Not quite as effective as in the big screen in New York, but nonetheless. Good morning, everybody, and thanks to all of you who are joining us either here in St. Louis or via the webcast. I'm Barbara Gasper, Head of Investor Relations for Mastercard, and on behalf of the entire Mastercard management team, would like to thank you for joining us today, especially those of you who made it out to St. Louis to join us. This is the first time we're holding this event here at our location in St. Louis. Today, we believe we've developed a program that addresses many of the topics we've heard from you all that are of interest. This year, we've decided to shorten the formal part of the presentations and add more time for informal discussions over lunch with some of our senior management members.
We also have our product demonstrations this afternoon, which give you a chance to experience firsthand some of the newest products and services that we've been working on and gives you a chance to talk to the subject matter experts, the people who work on those day in and day out. This is the part of the day that we just really can't replicate any other way but live and in person. We can't really do it in small group meetings. I ask that you take advantage of the opportunity to speak to those folks. Ajay is actually on his way to Asia right now and extends his apologies for not being able to join us today.
Gary Flood, our President of Global Products and Solutions, will kick off today's formal presentation with some comments about our progress on advancing our strategy and driving growth in the new digital environment. He will then hand it over to Garry Lyons, our Chief Innovation Officer, for some thoughts about how we look at innovation across the company, particularly at Mastercard Labs, which is the group that Garry leads. We'll then talk about our business from a geographic perspective, beginning with Chris McWilton, President of North America, and then move to Ann Cairns, our President of International Markets. Martina Hund-Mejean, our CFO, will be presenting a financial perspective. After Martina, there will be a Q&A session. As in the past, we have the ability for those of you listening in to remotely submit questions online.
Gary will then come back up to offer some closing comments before we adjourn about noon for lunch and the product demonstrations. The slides that are being used today in the presentations can be found in the booklet you received as you walked in the room. They have also been posted to the IR section of our website for your reference. Additionally, an audio replay of this meeting will be available on the IR website for 30 days until October 17th. Along with our presenters, we have a number of other members of management, the senior leadership team with us this morning. Rather than take time to introduce them all, we have included a list of them with their photos in your booklets.
To help facilitate the dialogue with our executives over lunch, there is a diagram in your booklet showing the location of the several lunch and discussion tables that are spread throughout the product demonstration area. Executives who are not hosting a specific table will be floating around in the product experience as well. I do want to acknowledge the other members of Mastercard's IR team who are in St. Louis today. Catherine Murchie, I don't know if Catherine's in the room; Matt Lanford, who is the newest member of the IR team, who's in the back; and Ryan Beaudry, who is our analyst. Just a few administrative items to get out of the way before we get started. Should you need the restroom facilities, they're located right outside the doors to your right.
Second, as a courtesy to our speakers and those around you, would you please silence your mobile devices. Finally, just a reminder that today's presentation includes some forward-looking statements about our expectations for future performance. Actual results could differ materially from what we say today, and additional information about the risks that could affect our future results are detailed in our SEC filings, including our Form 10-K, 10-Qs, and 8-K. With that, I'd now like to turn the program over to Gary Flood. Gary?
Yep. Taking this so I don't forget. Okay, I would like to also welcome you here. Hmm? One more.
There you go.
I'll get out of that. Okay. I'd also like to welcome you here to St. Louis. Having been here 28 years, this is the hub of an awful lot of very important things for us as an organization. When you think about a network that has to operate all the time, everywhere around the world, this is where an awful lot of that action happens. All right? Even to this day, I probably haven't seen all the secure rooms they have to make sure that that continues to happen as we go forward. Rob Reeg is our host. He's the big fellow in the back. If you get a chance, you should spend a little bit of time with him, okay?
With that said, what I want to do is just build a little bit on the conversation we've been having over the last couple of years. All right? We're lucky and fortunate to be in the industry we're in. We have a wonderful global franchise. We have a very powerful brand, a very capable and awesome network. Probably the most important thing is we have people on the ground distributed locally in countries and divisions, working closely with our clients, taking things that we are developing both locally, regionally, and at the center, and optimizing those. All right? As Ajay's talked about the strategy and laying out, he uses the three concentric circles. All right? PCE, which is an overriding flavor of what's going on in the world. He'll talk about cash and checks versus electronics. All right?
The opportunity that's created by the 85% that's still basically not electronic. All right. Of course, there's that 15%, which having been here for so long, was what we fought over for so many years. We continue to fight that battle day in and day out. All right? That's just the way this is, whether it's Visa, American Express, Discover, local networks, CUP, doesn't matter. All right? Digital giants. The opportunity to grow in that space is front and center to what we need to get done. The bigger opportunity is the one that is driven and focused on converting cash and check around the world. All right? When I think about this, there's a couple of things we're doing. One, financial inclusion. This has been a strategy that we've been talking about for a couple of years. All right?
If you think about the benefit disbursement programs we've talked about, whether it's Nigeria, South Africa, Pakistan, those are all about activating or deactivating cash before it comes into the system. All right? If you can drive that to a prepaid card, you're going to put us in a much better position. All right? It works for governments because it's more efficient, it's more transparent, but the best part about it is it draws people into the ecosystem. All right? More inclusion. It also requires the buildup of our merchant network too. Cards and capability without point-of-sale capability is, I think Ed McLaughlin tells me an awful lot about technology, is one hand clapping. All right? You need both hands. All right? It's about individual inclusion, but it's also about merchant inclusion and building ecosystems. All right? We're ecstatic with the progress we've had.
We have about 100 programs over the line with governments around the world, and the dimension of who we actually can touch with those programs is about 330, 340 million individuals. All right. We set a goal for ourselves when we worked our strategy a couple of years ago, 500 million new consumers. All right. We feel good about where we're going. That's just beginning, folks, to be honest with you. If you think about development in many of those economies, it could take a generation. All right. You worry about adoption, utilization, optimization, and those kinds of things. Okay. We have both the consumer development and we have the merchant development.
If you think about small merchant development, Ed and I were talking on the ride over here earlier this morning, you just think about what's happened with the capability that phones have provided around the world to open up small merchants to accept it. We have over 140 registered at around the world. Two-thirds of them are chip-enabled, which tells you something. That wasn't the way it started out. Okay. The convenience of a device mapping to another device and/or a plastic card is doing wonderful things for us. Gary Lyons, who has been driving innovation for us, he had his team. Ajay refers to Gary and his team as Freaks and Geeks. This is our innovation lab over in Dublin and several other places around the world.
On one weekend, they spent time developing an app leveraging Masterpass to enable a purchase from a vending machine. All right. No cash involved at all. All right. A mobile app. All right. Gary, how many vending machines are we talking about around the world? 20 to 30 million. We also set a goal for ourselves where it basically was trying to figure out, today we're at 36 million merchant locations. I started 28 years ago, we had 3 million. All right. It's not going to take us 28 years to get to the next 33 million. If you think about technology and what Gary and his team kind of concentrate on. There's multiple examples. You'll see more of them over in the product showcase a little bit later. Let's talk about high and low-value payments and the opportunities there. I'll be brief on this one.
Ann will touch on it. Transport for London went live yesterday, low-value payments, Chicago Transit, another example. All right. Leveraging our Paypass technology. Another example would be rent in New York City with the New York City Housing Authority. Paying rent to landlords who have a prepaid card that we're reloading by paying rent. Okay. All that's zeroed in on growing the pie. That's more money for our system. All right. That's more money for all the participants. If we do a good job enabling them, that enables us to continue to prosper and grow. All right. Big emphasis on this. Right-hand side is grow our share. That is where it's kind of honestly day in, day out, hand-to-hand combat around the world.
It comes down to products, technology, services, and how you package those to provide solutions to your customers, and then actually execute those with them. There I talk about the fact that we started investing in Mastercard Advisors back in 1997. We built our first loyalty program in 1998. All right? The technology to actually get that done. Buying Access Prepaid, building IPS, buying other processing assets, has put us in a position where we have a stable of very competent people who have come, great experience, yet technology and capability to drive great outcomes with clients. In addition, if you think about what's transpired over the last, I'd say year and a half, EMV in the U.S., tokenization in the U.S., and the application of biometrics and different authentication methodologies, and where we are sitting in that equation.
Ed McLaughlin, who's sitting in the back, has been one of the leading forces in tokenization and many of those initiatives. All right? He'll be available a little bit later to talk on that. Last point on this slide is participating more in domestic transactions. I'll touch on processing a little bit later. We told you last year, Ajay specifically, I followed up about our desire to be more involved in the transaction flow. It does a couple of very important things. One, it embeds you very much with your customers, so you're more important to them and they're more important to you. All right? The other aspect to it is it lets you get on the ground and convert cash through innovations if you're actually playing the processing role. All right?
Best examples I could give you right now would be with Provus in Turkey, where they're actually running a toll system through a prepaid card. All right? That converted an antiquated platform to electronics. Okay? Of course, when you package all these things together, it becomes very powerful. If I've got processing, program management, I can fight pretty hard on prepaid. All right? If I have processing and Mastercard Advisors, I fight real hard on debit and credit. All right? It's a combination of assets that we've put together, as well as the technical capabilities that we've been building. All right, we feel very, very good about where we are. You can't do this without understanding stakeholder needs, what they're looking for, what role you want to play, what role your partner wants to play.
