Data analytics Open banking

Mastercard.

TO SUPPORT GROWTH OVER THE SHORT, MEDIUM AND LONG TERM

©2019

88

Economic model of new applications

Direct

Indirect

Initiative

Per transaction

Ad valorem

Card GDV /

Transactions

Bill Pay

Pay by Account

Point-of-sale financing

Account-to-accountcross-border

(FX related)

Mastercard Track

Ethoca

Mastercard.

©2019

89

Capital planning priorities

Strong balance sheet

Preservestrong balance sheet, liquidity and

credit ratings

Long-term business growth

Investin strategy-led organic and inorganic

opportunities

Return excess capital to

Returnexcess capital with bias toward

shareholders

share repurchases

Capital structure

Migrateto a more normalized mix of

debt and equity over time

Mastercard.

©2019

90

Return of capital

Share repurchase Dividends

$3.9

$0.5

$ billion

$3.4

2014

$6.0

$6.0

$4.7

$1.0

$1.0

$36+ billion1

$4.2

$4.3

$0.7

$0.8

$0.9

returned to

shareholders

$4.9

$5.0

since IPO

$3.5

$3.5

$3.8

2015

2016

2017

2018

AUG 20192

©2019 Mastercard.

Note: Table may not sum due to rounding

  1. Includes $7.5 billion prior to 2014
  2. Year-to-datethrough August 30, 2019

91

Long-term revenue growth potential

PCE

Revenue

growth

$50T1

potential

Market

Services

~5% annual growth2

Volume /

4-5% annual secular shift2

Transactions

Mix

opportunity

Pricing

Low

Share

double-digits

to mid-teens

New flows

$185T

B2B/G2B: $125T

B2C/P2P/G2C: $60T

Mastercard.

©2019

1. Includes $12T of non-purchase consumption

2. Currency-neutral, adjusted for available market92Sources: 2018 - Oxford Economics, Euromonitor International, Kaiser Associates, McKinsey Payment Data; Mastercard internal analysis

2019 - 2021 performance objectives1- reiterated

Net revenue

Low-teens

CAGR %

Annual operating

Minimum 50%

margin

EPS CAGR %

High-teens

Highlights

  • Grow core consumer and commercial solutions, build acceptance and increase share
  • Expand service offerings and grow them faster than the core
  • Invest in B2B / new payment flows
  • Assumes annual PCE growth of4-5% (i.e. no significant downturn)

©2019 Mastercard.

1. All figures are on a currency-neutral basis. Amounts exclude impact of acquisitions made after the beginning of 2019, special items (as defined in Appendix C) and gains/losses on equity investments. Refer to Appendix C for reconciliation of non-GAAP

measures

93

Final thoughts

Significant

opportunity ahead

Executing on

strategy

Investments focused

Offering broad set of

on key growth

applications, services and

opportunities

infrastructure to meet

market requirements

Continuing to return

Well positioned for

excess capital to

long-term growth

shareholders

©2019 Mastercard.

94

Appendices

Appendix A - non-GAAP reconciliation

($ in millions, except per share data)

