2 Key Value Drivers for MasterCard

| About: MasterCard Incorporated (MA)

MasterCard (NYSE:MA) is the second largest global payment solutions company in the world. It provides a variety of services to support the credit, debit and related card payments of over 24,000 financial institutions globally. MasterCard competes with Visa (NYSE:V) and American Express (NYSE:AXP). We have $293 price estimate for MasterCard, which is around 17% ahead of the current market price. Below we look at the two most important trends for MasterCard, which have significant impact on its stock price.

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Fast Growth in Electronic, Cashless Payment Solution

MasterCard provides a cashless payment solutions to customers worldwide. This includes payments done using credit cards, debit cards, and prepaid cards. The market for such transactions is growing at a rapid pace as growth in the emerging economies outpaces that of the US.

According to Euromonitor, card transactions including credit, debit and other payment cards, surged 158% between 2004 and 2009 to $1.8 trillion in the Asia-Pacific region, representing nearly a quarter of the global card volume. Such growth is expected to continue in the near future as more people and merchants adopt the usage of credit and debit cards. [1]

Mobile Payments on the Rise

Mobile payments continued its stellar growth in 2008 with total users expanding to 43.1 million users. The number of mobile payment users worldwide increased to 73.4 million in 2009, an increase of over 70%. Gartner predicts that the number of mobile payment users will reach more than 190 million in 2012, representing more than 3 percent of total mobile users worldwide and attaining a level at which it will be considered “mainstream”.

The overall market for mobile payments is expected to rise to over 204 million users in 2013 at an annual growth rate of 33%. Global mobile payments transactions are expected to rise to $110 billion in 2013, at an annual growth rate of 105%. [2]

These two emerging trends will boost the number of transactions processed by MasterCard from about 22.6 billion transactions in 2010 to about 57 billion transactions by the end of our forecast period.

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  1. Asia-Pacific region embraces use of credit and debit cards, USA Today
  2. Gartner Forecasts Rapid Growth in Mobile Payments Users, Payment News

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