We focused for a long time just on financial institutions around the world. Our stakeholder set has definitely expanded. If you talk to Chris and Ann, they'll reflect on governments, they'll reflect on merchants, they'll reflect on technology companies. Just think about all the news you've heard over the last couple of weeks. You have to basically drive into what's important. Consumers, they want a great experience, and they want a frictionless experience. Merchants, they want to grow their business. They want more out of their existing customers, and they want new customers. Big opportunity there for us is cross-border. Folks that are traveling in corridors, how can we identify them? How can we bring them to the merchants where it'll matter the most? Think about financial institutions. They want to innovate. Think about the stress and everything they've had to work their way through.
The room you're going to go to when we're done will give you a good perspective on the kinds of things we're doing. Gary will talk for a minute about the types of processes we are implementing to work with our clients to help them innovate. It's not just about what we do, it's about what they do and what we can collectively get done. Next point on government. This one is a beautiful one. Our work on governments, which is being done locally around the world through Ann's team and Chris's team, is putting us in a very different position. It's a daily dialogue on how to include folks, build ecosystems, enable transparency, and make things just collectively much more efficient.
Digital players and telcos, they want to participate, they want to lever what they have, and they want to get as much out of it as they possibly can. With that as a frame, big opportunity. You really need to understand your stakeholder set. I think we're well down the path of working with all of these constituencies in a very, very powerful way. Next point, there's two key themes that just resonate that drive our organization. One is this conversion of cash to electronic payments. We hear about it. We talk about it. We're zeroing in on it. If you think about the average cash transaction around the world, somewhere around $8-$10. It could be as low as a few pennies in some countries and as high as $28, $29 here in the U.S. You really need to think about that proposition very differently.
The idea of converting cash and check is ingrained and worked its way through our organization. Underserved, we've talked about that. We're getting at that through financial inclusion work with government, but we're also getting at that through work we're doing with telephone companies around the world. MNOs, where we have 50 programs or 50 MNO relationships that have line of sight to 2 billion consumers. How you actually take that, create the right product set, and then enable it and drive adoption is kind of what the whole process has been zeroing in on. That is opening up big opportunities. Again, technology playing a role there. New merchants, we've talked about small, we've talked about MPOS. In the other room, we have Simplify Commerce, which is a way for small merchants to go online with a heck of a lot less friction.
You should take a look at it. It's one of the things we're concentrating on. It's one of the elements that Gary conceived in an Innovation Express with a cross-sectional team across the organization. He put it in incubation, now we're mainstreaming it into the corporation. The last one is just new payment flows. I like to think about what we do as connecting buyers and sellers, senders and receivers. The senders and receivers is where all that new payment flow comes from. Could be insurance disbursements, financial benefits, remittances, domestically, cross-border. It's why we've done some of the things we've done over the last couple of years. The HomeSend proposition we structured is about connecting senders and receivers around the world and enabling our customers to give consumers what they need and what they want.
I'll transition a little bit into how we think we're doing. Craig Vosburg is in the back. Craig runs our core products. He took over from Tim Murphy, who took over for Noah not too long ago. What I'll reflect on is consumer credit outside the U.S. in Ann's world. We're doing extremely well growing our share. Heavy emphasis on affluent, leveraging all the assets we have. You combine that with all the work we're doing on financial inclusion, and you see a nice pattern developing that should serve us well over an extended period of time. Chris will reflect on the U.S., where we've had challenges, but yet he will express his view on a lot of the co-brand wins and things he's been doing with his team to put us in a pretty good position.
We feel good about where we are, particularly outside the U.S., and we feel very good about the work that's been done in the U.S., and Ann and Chris will reflect on that. Commercial credit, honestly, is my favorite. I was here in 1986 when we launched the product. Ed Glassman runs it for us. We're doing an outstanding job winning business around the world. Combination of technical assets, Smart Data. Smart Data has over 500,000 corporations on it. It's an information management tool for corporations. Rob runs that here for us. That in combination with acceptance and In Control benefits. In Control, the feature and functionality we have to restrict and to manage where cards can be used are foundational. You package that with very good people on the product side and in the work that our Advisors team does on optimization, and we're actually doing very well.
My belief on that one, we have scratched the surface on commercial products, particularly in LAC, MEA, and AP. Craig can discuss that with you guys, and I can do it a little bit later as well. Debit, we're growing share. We're winning business. Last year, if you remember in the presentation, we talked a lot about a 5-step process. One that takes ATM folks all the way to beloved debit users. Typically, if you open up debit in markets, the first thing people will do is go to an ATM and take out cash. What you want them to do is go to the point of sale and use the card. You have to basically work with each customer, and we do this with Advisors.
We assess their files, we diagnostically understand what people are doing, and then we create marketing programs and communication programs and promotions to drive utilization in different stages. With the ultimate objective of making it habitual. This is the most secure, it's the easiest way to pay, and it's something I should be doing every day rather than carrying cash and using cash. On prepaid, we've made tremendous strides on prepaid. We're winning business around the world. I said earlier, the combination of Access Prepaid, which gives me prepaid program management, and IPS, which gives me state-of-the-art processing for prepaid programs, in addition to a very strong product team distributed worldwide, does great things for us. We're extremely happy with the progress there, particularly on the share front. We are gaining share significantly.
From that, when I take a step back, we have really good assets, we're listening to stakeholders, and we're executing, particularly locally and on the ground. Several years ago, if you remember, we made that decision to push product and capability people out closer to the action in the regions. We've gotten that done pretty well. We feel good about this. Let me just talk for a minute on the assets we have and what we've built, because it's the composition of these assets and how they come together that makes a very big difference when you're working with clients. Stakeholders. Could be governments. Could be technology companies, particularly merchants, financial institutions. I'll go to brand and marketing. Our brand is very powerful. Priceless has been a very forceful program for us around the world. Priceless Cities is in 40 cities around the world.
Priceless Surprises with Raja launched probably about six months ago, is in 11 countries. All right? The combination of assets like that help us position the brand extremely well. Stand Up To Cancer is another great example with Priceless causes. Started here in the U.S., Canada, Russia, moving around the world. From a brand standpoint, we have a wonderful platform to work with. That's a key ingredient. Data and analytics. I'll talk about this for a second. A year ago, we worked with about 25 merchants around the world when it came to data analytics. This year it's already 150. The power of the information we have, which is not personally identifiable, but when you take that data and you integrate it into trying to solve a problem for a merchant and work with their information, it becomes extremely powerful.
This is one of the bigger growth areas that we see as we head forward. On Mastercard Advisors and at large, last year we did about 1,800 projects. This year it'll be 2,400 projects. Working with all types of constituents, governments, technology companies, merchants, issuers. Last point I'll go here is loyalty. We started a loyalty platform, as I said, back in the late '90s. We've worked that platform. We have 80 million consumers on that platform with issuers, mostly outside the U.S. in 25 countries. Now with our acquisition of Pinpoint, which is heavily based in Asia Pacific, MEA, that gives us an opportunity to do some very different things over there. 60 million consumers, 50,000 merchants on that platform. When I think about connecting buyers and sellers and enabling that to happen, not just domestically, but more importantly, cross-border.
Cross-border digital purchase growth is by far growing faster than anything else. The ability to actually connect these assets and use them in different ways will become extremely powerful. I just wanted to touch on those couple of things just to reinforce what we said last week. It's how that all comes together. That's what kind of makes a difference for us. Now, safety and security, particularly in today's environment, undermines everything we do. Okay, first thing is authentication. Are you the person that actually can work with that card? That's extremely important. Extending SecureCode. SecureCode for us will see about 2 billion transactions this year. That's a product where the issuer and the merchant or the issuer and the consumer know a code, flows back through the system. It's a form of two-factor authentication. All right? That works extremely well.
2 billion transactions. We're also working to implement device recognition. If you use that card on that device, and we see that a number of times, we're working with a variety of partners. That can add a little bit more confidence to an authorization approval. Last point there is biometrics. You'll see demonstrations of biometrics inside. Bob Reany is going to do that for you folks. Just think about the government programs I've referenced in Nigeria and down in South Africa. Those are biometrically based. The utilization of biometrics is important. Next one is physical transaction security. I won't spend a lot of time here, but basically Chris and the U.S. team leading the way on EMV and chip to try and remove some of the issues we have here given all data breaches.
The last point on this slide is digital transaction security, and this is what Ed has spent a ton of time on, which is tokenization and developing MDES, which is our on-behalf-of service to manage tokenization and make it easy for our customers. In essence, that process will nullify information in the system if it's compromised. We are the only people who know how to connect the token to an actual account will be us and the issuer. If you remove that and make data useless, we're in a much better position. That's what Ed's been architecting and working with the industry. This is fundamental to everything we're doing. We have a roadmap worldwide on EMV, a roadmap worldwide on tokenization. Next point is digital.
I would say on credential management, Ed and the team have done a very good job leading the development of that initiative and positioning our company in a very good way. We work with all parties interested in leveraging it. It's an open platform. It's foundational what was done on Apple Pay. Chris will talk about that. Now we're working with a variety of other players that want to leverage the same technology. Next point is Masterpass. Masterpass, extremely important. It's actually live in 10 countries. It's technically enabled in 40. 40,000 merchants, we are not going to back off on the distribution of Masterpass one bit. All right? We have an extremely strong pipeline, we're not going to let up.