5-Year

CAGR

Currency-

2013

2014

2015

2016

2017

2018

CAGR

neutral 1

Net revenue

$

8,312

$

9,441

$

9,667

$

10,776

$

12,497

$

14,950

12%

15%

Operating income - as reported

$

4,503

$

5,106

$

5,078

$

5,761

$

6,622

$

7,282

10%

13%

Special items 2

95

-

140

117

182

1,128

Adjusted operating income

$

4,598

$

5,106

$

5,218

$

5,878

$

6,804

$

8,410

13%

16%

Operating margin - as reported

54.2%

54.1%

52.5%

53.5%

53.0%

48.7%

Special items 2

1.1%

-%

1.4%

1.1%

1.4%

7.5%

Adjusted operating margin

55.3%

54.1%

54.0%

54.5%

54.4%

56.2%

GAAP diluted EPS

$

2.56

$

3.10

$

3.35

$

3.69

$

3.65

$

5.60

17%

21%

Special items 2,3

0.05

-

0.08

0.08

0.92

0.89

Non-GAAP diluted EPS

$

2.61

$

3.10

$

3.43

$

3.77

$

4.58

$

6.49

20%

23%

Note: Table may not sum due to rounding

  1. Adjusted for both the translational and transactional foreign currency impact Special items:
  2. Impact of the following: 2013: U.S. Merchant Litigation Settlement of $95 millionpre-tax ($0.05 per diluted share); 2015: the termination of the U.S. employee pension plan of $79 million pre-tax ($0.04 per diluted share) and U.K. Merchant Litigation Provision of
    $61 million pre-tax ($0.04 per diluted share); 2016: the U.K. Merchant Litigation Provision of $117 million pre-tax ($0.08 per diluted share); 2017: Deconsolidation of Venezuela subsidiaries of $167 million pre-tax ($0.10 diluted share) and Canadian Merchant
    Litigation Provision of $15 million ($0.01 per diluted share); 2018: litigation provisions of $1,128 million pre-tax ($0.96 per diluted share) related to a fine by the European Commissions of $654 million, U.S. merchant class litigation and the filed and anticipated opt- out U.S. merchant cases of $237 million, and settlements with U.K. and Pan-European merchants of $237 million.
  3. Impact of the following: 2017: net tax expense from related to the Transition Tax of $873 million ($0.81 per diluted share) and 2018: net tax benefit of $75 million (($0.07) per diluted share) comprised of a $90 million benefit related to the carryback of foreign tax credits due to transition rules, offset by a net $15 million expenses related to thetrue-up of the 2017 transition rules.

©2019 Mastercard.

96

Appendix B - non-GAAP reconciliation

2019 full-year financial outlook

2019 vs. 2018

Increase / (decrease)

Net revenue

Operating expenses

Forecasted growth - U.S. GAAP1

High end of low double-

(Mid single-digits)

digits

Special items2

**

16%

Foreign currency3

2%

1%

Acquisitions 4

0 - (1)%

(3)%

Non-GAAP growth, excluding acquisitions

Low-teens

High end of high single-

digits

** Not applicable.

  1. U.S. GAAP - 2019 forecast versus 2018 reported results
  2. Impact of special items related to 2018 provisions for litigation ($1,1128Mpre-tax)
  3. Impact of foreign currency calculated by remeasuring the future period's results using the current period's exchange rates for both the translational and transactional impacts on operating results
  4. Impact of 2019 acquisitions which closed through the end of August. This excludes the pending acquisition of the majority of Nets' Corporate Service business, which is subject to regulatory and other conditions

©2019 Mastercard.

97

Appendix C - non-GAAP reconciliation

Long-term performance objectives

2019-2021

3-Year CAGR

Increase/(decrease)

Net revenue

EPS1

GAAP

Low-teens

Low to mid 20s

Special items2

**

(6)%

Acquisitions3

(0-1)%

0%

Foreign currency4

1%

1%

Non-GAAP - currency-neutral

Low-teens

High-teens

** Not applicable.

  1. Based on 2018 pro forma EPS utilized to measure3-year diluted EPS target performance (2019-2021). Refer to Appendix D
  2. Impact of special items relates to litigation provisions ($0.96 per diluted share), offset by a net tax benefit ($0.07 per diluted share)
  3. Impact of 2019 acquisitions which closed through the end of August. This excludes the pending acquisition of the majority of Nets' Corporate Service business, which is subject to regulatory and other conditions
  4. Impact of foreign currency for both the translational and transactional impacts

©2019 Mastercard.

98

Appendix D - non-GAAP reconciliation

2018 full-year EPS

2018 Diluted Earnings Per Share GAAP

$5.60

Litigation provisions2

0.96

Tax act3

(0.07)

2018 Diluted Earnings Per Share Non-GAAP

$6.49

** Not applicable.

  1. Full-yearEPS utilized to measure 3-year EPS target performance (2019-2021)
  2. Impact of the 2018 provisions for litigation ($1,008M after tax)

3. Impact of the 2018 tax benefits ($75M)

©2019 Mastercard.

99

Disclaimer

MasterCard Inc. published this content on 12 September 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 September 2019 12:51:03 UTC

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Financials (USD)
Sales 2019 16 837 M
EBIT 2019 9 648 M
Net income 2019 7 909 M
Finance 2019 7 464 M
Yield 2019 0,46%
P/E ratio 2019 35,0x
P/E ratio 2020 30,1x
EV / Sales2019 15,9x
EV / Sales2020 13,7x
Capitalization 275 B
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Technical analysis trends MASTERCARD
Short TermMid-TermLong Term
TrendsNeutralNeutralBullish
Income Statement Evolution
Consensus
Sell
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Mean consensus BUY
Number of Analysts 39
Average target price 307,21  $
Last Close Price 270,63  $
Spread / Highest target 21,2%
Spread / Average Target 13,5%
Spread / Lowest Target -12,8%
EPS Revisions
Managers
NameTitle
Ajaypal S. Banga President, Chief Executive Officer & Director
Richard Neil Haythornthwaite Chairman
Edward McLaughlin President-Operations & Technology
Sachin J. Mehra Chief Financial Officer
David R. Carlucci Independent Director
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