Mastercard SWOT and PESTLE Analysis

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.

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Threat

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Political

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Economic

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Social

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Technological

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Legal

1. Dynamic and rapidly evolving legal and regulatory environment for financial services and payment solutions providers: Financial services companies are subject to a dynamic and rapidly evolving legal and regulatory environment which increases cost of doing business and imposes numerous challenges. The European Union Interchange Fee Regulation requires Mastercard to separate its scheme and switching activities. Mastercard, in the United States is governed by the Federal Trade Commission and federal banking agency information safeguarding requirements as dictated by the Gramm-Leach-Bliley Act. This act mandates companies to keep their information security program written out in a comprehensive manner. The European Union has set up the GDPR (General Data Protection Regulation) Act which demands a comprehensive privacy and data protection program from all companies to protect all sensitive and personal information of EEA residents. The GDPR is already being used as a reference point by many regulatory bodies to develop their own privacy and data protection laws. These include the U.S. (California), Argentina, Brazil, Chile, India, Indonesia and Kenya. Since 2016, the People’s Bank of China issued new regulations for license application and operational requirements for network operators. Mastercard also faces numerous legal challenges and new regulations across markets with respect to interchange fee which will impact its operational model and costs.

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Environmental

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