Last one I'll talk to is open APIs and leveraging the developer community by opening up our capacity, capability, products, and technology to them so they can create both business solutions and consumer solutions. Good example is the one Ed and I were talking about on the way over this morning was American Airlines Hackathon using wearables to change the travel experience. At the end of the day, two APIs, there were four finalists that they worked their way through, three of them had leveraged our locator services and our payment services through APIs. This is an area we're going to invest and spend more time. Okay? Next point is processing. I just wanted to touch on this. The red places are the new additions since the last time we spoke. This is a real business and is providing significant leverage for us around the world.
55 countries, 40 million cards, 5.2 billion transactions processed. We've switched 43 billion. Okay. If you think about this capability and you think about the technical things we're developing, MDES, tokenization, loyalty, it provides a very compelling platform for us to drive business decisions. This gets us local, and it gets us in the game. It's important to our clients, but it's equally important to governments that you are local and playing. All right. This is key to our strategy. We referenced that last year. We've made some acquisitions. We continue to extend the business, and Ann actually launched processing, I think our Dubai hub, processing hub, not too long ago, and that'll be up and running by the end of the year. This, I didn't want to leave before I just reinforced.
Composition of assets, solutions that matter to customers, provided in the right way, puts you in a position to win business. On affluent, travel services, concierge services, hotel, Priceless Cities, our rewards platform, and the provision of benefits and insurance. We sell benefits insurance, okay, to our clients. Very powerful proposition. They can come to us, and we can give them an end-to-end solution. On the commercial side, I reference this. We're ecstatic with where we are, but we're not pleased. We're not satisfied, I guess, is what I'd say. There's too much room for growth in this world, in this space. All right.
If you think about the acceptance, the data program around Smart Data, analytics, spending controls, and virtual card provides an outstanding opportunity for us to actually convert more checks for businesses and make the whole system more global and drive even faster growth than what you saw on the earlier slide. Next point, two slides up. Financial inclusion isn't just about getting cards in people's hands. It's about getting cards in people's hands. It's about educating them on how to use it. It's about dialoguing with the government and legislators on all the benefits that come with electronic payments. It's about drawing up merchants. All right. It's about positioning the franchise for the long term. This is important to us. In some countries, it's generational. It will take time. All right.
We can see the opportunity that it's creating, and we can see that both physically with a card and what happens with devices, typically phones. Okay. Last point on this one, new payment flows, new industry verticals, healthcare, rent, things like that remain key and priority for us. Chris and Ann can touch a little bit on that. I've touched on senders and receivers. What we're doing with HomeSend gives us access to about 1.2 billion mobile wallets. All right. The idea is to connect these parties worldwide. Okay. New senders and receivers. New and expanded acceptance comes from the things that Gary is going to talk about, vending machines and different applications, appliances, MPOS terminals in different parts of the world. Very strong propositions coming together cohesively in market to drive our growth. Last point.
We've bought some companies, we've developed some partnerships, and we've created some innovations through Gary and the team here at Mastercard. If I can on expanding our footprint, I'd actually use Telefónica down in Latin America, the work we've done with them on launching programs in Brazil. I'd suggest Simplify Commerce, expanding the footprint by opening up acceptance for small merchants and omnichannel solutions. On extending capabilities, I go to C-SAM and the capability C-SAM is providing us to work with merchants around the world, both mobile applications, loyalty applications. All right? I'd also think about Masterpass online commerce. One of my favorites is Qkr, which Gary has worked on opening up a platform in Australia where parents could leverage Qkr as a platform to actually identify and purchase their son or daughter's lunch that day at school. All right?
Take money out of the system and provide control to parents who might be a little concerned about what their young kids might be eating. Then diversifying the businesses. Access Prepaid, prepaid program management. I touched on Pinpoint, DataCash. I think the things for me that are real important here would be Ford and Whirlpool. When I started, I used to sell merchants. I worked for Citibank the first four years out of school. I sold merchants, and I plugged terminals in. You sign the merchants Monday through Friday, and on Saturday you plug the terminals in, so you get the transaction to flow through. When I think about the point of interaction and I'm talking to people, we're talking about a car where your hands are on a wheel, and you can purchase stuff. Soon as you take your hands off the wheel, transaction's over.
All right? It actually measures your eyes on the road as well. Okay? Think about that. Also think about, Gary will talk to you about Whirlpool. I'm not going to get into what he can share, but the actual capability of solving a problem for a manufacturer that deploys washing machines and dryers in locations and is concerned about payment. Gary, you can touch on actually what you guys did and how you developed it. I'm going to stop there. All right. I'm going to introduce Gary now. Gary, you've been with us how long?
Five years.
Five years. He came with Orbiscom, which was one of our initial acquisitions, which gave us the In Control technology, virtual card numbers and things like that. He has been a force in our company. He has pushed us. I wouldn't say you've been disruptive, but you've been-
A little bit.
A little bit disruptive, which actually has been very healthy for us. I think it manifested itself this year with Forbes identifying us as a top 100 innovative company in the world, number 32. The stuff and things and the demonstrations you'll see downstairs are indicative of the kinds of things we're working with people around the world on. All right. You'll hear more announcements on what Gary's been able to accomplish out a little bit. He's also been identified individually as a key innovator. Now I'm going to transfer it over to Gary, who will take you through what we're thinking about on innovation.
Great.
You don't have to applaud.
Thanks very much, Gary. Good morning, everyone. I'm absolutely delighted to get this opportunity to touch on innovation within Mastercard, but much more so than the presentation I'm going to give you today. Innovation in Mastercard is truly going to come to life when you see some of the fantastic demonstrations in the product showcase after the presentations are finished. I'm going to do what I often do, and that's start with stating the obvious, and that is that the world is changing. I think we're all aware of that. Technology is evolving at a phenomenal rate, and we need to evolve with it. We've identified some of the trends that sort of are linked to our innovation strategy.
I'm not going to necessarily go through them all, these are some of the ones that we think are going to have the biggest impact in commerce over the next 10 to 15 years. Certainly, new trends are going to emerge. Some of these trends are going to evolve. These are ones that we see huge opportunity in. Just going to touch on some of them. If we start with the Internet of Things. Depending on what reports you read, in 2020, it's believed that there's going to be between 20 and 70 billion connected devices globally. That basically means that every electronic device is going to be connected to the Internet. We have this belief that every single connected device is potentially a commerce device.
We don't really care whether you're transacting on your phone, your tablet, your watch, your fridge, your television, or even, as Gary said, your washing machine. We're going to facilitate secure payment transactions from that device, and we're going to provide an awesome experience at the same time. We've another belief in Mastercard that's no longer just about the payments. We obviously still need to be fantastic at the payments and to achieve some of the things that Gary talked about in terms of our objectives. We need to continue to make payments safer, simpler, and smarter. We also need to recognize that payments are not the be-all and the end-all from a consumer perspective. They're often just a necessary step in what the consumer is actually trying to do.
I've never woken up and thought, "God, I can't wait to pay for that cab this morning," or, "I'm really looking forward to going to pay for my breakfast in the restaurant." We recognize that technology and the speed at which it's evolving can allow me to do many of the things I'm going to do much better than I can do today. That's going to be critical to enable people to change behavior. Consumers are not going to change behavior and move into the new forms of technology unless it provides a much better experience than they're getting today.
That doesn't matter whether I'm potentially ordering ahead and having my breakfast ready when I get to the cafeteria, potentially as we do in Yankee Stadium, where I can actually order a hot dog and a soda and have it delivered directly to my seat and have the payment just happen securely and simply using our technology. Or even potentially one that we went live in recently in the U.K., where I can actually pay for my restaurant meal from my smartwatch or my smart device without even waiting for the waiter or the waitress to deliver the bill to me. It creates a frictionless experience. It's good for the retailer, and it's also good for the consumer. In addition to sort of facilitating the payment, which is absolutely critical to our core business, we're also going to provide a great experience for the consumer.
You've probably heard us talk about this before. We want to deliver value to the customer before, during, and after the transaction. Another thing that Gary talked about that's very important to us is safety and security. Biometrics is something that we're pretty passionate about. We think if you can actually guarantee the authenticity of the user, it makes it easier to further guarantee the integrity of the transaction. Gary talked about the fact that we're looking at all forms of biometrics. Biometrics are evolving as well. You're going to see demonstrations of facial recognition, voice recognition, fingerprint recognition. Another thing that I'm pretty passionate about is persistent authentication.
You're going to see a demonstration today, and it's one of the companies that we partnered with where they've actually created a device that uses your EKG or the electrical impulses of your heart to authenticate the user. Creates this phenomenon called persistent authentication, so you're authenticated throughout the day instead of having to bring your house key, your car keys, your card to get into the office, and a whole slew of passwords. We're experimenting with a lot of things, and we think biometrics is going to play a key part in authenticating the user. I'm a very simple guy, and I look at Mastercard and think we've become very relevant in the payment ecosystem for four simple reasons: our products, our people, our processes, and our infrastructure. If you look at the last two, our processes and our infrastructure, our processes are highly documented.
They're appropriate segregation of duties. They're highly analytical. Our infrastructure, as Gary talked earlier, is secure, scalable, reliable, fault-tolerant. It's absolutely everything it needs to be to process trillions of dollars of transactions across 210 countries and 150 currencies. The challenge with that rigor is it doesn't allow you to take risks. It doesn't allow you to experiment with some of the trends and technologies I have on the slide behind me. We recognized about four years ago that we needed to create a complementary part of Mastercard that allowed us to operate differently and allowed us to look at the future from a fresh perspective, taking risks, moving quickly. The key thing was failure wasn't an option. We knew that if we moved quickly, we tried things, not everything that we tried was actually going to succeed.
