A finger in every financial pie

Recent results from the $330bn card-processing giant were initially well received. Earnings eclipsed expectations and comments from the company revealed an encouraging pick-up in income from recovering cross-border travel.

The very recent emergence of the Omicron variant has inevitably dented travel as restrictions are reimposed. Still, the rebound in this key source of sales has been delayed, not cancelled. The company upped its dividend by 11% and announced an $8bn distribution to shareholders via a share-buyback programme.

Its recent partnership with cryptocurrency specialist Bakkt means Mastercard can offer its clients the ability to issue bitcoin payment cards and promote crypto-reward programmes. This is likely to be a bigger draw than old-style reward points and, crucially, engages younger consumers. Similarly, the launch of “Mastercard Installments” as a platform for building

BNPL offerings keeps the group at the forefront of financial trends while it simultaneously receives transaction fees from the efforts of newcomers in this field.

Mastercard is also moving into other new areas. Working with alternative-finance group Demica, for example, it is providing supply-chain financing to businesses.

The recent demise of Greensill Capital has unfairly cast a shadow over this activity.

It has in fact been an established practice for years and, if managed correctly, is a good opportunity given that

$125trn of payments flow between businesses each year.

Wall Street analysts have forecast annual sales and earnings growth of around 14% and 22% respectively on average over the next three years.

This is well ahead of the market as a whole. While the pandemic could reduce these numbers in the short term, Mastercard undoubtedly offers superior long-term growth prospects due to its dominant industry positioning, financial strength and technological innovation.