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Mastercard SWOT & PESTLE Analysis

ID : 52735453| Sep 2020| 15 pages

COMPANY PROFILE -Mastercard

Business Sector :Banking and Financial Services, Payment Solutions

Operating Geography :North America, United States, Global

About Mastercard :

Mastercard is a technology company, operating within the global payments industry is headquartered at Harrison, New York, United States. It was founded in 1966 as Interbank Card Association and is an American multinational financial services corporation. The company is headquartered in Purchase (New York), United States. The company specializes in credit cards, payment services and solutions. It connects consumers, financial institutions, merchants, governments, digital partners, businesses and other organizations together, creating a method of electronic forms of payment instead of cash and checks. Mastercard offers a wide range of payment solutions and services through its brand portfolio which includes Mastercard®, Maestro® and Cirrus®. The Company acts as a solution provider for all domestic and cross-border payment needs. This American multinational financial services corporation was founded by collation of several California banks, to act as a competitor to the BankAmericard issued by Bank of America and renamed as Mastercard in 1979. It employs approximately 18,600 persons as of early 2020.
Mastercard’s USP or unique selling proposition lies in being one of the world’s largest card payment organization specializing in payment and value-added solutions. Mastercard’s vision statement reads “A World Beyond Cash” and its mission statement reads “Every day, everywhere, we use our technology and expertise to make payments safe, simple and smart.”

Mastercard Revenue :


US$ 16.9 billion – FY ending 31st December 2019 (y-o-y growth 13%)
US$ 15.0 billion – FY ending 31st December 2018

Competitive Analysis of Mastercard

SWOT
PESTLE
The SWOT analysis of Mastercard is presented below:
Strengths
Weaknesses
1. Consistently strong financials with a healthy balance sheet
2. Second highest market share in payment cards segment
3. Implementation of latest payment technology
4. Value added services adds diversity, besides giving it a competitive edge
5. High profit margin business which is quintessentially global in nature
1. Involvement in multiple claims and legal proceedings
2. Security issues due to data breach
Opportunities
Threats
1. Surge in Digital Payments as E-commerce Reaches New Heights Around the World
2. Employing AI to curb fraud and reduce false declines
3. Betting big on B2B payments, which is an estimated $25 trillion market annually in the U.S
4. Strategic acquisitions propelling growth and adding transformational payments technology
5. Eyeing China’s massive Payments Market after a green signal from Central Bank
1. Losses due to card frauds
2. Competition from entry of new players
3. Continued intense pricing pressure
4. Rapid and substantial technological advancements negatively impact overall business
5. Foreign exchange and market risk
SWOT & PESTLE (combined)
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Detailed SWOT Analysis of Mastercard

 

Strength

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Weakness

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Opportunity

1. Surge in Digital Payments as E-commerce reaches new heights around the world: The pandemic Covid 19 has caused a surge in digital payments. However, a Mastercard weekly survey conducted in April 2020 has shown that nearly 7 of 10 customers around the globe believe this shift to digital payments to be a permanent one. It has also revealed that almost half the customers plan to make lesser use of cash even after the end of the pandemic. The Mastercard SpendingPulse has measured retail sales across all payment types including cash and check to show that e-commerce spending within the US increased by nearly 93% in May. The UK saw a 72% year-on-year rise in online retail sales in May as compared to a year-over-year growth of 64%. This shows a growing trend in which consumers prefer to shop online during the pandemic.

2. Employing AI to curb fraud and reduce false declines: The financial and professional services industry in North America, as per PwC forecasts, are expected to see a GDP growth of as much 10% by 2030, mainly due to AI input which will cause an increase in productivity and consumption. The global AI market is currently growing at a rapid rate with expectations of it seeing year-over-year growth of more than 150%, with a 127% growth likely to be sustained by 2025. The prominent role of AI in fuelling growth is seen clearly within the payments industry. Mastercard has incorporated several state of the art AI tools within its system to fight cybercrime and has transformed the payments industry. In 2018-19, the company succeeded in stopping fraudulent transactions to the tune of nearly USD 52 billion. This success is partly due to the technology the company acquired through its acquisition of Brighterion. The Brighterion AI tool is especially accomplished in identifying fraudulent transactions and reducing false declines. The company since then has also applied AI technology in many other projects that it has developed for its customers.

3. Betting big on B2B payments, which is an estimated $25 trillion market annually in the U.S.: "Mastercard [is] very heavily focused on owning and operating fast [automated clearing house] rails for the purposes of tackling B2B payments specifically," MoffettNathanson analyst Lisa Ellis said. For decades, the ACH payment rails have facilitated transactions between merchants, consumers and financial institutions. The American payments solutions provider is investing big to expedite their speed and make them inch close to real time. Mastercard's dogged pursuit on developing fast ACH payments, one of the primary models for B2B payment flows, mirrors its intentions of building out B2B capabilities, according to Ellis. In 2019, the Company launched Mastercard Track, their B2B payment ecosystem which signify a suite of products and services aimed at improving the way businesses pay and get paid. The Track suite of products aims to introduce Mastercard Track Business Payment ServiceTM, an open-loop commercial service built to simplify and automate payments between suppliers and buyers.

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Threat

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Check Out Analysis of Other Relevant Companies

TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in Mastercard Analysis Report

1. Mastercard incorporated Annual Report 2019 - https://s2.q4cdn.com/242125233/files/doc_financials/annual/2019/2019-Annual-Report-on-Form-10-K.PDF

2. Mastercard company website - https://www.mastercard.co.in/en-in.html

3. Mastercard company profile - https://www.reuters.com/companies/MA.N

4. Exclusive: Mastercard lodged U.S. protest over Modi's promotion of Indian card network: https://www.reuters.com/article/us-india-mastercard-exclusive/exclusive-mastercard-lodged-u-s-protest-over-modis-promotion-of-indian-card-network-idUSKCN1N65IU

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Mastercard SWOT & PESTLE Analysis - SWOT & PESTLE.COM

SWOT & PESTLE.com (2020). Mastercard SWOT & PESTLE Analysis - SWOT & PESTLE.com. [online] Available at: https://www.swotandpestle.com/mastercard/ [Accessed 27 Nov, 2020].

In-text: (SWOT & PESTLE.com, 2020)

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Mastercard SWOT and PESTLE analysis has been conducted and reviewed by senior analysts from Barakaat Consulting.

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