That area that we created is called Mastercard Labs, and it's our global R&D department. It's focused on three areas. I've already said, looking at the future from a fresh perspective, unencumbered with what has gone on in the past. It's also focused on creating new products and solutions for Mastercard. Finally, it's focused on helping to drive an even more innovative culture right across the organization. We have a core philosophy and that is that we want to experiment lots and quickly. The key thing is, if an innovation is going to fail, we want to fail smart. Failing smart means you want to fail as fast as possible, you want to fail as cheaply as possible, and you want to learn as much as possible from that failure. The other thing we believe in Mastercard is that innovation is a repeatable process.
It's not a case of, as Gary calls it, the geeks and the freaks. Throwing a few freaks and geeks in a room and giving them a challenge, and maybe some pizzas and some beers and wishing them the best of luck. That will work, but it's not necessarily sustainable. You do need to believe that innovation is a repeatable process. You can certainly improve the quantity of ideas you get. You can improve, more importantly, the quality of the ideas you can get. You can also improve the speed at which you prototype, the way that you prototype. You can also, very importantly from our perspective, is you can also improve the way that you take new solutions into the market. The other thing about Mastercard Labs is it's somewhat run a little bit like a startup that operates inside Mastercard. We're organized in a certain way.
We're organized to allow us to have the independence to move quickly, but we're also integrated with the core business to be able to take advantage of some of the fantastic assets that we have, whether that's our network, our brand, our data, our reach, our access to cash. You guys know the fantastic assets that the company has. The other thing is that we're organized, as I say, because it is a repeatable process, in five distinct areas. The first is innovation management. That's very much focused on getting ideas, getting quality ideas, and solving real problems. We want to get ideas from a variety of different sources, not a case of just ideas coming from the Labs.
We get ideas from our customers, from our employees, from our business units, from our partnership with universities, from our partnerships with startup communities, and so on and so forth. The team also has a really, really rigorous process to allow us to quickly decide which are the ones that are going to succeed, because we get thousands upon thousands of ideas every year. You can't prototype them all. You have to have a methodology that says, "You know what? Based on all the information that we know and the size of the opportunity, these are the ones that we should actually move forward with." We've got rigor around that. The other thing that the innovation management team does to help drive a more innovative culture inside the organization is we run innovation processes and competitions. A great example of that is Innovation Express.
It's just one of the many processes that we have. It's a 48-hour sort of hackathon where we bring people from around the organization, bring them to a location, and challenge them to solve a particular problem that's important to Mastercard in that 48 hours. They have to come up with a working prototype, a video demonstration, and a go-to-market plan. It's not just fun, it is interesting, but the key thing is some of the innovations that you're going to see in the showcase today began like an Innovation Express and are now live in the market. Next group is the freaks and the geeks, the technologists, and they do build prototypes and pilots. Given that, as I told Fortune Magazine last week, that I was a geek, I would tell the guys to take that as the ultimate compliment.
The key thing about these guys is they're not your average run-of-the-mill techies. They're not guys who are just into technology for technology's sake. You have to understand that technology isn't a neighbor. We've got this view in there that you have to have an appreciation, and the technologists have to do this as well. It's not just product people, of how technology is evolving and how it can make people's lives easier. We have this expression which we say, "Cool doesn't cut it." What does cool doesn't cut it mean? It means that just because something's cool and it's technologically possible, if it's not actually solving a real problem or actually creating an efficiency that doesn't exist today, then we're wasting everybody's time and everybody's money. We're trying to focus on impactful solutions that drive our business forward.
Prototypes are built by this team. Some of them can take days, and some of them can take weeks. Gary already touched on the vending machines, just a simple example. We actually brought it here to show you. The key thing was we were looking at unattended retail, the ability, it's an opportunity to be able to sell things without necessarily having the manpower cost of doing that. The guys decided that they'd take a regular vending machine, a non-connected to the internet vending machine, coin-operated one, and over a weekend, they built the hardware and the software to make that a Masterpass-enabled vending machine. You'll get to see the experience today. You've got the ability from your phone, your smartwatch, or even Google Glass, if you wanted to be able to order and pay for a soda and have it delivered from the machine.
It's a bit of fun, but there is a real opportunity in that particular space. One of the big challenges that pretty much all established companies have is how do you go from the lab to the market with new initiatives that are somewhat disruptive? It's actually quite a challenge because new innovations often don't generate significant revenue in the short term, but they do generate significant cost. You have to be intelligent about the way that you move forward. We actually created a process inside Mastercard called our incubation process. It effectively allows us to create virtual startups to take new solutions to market in a controlled way so as to test their viability in terms of meeting customer needs and in terms of meeting revenue potential. Key thing is you create virtual startups.
They have their own leader or their own IEO, as we call it, Incubation Executive Officer, their own tech team, their own product team, their own sales team, their own marketing team. It's almost like they've got their own ecosystem because you want them to be able to move fast, focus on metrics. Use the Lean Startup methodology, and they're focused on achieving certain metrics. These metrics actually vary depending on incubation to incubation. It could be with a new incubation, we want to achieve X transactions or Y users or Z merchants or some combination thereof. The focus is on achieving certain metrics with the incubation group. We have a number of them that are live at the moment. And the achievement of the metrics by the incubation, it's almost like a startup that's got first-round funding.
Once you do that, the focus is Do they achieve them? No. Maybe we kill it. That's okay, because we killed it fast and cheaply. Do we actually incubate it further, give it further funding, like a startup getting second-round funding? Or do we actually move it into the core business to scale? Because that's the Holy Grail. That's the key focus for us. This process has been extremely effective for Mastercard and Simplify Commerce that Gary touched on earlier. It began life in Innovation Express. It didn't even win Innovation Express, as it turned out, but we saw the opportunity there. It graduated to be an incubation or a virtual startup, and then we're moving the virtual startup into the core business to take advantage of the scale that the organization brings. We also believe that the startup community is very important to us.
Some of the best innovations in the world actually begin life in the startup space, and we need to keep our finger on the pulse on what's happening there. Having come into Mastercard through an acquisition of a technology startup myself, I'm very aware of the opportunity that Mastercard can bring to these startups, and vice versa. We can be good for the startups, we can help those startups grow, but those startups can actually be great for us as well. To actually work with this community, we set up the Startup Engagement Group and Acceleration Group. We run a number of accelerators. The key thing for this group though is it works exclusively with these startups to provide tailored support.
It could be product or proposition development, it could be winning new customers, it could be integration with Mastercard products, it could even be raising funding to help them move forward. They give us access to a new way of thinking, new ideas, and so on and so forth. Historically as a company, and Gary talked about the evolution, that he's been here for 28 years. Historically, likely we would've been focused on payments, processing, and fraud prevention. They were the core focus. It was about the payments, securing the payments, growing acceptance, enabling people to pay. As you're going to see when you meet some of the startups that are in our Start Path and Commerce Innovation Accelerator, we have a much broader view of commerce. The technology is driving commerce, and payments is just one piece of that.
The final group in Labs is Labs as a service. Customers get really, really excited when they come to visit Labs and they see the things that we're working on and the way that we work, because we don't preach innovation. Innovation is an easy thing to talk about. Every company uses innovation as a buzzword. We actually show the way that we work, and we also show the outputs that are solving real problems. We've just recently created a joint venture inside Mastercard between Mastercard Labs and Mastercard Advisors. I'm sure many of you are familiar with Mastercard Advisors, they're professional services, our consultancy division. We've actually created this joint venture to enable customers and partners to take advantage of the way that we work in Labs through advisors' engagement.
Gary talked about the example with Whirlpool, you get to meet Whirlpool today and see the innovation that we created. Whirlpool talked to us about the problem with commercial laundry, the friction that exists around payments, we took them through a design thinking process that we've created called Launchpad, in four and a half days, we solved a lot of the friction that existed in commercial laundry. We took it from pain, the end of the week, they were able to have a mobile application connected to their connected washing machine, you were able to pay for your washing from your mobile phone using Masterpass. There's 2 million commercial laundry machines in the U.S., 25 million people use this on a weekly basis in the U.S. alone. It's a big market. We're not saying this in of itself is the next big thing.
Key two things I'd want you to take from that, it's a great example of the Internet of Things, every device being a commerce device, it's also the way that it was done. We were approached with a problem, we used our methodology, in a really short order, we created the solution. Again, you're going to get to see that later today. In fact, we got a great testimonial from Bob English, who is the General Manager of Commercial Laundry in Whirlpool, he actually said, "This is the most important innovation in commercial laundry since the front-loading washing machine," which we're very proud of. It was a fantastic testimony of when you think one week there was a problem, at the end of the week, we had a solution that someone who's been in this space for some time recognized as delivering real value.
It's going beyond the payment and delivering real value across commerce. We have a fantastic team based all around the world. We have people based in Dublin, Singapore, Australia, many locations, New York, St. Louis, Miami, and Silicon Valley in the U.S. There's a couple of reasons for that dispersity. I think, first of all, we're a global company. We want to create global solutions, one size doesn't fit all. The key thing there is that you need to have people who understand the differences from country to country and region to region, also the needs of those regions. From my perspective, more importantly, diversity is absolutely critical for innovation. You need to have different people who think differently, people who've been brought up different ways in different countries and from different demographics.
You need people who have different experience and different qualifications. You need people who are going to challenge the status quo because in Labs, about 80% of the people that we bring in to Labs know nothing about payments. That's intentional because we've access to some of the best minds in the world from a payments perspective in Mastercard. But if you know too much about the domain, you either end up incrementally improving it or you start with the premise, "That won't work because" We don't really want to do that. We're looking to create new solutions and use these technologies to drive commerce forward.
