14 FORTUNE DECEMBER 2020 /JANUARY 2021
Actually, the clue is in your question,
when you said “credit card networks.”
The reality is that’s what we are
not—and we’ve actually not been that.
We’ve got that label attached to us for
a long time. So here’s the reality.
When I became CEO 11 years ago,
it is true that a large percentage of
the transactions that we used to see
came out of the use of credit cards.
Debit cards were smaller; prepaid
cards did not exist; and commercial
cards were also small. Fast-forward
11 years, and today one-third of our
revenue comes from something
we didn’t really have—which was
analytics, cybersecurity, data, A.I.,
that piece. Of the other two-thirds,
some comes from commercial pay-
ments and from real-time payments,
including bank account to bank ac-
count. That leaves you with a signifi-
cant amount from all the other types
of transactions. Within that, debit
and prepaid are now very big.
So why am I saying all this? That
actually we have embraced all the
different forms of payments over a lot
of years. And I think we’ve changed
our company to be more capable of
competing in this world without get-
ting bothered about one or another
rail of payment, which is where the
disintermediation story comes from.
So my view is, this is not about
me disintermediating credit. This
is about providing the consumer a
choice on how they want to pay. Or
providing a small business the choice
on how they want to pay their vendor
or their partner. Do you want to get
paid now, which is by debit? Or paid
later, by credit? Or do you want to get
paid in advance (prepaid)? There are
only three ways to pay—whether it’s
on a card, a phone, a fingerprint, or
you and I looking at each other and
touching our foreheads in the future.
Disintermediation of our own
business is actually just providing
consumers and businesses with
choice. And the trick is to do that and
then make money off of that. That’s
what our business model is.stage of normalization right now, and
real growth would be when you have
a vaccine that’s equitably distributed
to adequate numbers of people for
consumer confidence to begin to
come back—when we probably get
back to a pre-COVID kind of life.^4Can a business based on spending
thrive in this new normal?
Consumers are spending. Look at U.S.
domestic spending: It’s actually plus
over last year for the last few months,
which is interesting. So that’s a good
thing for our business. The second
good thing for our business is that
digital is here with double the power
of anything. It has been on afterburn-
ers. Everybody has embraced contact-
less commerce.
So seven out of 10 people are now
doing e-commerce in some way or
another; eight out of 10 people are
using contactless methods of paying
because they think it’s safer. Digital
sales, e-commerce sales in the U.S.
are double what they used to be
pre-COVID. So digital is a tailwind
for us because that converts cash
to electronic bits, just as consumer
spending is a tailwind.^5 And then
we’ve got a headwind.Which is no cross-border travel.
Yes, I don’t know whether that’s go-
ing to come back, but I believe it’ll
probably come back as consumer
confidence improves. You can see
domestic travel beginning to come
back.^6 The TSA is turning a million
passengers now a day. They were
down below a hundred thousand
in the peak of the crisis. So clearly
there’s some recovery, but it’s not on
international. When that begins to
come back, then that will become
closer to the normal growth phase.Crises are often accelerants for
disintermediation. One question
that hangs over the credit card net-
working industry is whether some
fintech upstart will come along and
disrupt your business.THE CONVERSATION AJAY BANGA(4) Health equals
wealth: Early in
the pandemic,
Mastercard commit-
ted $25 million to a
program to speed
up the develop-
ment of medicines
for COVID-19 in
partnership with the
Gates Foundation
and Wellcome Trust.
“You could ask,
‘What the heck is
Mastercard doing
in a therapeutic
accelerator?’” says
Banga. “Well, my
view is, if I don’t get
to normalization
of growth, I can’t
have a prosperous
community around
me. Without a
prosperous com-
munity around me,
this is not going to
be a prosperous
company.”(5) From bits to
bucks: Mastercard
now connects some
3 billion cardholders
to some 70-million-
plus merchants
through nearly
40,000 banks and
financial institutions
in about 210 coun-
tries and territories.(6) Ramblin’ man:
The son of a senior
oicer in the Indian
Army, Banga had no
shortage of domes-
tic travel growing
up. “I went to seven
schools before I was
out of high school,”
he says.