Just to wrap up, I suppose I often think of my job or innovation in general as finding smart people, and we've got really smart people, giving them a mission or a mandate, giving them the tools and the freedom to innovate, and then getting the hell out of their way. It really is amazing to see what gets created when you actually enable that to happen. I look forward to speaking to you guys later today and you seeing some of the fantastic innovations that have been created right across Mastercard. Some of them we've created ourselves, and some of them we've created with fantastic partners like Western Union, Whirlpool, Wagamama, and so on. Thanks very much for listening. I look forward to speaking later, and I'm now going to hand over to Chris McWilton to talk about our U.S. market.
Thanks, Garry.
Garrry has been in the media. There we go. Green light. Okay. Named one of the top 100 most innovative companies in the world. What Garry didn't mention is there was no other payment network on that list at all. That makes our lives easier when Ann and I go to talk to customers about innovation, thinking ahead 5, 10 years, and how payments will evolve. As you know, I run North America for Mastercard. I take care of the U.S. and Canada. What I thought I'd do is just start out with some key metrics about the market, just to frame it, some quick facts. We generate about 33% of the global volume for the company. That 33% of volume translates into about 40% of our consolidated worldwide revenue.
You may be saying, well, why is the 33 and the 40 different numbers? The fact of the matter is, in the U.S. and Canada, we process, we switch the vast majority of transactions. When we switch a transaction, we get higher yield than when we just have an assessment on the volume. Ann will probably discuss this in her remarks. In much of Ann's world, we do the cross-border transactions. We switch those. The domestic transactions are handled by domestic schemes. North America's cash penetration is 54%, and what that tells me is there's still large swaths of payments in North America that are still subject to electronification. Government payments, insurance payments, B2B payments, healthcare payments provide a lot of runway for our business to grow.
Our strategy for growing the business in North America is consistent with the strategy I discussed in New York a year ago. We haven't changed it. We're staying the course. Our goal is to advance the market in a way which provides a well-balanced and diversified revenue engine and profit engine for the company. Our legacy business in North America has been consumer credit issued by large monoline financial institutions. By monoline, I mean those that did not have large retail branch footprints. That approach served us well for a long period of time, but it did leave us vulnerable to changes in the marketplace. There were a number of acquisitions that took place, and obviously retail branch distribution is an asset in competing in the consumer credit business. We're moving on trying to diversify our revenue base from two dimensions.
First, from a product dimension. Not just focusing on consumer credit, but focusing on commercial credit, debit, prepaid, and processing. From a customer perspective, diversifying to generate revenue, not just from large financial institutions, but from smaller banks, independent banks and credit unions, governments, insurance companies, processors. It's a diversification strategy, and I think we're well on our way. I know you're very interested in consumer credit. Obviously, all the calls Barbara and Martina about consumer credit and the Chase deconversion is something we're all sensitive to, and I want to spend a little bit of time addressing that today. I mentioned in New York a year ago that I didn't think we were going to see a market share move in U.S. consumer credit based upon a home run, a huge flip of a big piece of a big bank's consumer credit portfolio.
I still believe that to be the case. I said we were going to have to score runs in consumer credit with doubles and singles and bunts and stolen bases. One of the areas where we're really pushing a lot of runs across the plate right now is in the co-brand world. You see the names up here. These co-brands are sponsored by some of the largest retailers in the world. They represent flips of portfolios from every other major payment card network. We've got flips from Discover, we've got flips from American Express, we've got flips from Visa. They're in all different sectors. We have the ability to develop relationships with these merchants that go far beyond the co-brand. In terms of developing new applications for Gary's technology.
If you look at what these wins represent and you combine that with our win with American Airlines, you're probably seeing a lot of advertising these days around the relaunch of the General Motors co-brand portfolio. The volume from these co-brands will more than offset the loss of the Chase business over a period of time. It could be twos and fros over quarters. At the end of the day, we've replaced that volume, and we're very happy with it. You may be saying to yourself, well, why is Mastercard being so successful in co-brands? There's really a couple dimensions to it. One is the way we go and manage the accounts with merchants. 10 years ago, we had groups of individuals within my organization that called on financial institutions.
Account plans, call plans, regular meetings, manage the relationship, make sure that technical issues were worked out. We didn't have such a thing on the merchant side. It was very ad hoc. Account managers were one might handle an airline and a restaurant and a hotel chain. There was no vertical alignment, et cetera. Craig Vosburg came into that group and really put some structure to our go-to-market approach. We're seeing dividends based on that. We're having richer conversations with merchants about their business, and it's paying dividends with co-brands. The second big ingredient in our secret sauce here is data and analytics, and what we've done with advisors. Ajay mentioned in Dublin that this year alone, we have done 150 engagements around the world with merchants using our data and analytics to help them grow loyalty and their top line.
When you can go in and talk to a merchant about doing something other than just switching cards for their co-brand business, you can talk to them about loyalty, rewards, how to get a bigger piece of their customer's wallet. You have a much different success rate on co-brands, and we're seeing it all here. Last year at Investor Day, I mentioned that we had several deals on the co-brand front that were signed, but we could not disclose because our co-brand partner had asked us not to do that. They fear consumer confusion, and they don't want to introduce that into the marketplace until the cards are ready to launch. We have that again this year. In the not-too-distant future, you're going to hear about some more co-brands that we're going to add to this list up there.
It's pretty impressive, and we've got a couple of people with us today. They're going to, I hope, give you some additional depth of understanding of the merchant world. Denise Walker, sitting in the back here, is going to talk about new products and services we're rolling out to merchants. Sitting next to her in the back, Sean Miles from our public policy group, is going to talk to you about how we're having conversations with merchants about the cost of card acceptance and really compare that to the value of card acceptance, so that merchants view this not just as a cost, but a benefit to their business of electronifying payments. In addition to the co-brand wins, we've got great momentum in the commercial credit business. Smart Data, our commercial card platform, which Gary mentioned, is a true product differentiator in our market.
It's a better product than anybody has out there that's helping us win business domestically in the U.S. and globally with large issuers. This is one of those situations where I clearly believe that our commercial platform is going to take us to levels that we never expected 10 years ago when Gary first launched the program. Really seeing traction there. In the debit space, continued momentum with independent banks and credit unions. Continued momentum with mid-tier regional banks. We're seeing good growth in the debit space. Prepaid, Gary mentioned prepaid as us taking share around the world. We're also taking share in the United States. A couple of examples up here, ADP and Paychex, so prepaid payroll. The biggest prepaid program probably in the world is the Direct Express program with the Treasury Department for Social Security benefits. Rounding out the business. Diversification.
It's not just consumer credit, it's co-brands, it's debit, it's prepaid, it's processing, it's commercial business. A lot of momentum, and we're pretty happy with the progress to date. Let me talk about safety and security for a few minutes. It's on top of mind for a lot of folks. I think the data breaches that occurred last fall were a wake-up call to the U.S. that you can't secure your payment system with 50-year-old magstripe technology. It just doesn't work. We have to get on board with the rest of the world and migrate to EMV. The good news is we're starting to see a lot of momentum with the EMV migration. By the end of 2015, we think there's going to be about 575 million chip-enabled cards in the United States. We're also seeing the rollout of terminals, shipments of terminals to merchants that are EMV-compatible.
In a lot of cases, those terminals are already in place, but the merchants haven't switched them on. They're now starting to switch them on. That chicken and egg dilemma of issuance versus acceptance, we're starting to see momentum on. Mastercard is out front on leading the conversion of this market to EMV. Even before the data breaches last year, we stuck by our liability shift dates. There were other payment networks that were waffling. We realized that this market needs to get on board with the rest of the world, that losing the credibility of your business as a retailer, as a payment network, as an issuer, wasn't going to do anybody any good, and kicking the can down the road by deferring liability shift dates wasn't going to help anybody. We formed the Payment Security Task Force.
We've got large issuers, other payment networks, and merchants sitting together at senior levels talking about how we take the obstacles and the roadblocks to EMV migration out of the way. We changed our account data compromise standards. We're out front with the regulators convincing them that they don't need to get involved. The industry is going to do this on its own. The last thing we need is another drive-by Durbin-type regulation about migrating to EMV in this country. We're on the path. EMV is only part of the answer. You have to remember that e-commerce is the fastest-growing consumer segment, has been even during the darkest days of the recession. It was growing in the mid-teens, continues to grow that way. EMV isn't applicable in the e-commerce world because there's no physical card with a chip on it or a terminal to accept it.
The answer there to secure that channel and growing channel is tokenization. Simply put, tokenization is a mechanism to replace a 16-digit card credential with a one-time use encrypted number. Our platform for tokenization is called MDES, Mastercard Digital Enablement Service. It is the enabler of what you saw last week in Cupertino, Apple Pay. It basically provides tokens that will go on the iPhone 6, the iPhone 6 Plus, and the Apple Watch to make payments commercially on time or either NFC or in-app or online. We've been working with Apple for two and a half years on standing up that engine. Ed McLaughlin and his team did a phenomenal job of standing that up and convincing a major consumer brand, a powerhouse company in the global world, that Mastercard was ready.
EMV isn't applicable in the e-commerce world because there's no physical card with a chip on it or a terminal to accept it. The answer there to secure that channel and growing channel, is tokenization. Simply put, tokenization is a mechanism to replace a 16-digit card credential with a one-time use encrypted number. Our platform for tokenization is called MDES, Mastercard Digital Enablement Service. It is the enabler of what you saw last week in Cupertino, Apple Pay. It basically provides tokens that will go on the iPhone 6, the iPhone 6 Plus, and the Apple Watch to make payments commercially on time or either NFC or in-app or online. We've been working with Apple for two and a half years on standing up that engine.
Ed McLaughlin and his team did a phenomenal job of standing that up and convincing a major consumer brand, a powerhouse company in the global world that Mastercard was ready to support them with tokenization for our cards. The MDES is not exclusive to Apple. We will use MDES for other wallet providers, other payment applications, Android, Google, whatever the case might be. We're prepared to help stand them up as well. Anything we can do to secure e-commerce payments, going to grow that business and grow our share of it. We're very happy to be there with that. Our own wallet platform is Masterpass. I joke around the office that I think there are days I think we're in wallet palooza, right? Everybody's got wallets, and not all of them are going to survive. Masterpass is a winner. We've developed an open wallet platform.
We had it right from the start. We're not trying to get out in front of our financial institution customers and get in the way of their relationship with their customers. We allow that platform to be white labeled. We allow retailers to white label it. We don't hold personally identifiable information. We're an open platform. Ed refers to it as the digital equivalent of the acceptance mark on the bottom right-hand corner of a piece of plastic. I think we're very well-positioned in this conversion of physical and digital world. Ed's team has done a great job getting us positioned well for this, thinking through it, getting it right the first time. The combination of MDES, Masterpass, et cetera, is going to put us in a great spot. I'm going to wrap up and hand this over to my friend and colleague, Ann.
Just a couple of closing thoughts. The U.S. is still the world's largest global economy. We sometimes forget that. It is. There are huge swaths of payments that are still subject and dominated by cash and check. There's a lot of runway ahead of us. The U.S. and Canada is going to be the epicenter, I believe, for payments innovation in the world. All the digital giants are here. Apple, Microsoft, Google, Twitter, Facebook, they're all based here. The chances of innovation starting here and then emanating out to the rest of the world is pretty strong. I think we're well-positioned, we're well-resourced, we've got great technology, and we're going to be able to take advantage, I think, of a lot of growth that's still left in what is otherwise viewed as a mature market. Now to the more growing market. Ann.
Thank you, Chris.
There you go.
Thanks. Well, I'm just the act before the real session with Martina, which I know you're all dying to get to. It's a bit like the speaker before dinner and cocktails, really, but I'll try and make it interesting anyway. Gary, as I said in Dublin, it would be great if someone could create something to stop my husband putting his socks in the washing machine with all my white shirts and so on. The next best invention since the front loader. Anyway, I'm delighted to talk to you today about international markets. Here's the equivalent slide from my area that Chris showed you. 66% of the GDV, obviously. As Chris said, not as high a % of the revenue. The reason is that in many countries around the world, we don't switch our own business yet.
All that says is that there's a great opportunity for us to increase our revenue around the world as we grow. As you can see, the volume growth around the world is incredibly strong. You're looking at Asia Pacific, MEA growing at 18%. The other regions, surprisingly, I say this every year, Javier's here, Europe still growing at 14%, which everybody just can't fathom sometimes. I also think that there's fantastic opportunity in Latin America. I've just been to Latin America, I'm sort of feeling very strong about it. The other reason I'm feeling strong about it is look at the PCE level currently in Latin America, 11.5%. As you know, PCE is a big driver of our growth. Look at the cash penetration level, 92%, which means only 8% of the traffic is electronic right now.
You've got a huge space, or we've got huge space to grow in Latin America, as we have when you look at the cash penetration levels all over the world. A very positive story on looking into the future and what could be going on there. Now, how do we continue to grow share? Well, we do it in many different ways in different countries because obviously we cover everything from very developed markets right through to incredibly underdeveloped markets. We're doing everything from differentiating with products and services to actually leading with services and particularly our advisors, which Gary and Chris have both mentioned this morning. Teaming up our advisors with labs, I think is a fantastic thing because that power of consulting with the innovation is the sort of thing that our customers want, and they feel that it's a very strategic move.
In fact, we're helping them think through their strategies. In my markets around the world, we have fantastic business looking at financial inclusion, which Gary covered this morning. I'm going to give you some examples of that later on. A lot of that work is obviously working with governments because benefit disbursements are driving the trends there. We're seeing much of the technology, the technology you'll see outside, such as biometrics to authenticate proof of life. These things are being adopted quickly in these markets because they help reduce identity theft. That's something the governments are very interested in. Other things that we're doing is value-added services with merchants. You've heard there's a number of merchants that we're working with around the world now on big projects, 150 projects on the go right now just this year with merchants.
Obviously, Chris has got a fantastic co-brand story in the U.S. We've got similar co-brand stories around the world with the big airlines. You can look at some of the big merchants in the U.K. like Tesco. We work with IKEA, Carrefour, and Kohl's, Woolworths in Australia. Many different merchant stories around the world, and it's becoming an increasingly important part of our business. Of course, at the same time as expanding our issuing co-brand business and so forth, we're expanding our acceptance footprint. That's hugely important in my markets because when you're up at sort of the 90% cash, then expanding your acceptance footprint is really the thing that drives business. The most exciting thing that happened yesterday was that the London Underground actually switched on to contactless.
I tell you that it wasn't even sort of hugely advertised, but the first commuter used it at 5:00 A.M. in the morning. I know that tens of thousands of transactions actually occurred yesterday. I was told at 9:00 this morning that it had already doubled in usage in 1 day from 9:00 the previous morning. Why are we so excited about that? Obviously it's a move to contactless. When you think about the impact that will have with Apple Pay, when you think about the impact it's going to have for Mastercard in the U.K. because we actually provide the prepaid infrastructure inside the EE network. The EE network actually covers 50% of the U.K.'s mobile users.
When you think we've got 6 million commuters in London every day, you can see this is a huge change that's happening as we speak right now. That's a good sort of segue into Europe. Apart from that happening in London right now, we're working all across Europe. As I said, we're leading with services. What do we do? We'll go into an example, a big Turkish bank such as Ziraat Bank, and they tell us, "Look, the Turkish market isn't a big credit market like the U.S. It's a debit-driven market." People need some way of managing their own working capital, so we've developed a deferred debit product for Ziraat Bank. What's it done? It's moved this bank from number 4 to number 1 in the Turkish market in terms of point-of-sale usage.
Very, very impactful when our advisors go in and really try and solve a product need for a client. Other things that we're doing, we have an innovative partnerships group that is working with some big infrastructure providers around the world. An example I'll use here is a business called eNett. eNett is an aggregator in the travel industry. When you go online and buy your airplane tickets to fly, you probably think everyone does that. Actually, only 1/3 of the world's airplane tickets are bought that way. 2/3 are actually bought through intermediaries such as travel agents. That causes cash to flow a lot in this industry. It caused delays to the airlines, and eNett has stepped in the middle as the virtual card holder to actually connect up the travel agents to the airlines, and we're providing the infrastructure for that around the world.
That's a great example of infrastructure plays at a partnership level. Of course, we're extending our processing assets. At the same time as looking at switching in different markets, we're actually looking at processing both issuer and acquirer processing for our customers. This allows us to actually touch transactions and bring all that value-added richness that we can do in the U.S. right now to other parts of the world. That's why we're very excited about the processing assets that we bought. Provis in Turkey, Trebica in Poland, and we recently bought ECS in India, which has fantastic IP. That's Europe. Moving on to Latin America, as I said, I've just had a business trip to Latin America.
I flew to São Paulo, Brasília, Cartagena, down to Lima, just to get an idea of what's happening in the market, go and meet some of our customers, and so on. We have fantastically strong businesses in Latin America. I know that you probably know Brazil is our biggest country in the world in terms of Mastercard business and volumes outside of North America. It's a huge market for us and we continue to grow there. We're growing both in the commercial space but also in the government space. I was with Caixa Econômica Federal last week. They're the big government payments benefits player in Brazil, and we've just launched our first project with them with 2 million people. That was a start of 8 projects that we're rolling out across Brazil.
Similarly, with Bansefi in Mexico, we've won business to do payments for 6 million people together with the bank on behalf of the government. The thing in Brazil is Caixa have teamed up with TIM, which are the big mobile player in Brazil, so we can go mobile with the social payments there. TIM have a reach of 70 million people in Brazil. Very exciting geographies and lots of room for growth there. When I was in Colombia, I met the Minister of Finance. As you can see here, only 10% of the PCE in Colombia is covered by electronic payments. Everybody's got a telephone, so we can see that things could move very fast there. Similarly, down in Peru, in Lima, only 30% of people have bank accounts.
We've just launched our JV with Telefónica there, which is the JV that is operating the Zuum product for us in Brazil. Last year when I talked to you about Zuum, there were about 26,000 users. Now there's 300,000 users. That's a drop in the ocean for Brazil, I know, but I think the whole thing is going to accelerate very fast now that it's starting to take off. Moving to Asia. If we think about Asia, huge continent. One of the things that Chris said was about his feeling about how strong we are in terms of our commercial products. I think Gary said that we have great room to grow in the commercial area. Here's a few commercial big deals that we won in Brazil recently. Our purchasing cards are going to be used by the government of Hong Kong.
That's a deal in combination with HSBC Bank. We've won government business for purchasing through Tetini and across 26 of the government departments out of just over about 110 in Singapore. That's with Citibank. We recently won a deal in the Philippines together again with Citibank, where we're introducing commercial cards, and the first instance of that is going to be the armed forces. We're winning different types of deal with different banks, different governments around the world. At the same time, we're renewing business. We renewed business with the top 2 Chinese banks this year, and we signed up the other 2 top Chinese banks last year. Business momentum continues strongly in China. Obviously at a sort of less pace than it was in previous years because China is growing less, but you know that China is growing very strong double digits.
The other side of it is we've just launched our first single brand card in China. People have asked me, "Well, how does that work, a single brand card in China?" Well, if you go to Beijing or you go to Shanghai or you go anywhere that you can use your international card, you will find that it accepts our domestic single brand card in China. Right now we're doing a combination of different things in Asia. You will see outside a demonstration of HomeSend. Please go and have a look at that technology. We are going to connect that up with Indosat in Indonesia, and that's going to give us access to something like 60 to 70 million people and allow us to do remittances. Remittances are going to be a big driver of our business around the world in the future.
Right now we've got the investments to really make them happen as well as obviously our partnerships with people such as Western Union. Just to finish on Asia and a little bit of a spotlight on India. We're working very diligently with the government unique identification program in India, which is the biometric solution. I think it's rolled out to something like 600 million Indians right now. We're also doing partnerships with other government areas such as the National Skill Development Corporation. One of the things to say about India is that it's, again, a very fast-growing market for us. Our commercial business is growing at 60% there, and our prepaid business is growing at somewhere like 200%.
It's one of these areas where we are also recruiting very good technical resources that Gary alluded to, some of the C-SAM people, and we work with a whole variety of technology people in India. Moving on to the Middle East and Africa. You can see from this slide that we're in 62 of the 69 geographies now. We've actually increased our geographic footprint by seven countries this year. One of the things about the way that we grow our business geographically is that we recruit local people. We have, in my area, actually brought in 80% of our new recruits in market. Feet on the street, people on the ground, and we like to recruit local talent from different markets around the world. We've got a very good track record of that.
At the same time, we're rolling out the big government programs that I've talked to you about before. The Nigerians have just launched their ID program. President Goodluck Jonathan did that week before last, and that's those 30 million cards led with payment capability that are rolling out across Nigeria. Obviously, at the same time, we're working with the likes of Ecobank in Africa on pan-regional deals. Ecobank reach about 20% of the African population. Gary mentioned that at the same time, we're putting in a processing hub in Dubai, which will be live by the end of the year. This will give us the ability to offer not just the issuer and acquiring processing, but also enrich those with all the fraud tools and so on that we've been developing over the last few years here at Mastercard, which are increasingly important across my geographies.
Finally, just to hit on a regulatory update. I don't have to say too much about Europe. We've got Javier here, who I know that you'll all be gravitating to at lunchtime. Just to say on the European front, the Europeans obviously been on holiday all summer. I mean, I know, I live there. We're in a situation where the new regulations are going through on different levels of interchange. There's not much news to report there. We continue to lobby to ensure that we would like to have a level playing field in Europe, and we would like to see commercial excluded from the regulations. Just right now, we haven't got any more information on that front. We are looking at the needs of separating processing and scheme, and we're well underway to understand how to achieve that if that goes ahead.
There's some positives and negatives to do with that. In the sense of, from a positive side, obviously we ourselves are in the processing business, and that separation will also affect all the local players as well. It could be an opportunity to gain more processing business in the future. Russia, you'll be reading in the paper what's happening with Russia. From our point of view, we're working very diligently with the central bank. Again, no specific new news on the Russian side from what you heard in the first half results. Obviously the Russians are moving towards having a domestic payment scheme. We're very involved in working both with the central banks and talking to the local players. We do have an RFP out in the market to talk about how we actually engage on that going forward.
In China, the Chinese still haven't changed their position on opening up the market a la their discussions with the World Trade Organization. In China, we continue to have a very strong focus on cross-border payments and working with China UnionPay on the domestic side. Remember, there are 100 million Chinese who actually travel abroad every year, and that number's increasing. Cross-border flows in China are a very good business. On that note, I'll hand over to the highlight of the morning, Martina, and look forward to talking to you maybe over lunch. Thank you very much.
Can I have the clicker? Good morning, everybody. Thanks for those of you who made your way to St. Louis, and thank you for those of you who are joining on the webcast. Gary and Gary have covered products and services and innovations, and Chris and Ann have given you a little bit of a walk around the world. I'm going to try and address a bit of a financial perspective. Here you can see the agenda. I'm going to talk about our 2014 outlook, spend a bit of time on our capital planning initiatives, talk a bit more about our acquisitions, as well as provide the update on our long-term outlook. As it has been, you guys have all the charts already in hand, and everybody on the webcast has them obviously posted on the internet, you probably all know what I'm saying.
There is not too much change that I'm going to provide to you in terms of what we have been saying in the past. Let me give you a little bit of an update on the 2014 business drivers, let's review the current quarter's data through the end of August. The as-reported numbers that you see here on the left side reflect the data reported in our prior earnings. The current quarter to date data is based on the processed metrics, which you know is pretty much the only metric that we have available intra-quarter. The processed growth trend for the July-August period is about the same or slightly better than what we had reported for the July 28 data at our last earnings call.
It is, however, the same or slightly down, depending which metric you're looking at, than what we saw in the second quarter. The slowing growth in the U.S. processed volume and transactions is pretty much in line with our expectations, and it's mostly due to the greater impact of the Chase attrition. Let's go to the next slide. Based on these drivers, our expectations for the full year 2014 are essentially unchanged since our late July earnings call. First of all, our net revenue, we expect the full year net revenue growth will remain at the low end of the three-year range. The strong underlying growth trends we're seeing in volume and transactions is allowing us to absorb the minimal impact expected from the Russian situation, as well as a good portion of the attrition that we anticipate from the Chase roll-off this year.
In addition, we continue to expect a 1 PPT contribution to our 2014 as reported net revenue growth from our M&A transactions that we have done year to date. We continue to expect that full year 2014 total operating expenses will grow in the low teens on an as-reported basis, and that includes the impact of the M&A activity. Our thoughts about G&A remain the same as what we have said on our last earnings call, that we expect the growth rate in the high teens, again, after including all the M&A activity. For modeling purposes, you should use a full year tax rate of about 32%. Although the timing is uncertain, there might be some potential over time to lower our tax rate as we continue to work through a number of initiatives geared at better aligning our tax structure with our business footprint.
On effect, when you look at the EUR and the BRL rates as of August 31st, and if they hold for the balance of the year, we expect really no significant net impact to our financials. Beyond these two functional currencies that we always call out, we could continue to see about 1 PPT headwind if other currencies continue to maintain their year-over-year depreciated level against the U.S. dollar and the EUR, we baked all of this into our comments. Let me switch a little bit of gears and talk about our capital structure and our capital planning initiatives. Our guiding principles really have not changed from what we talked to you before. We obviously want to preserve a strong balance sheet, liquidity, and credit rating so that we can continue to do the investments that are needed to enable the long-term growth of our business.
Given the strong cash flow capabilities of our business, we expect to have excess cash flow even after pursuing our growth strategies, which we would, of course, target to return to our shareholders. At this point, our bias is still towards share repurchases as it provides more flexibility for the business overall, but we continue to regularly evaluate the dividend level. Let me put this in context with some numbers. Since 2007, we have returned more than $10 billion to shareholders, either through dividends or share repurchases. In 2013, you can see on the chart here, we returned $2.7 billion to shareholders, that's significantly more than 2012. You can see that we are on an even stronger trajectory this year, having returned $3.5 billion through August of 2014, including almost doubling our dividend in January.
You might recall that declines in stock price across the tech sector earlier this year provided us with a nice opportunity to buy back more of our stock in the first half. However, you see that the pace of the share repurchases slowed significantly in the months of July and August, you should expect that to continue for the remainder of the year. Let me talk just one or two things about our M&A work. Last year, we talked about M&A as a way to acquire critical capabilities and to expand our footprint, which really fits very nicely with the strategy update that you heard. Since then, we acquired four companies, we have entered into one joint venture, that's the HomeSend acquisition that you heard about. Each one of these M&A deals really support our growth strategy.
First, we have acquired Provis in Turkey as well as ECS in India, both of those companies play strongly in the processing space. Provis strengthens our processing presence in the high-growth markets of Europe. They don't just stay in Turkey. They have a number of other markets where they're in. ECS is actually active in 25 countries, it enables us to offer turnkey processing and switching solutions. Secondly, I'm going to point out C-SAM. Gary already talked a little bit about that, but it really supports our physical-digital conversion strategy. C-SAM is really the leading provider of engineering talent, particularly in the mobile space, is expected to help drive the development of our mobile payment solutions, including the rollout of Masterpass.
Thirdly, we have Pinpoint, a leading Australian rewards program manager, which will help us to offer more targeted loyalty programs to our customers and cardholders, particularly in the Asia Pacific region. Finally, let me come back and talk a little bit more about the HomeSend JV. This partnership agreement is an important step in building out our global remittances and personal payment capabilities. With this JV, we're actually leveraging the connections between our financial institutions, our networks, and various service providers to enable safe and secure global money transfers. While the impact of M&A activities are not included in our performance objectives, they do impact our as-reported figures, financial figures.
With two more months of integration experience behind us since our earnings call comments, we now expect EPS solution from the most current acquisitions, the five that we have here to date, to be about $0.05 for both full year 2013 and 2015. Note that we continue to screen the market for other opportunities that fit well with our strategic objectives. Finally, let's look forward and let's look at our objectives that we have out there, the 2013 to 2015 period, and they have not changed since I first presented them. We continue to believe that our business can deliver an 11%-14% net revenue CAGR over the 2013-2015 period. We also expect an earnings per share CAGR of at least 20% over the same period, excluding recent acquisitions. Of course, this assumes that we will continue some level of share repurchases.
Our performance targets reflect our current view on the developments related to Chase, Russia, and the European regulation that we talked about also last quarter. We continue to hold to the 50% operating margin minimum target. I just want to reiterate that we are not managing to that 50% target. Rather, we believe that it's a minimum margin level for our business, that our business can generate even after considering all the right investment opportunities for growth and of course, managing expenses very carefully. Our ability to exceed that 50% in any given year is dependent on both top-line growth and the investment opportunities that present themselves. As we said before, all of these objectives are on a constant currency basis, and they exclude the recent M&A activities.
Thank you, and now I'd like to turn the program back to Barbara and invite my executive committee presenters to come up to the stage, and we'll start the Q&A session.
Okay.
Yeah, grab the chairs.
Just grab a chair.
Keep them quiet.
Okay, we're now ready to begin the formal Q&A session.
Oh, a lot of-
We have about 40 minutes for that. Remember, those listening remotely can submit questions by hitting the Ask a Question button on your webcast player, and we will intersperse those questions with the ones-
Barbara, you're not on.
No. All right. Okay.
Try it again.
I will. We are now ready to begin the Q&A session. Those listening in remotely can submit their questions by hitting the Ask a Question button on your webcast player, and we will intersperse those questions with the ones we receive from the audience here in the room. We'll start here in the room. We ask that you wait for a microphone to make it easier for everybody to hear your question. Please remember to give your name and your firm. In order to get to as many people, remember, please, one question. We'll pass the mic around again if we do have time. Jason, we'll go first, and then Daryl will be second.
Thank you. Jason Kupferberg from Jefferies. I think in Gary's presentation, you mentioned that one of the tenets that you live by when you're running the innovation part of the business is that cool doesn't cut it. I'm just curious, some of the people we've talked to in the industry reacting to Apple Pay have made similar comments that, "Hey, it's cool to pay with your phone," but there doesn't seem to be maybe any other value proposition for the consumer, at least the initial iteration, no real offers or loyalty platform around this. What's your view in terms of what the consumer adoption of Apple Pay might look like?
Ed, do you want to take that?
Give me a stand.
Stand up.
Sure. I think you should base that on things we already know. What we've seen in markets around the world is once the consumer taps more than two or three times using their card, they never go back to the prior behavior. If you look at the experience we've just had with Transport for London, when we launched Chicago, millions of taps in the first couple of weeks around then. I think what you'll see is anything which is simpler, faster, and more convenient, consumers will adopt, and you'll see that shift in behavior. If you look in the U.S., where 55% of the transactions, I think that was your number, Chris, are still cash-based. The ability to simply pay for that using what you're already holding with your handset, we know we'll see a shift in that behavior.
I think the other thing that's missed is this is enabling not only contactless transactions, but in-app transactions in a much simpler way. I'm pretty sure everyone in this room is probably already shopping in-app. I think what it does is it put it into consumers' fingertips, their credentials, the cards that they're already using, gives them another way of using their account, and gives you an ability to experience all the benefits of a genuine Mastercard transaction using a better shopping experience around that. Consumers always gravitate towards what's better, and this is part of that
Why don't you just pass the mic to David?
Thank you, David Togut with Evercore. Gary and Chris, you expressed a lot of enthusiasm for the commercial card growth opportunity. What are some of the major end markets in commercial that you're not in today that you could be in the next two or three years?
Maybe Ann can
Yeah
reflect on that as well, because a lot of these are in her market.
Yeah, absolutely. Around the world, there's only about 20% of the total SME population globally that our banks have access to electronic payments. It's a bit of a similar argument to the consumer space, where we say there's massive opportunity in the SME space to change the way that payments are made globally. Many of our products will play there. Some of the things you'll see, such as Simplify Commerce. Obviously, things such as the mPOS devices rolling out around the world are going to change that, all of the things we're developing in our commercial platform.
What we've seen in terms of the big issuers on the commercial side around the world is that if you look at a bank's portfolio, a big bank, and you say, "How many of your corporate customers actually use our kind of payments today?" You'll find it's only something like 15% of their portfolios that are activated. In a good consumer portfolio, you might be up at, say, 40%. What it's telling you is there's a huge opportunity for banks just to have a look at their portfolios and raise the number of commercial card users around the world, even in the existing platforms today. Finally, what I would say is, if you look at procurement around the world and the world's systems for procurement work, we currently signed a big deal with Basware, which reaches about, I think it's something like 1 million companies.
E-procurement is still very much in its infancy. Our view is that government departments, particularly, have not adopted this, and they have huge spend, whether that's in healthcare or in any other department. That's another area that's really, really under-provided for. Massive growth space in the commercial area. Remember that commercial payments are much more profitable than consumer payments and much more expensive to do if you don't do them electronically.
I think I just want to add very quickly. What we found that with the suite of products and services that we have, that we can really attack the large market, the middle market, and the SME market. We have made strides when you look especially in Chris' portfolio, but also in Ann's portfolio. We have really made huge strides across that whole spectrum of different type of companies and penetration from a commercial card point of view.
Yeah.
We do have a select set of countries that we go aggressive at, and that list has been expanding.
So-
A lot of it is dictated by our large commercial bank customers. They will say, "I'm trying to stand up a multinational program for a company that has a big employment base in Europe or AP. Can you go with us and be on the ground and help launch those programs?" It's not we're just sort of selecting based upon our own judgment where we think we need to be. We have customers saying, "I need your help here. We need Smart Data. We need people on the ground to actually administer these programs going forward." A lot Europe, a lot of AP, going forward.
Okay.
Ooh.
Stay in the back and Tien-tsin.
Thank you. Tien-tsin Huang from JPMorgan. Just want to ask about tokenization and what the revenue opportunity there might be. How much of it is incremental? Does it steal from other fee buckets? I'm curious for MDES who the target buyer is of that service for Mastercard.
Yes, Tien-tsin, it's kind of early days on tokenization pricing. We have some preliminary thoughts. We have some introductory pricing in the market today. I think it's going to evolve over time like all of our pricing does based on market dynamics, where we have leverage with players in the ecosystem. Don't necessarily see it as a tremendous revenue producer for the company. I don't think Martina or anybody in the top levels adding significant revenue growth on the tokenization platform. It's one other thing that we can do and provide a safe, secure payment system and make some money along the way.
I think, Tien-tsin, where you don't have contactless cards rolled out to a large extent, but you're mobile-ready, then I think MDES can really play very well in those markets because obviously if you stand that up, then it does the job. You can do NFC from your phone. It actually could drive much faster cash conversion in quite a few economies without the pain of issuing new cards, which is actually pretty exciting. I've been thinking in that in respect of London today, because I thought once you've got rapid transit systems going NFC, then you're going to have a whole different usage pattern, which is why MDES could be very important in future.
Hi, thanks. Chris Brendler from Stifel. I wanted to focus on processing for a second. You had a nice chart that showed some new geographies. If I look at the numbers, it looks like GDV growth the last couple of quarters has been below or above processing growth, suggesting that processing has lost a little share. Can you just talk about that trend and maybe something else going on there and maybe specifically address Europe and what's happening with SEPA and how much we've grown the processing penetration there? Thanks.
GDV growth and processing, sometimes they misalign, get in different ways. I think quarter to quarter it's hard to draw judgment because of the tos and fros of some of the pin-based routing decisions that are made by retailers. You might see situations where some of that business might go our way one quarter, might go against us the next quarter. We are very thoughtful about chasing pin debit deals in the United States. I think I've been pretty public that we're not going to chase all pin debit transactions just for the sake of having a pin debit transaction. They are very thin economics. We're talking pennies or less than pennies or fractions of a penny per transaction. We set a goal at the beginning of the year of how many we'd like.
We go through the year, we evaluate opportunities to actually incent retailers for some of that routing. Some of those deals we walk away on because there's just no money in it, and we need to see a decent return. I think what you're seeing, last quarter, the processing coming down or some of the PIN debit routing. It can change like the weather really. The next quarter, it doesn't take a long sales cycle to get a retailer to flip a switch and direct it our way.
If I perhaps you refer to Europe, that's one element, absolutely. The other element you see, this is certainly the case in Europe, may be the case across the world, is that as more transactions are happening, the amounts become smaller. In other words, as people use their cards more often, they start buying coffee, which they didn't do before. Instead of just buying a trip that is worth whatever, 2,000, you're going to see some coffee coming into the equation, right? They're going to start using their card. That's one factor that which you're going to see constantly is whilst you're going to see a very nice, healthy growth on number of transactions, the volumes may be less simply because the transaction gets smaller, that's normal process. This is completely standard, it's healthy, actually.
That means the people are using their plastic more and more. Second component of your question was what's going on in Europe? We've been hearing about SEPA for so long. What's going on? Perhaps let me bring your attention, we can talk some more during lunch about this. Let me bring your attention to the legislation. I think you alluded to that also somehow. There's one part of the legislation that is about the cross-border, which is important. You should keep that one in mind, which means that the possibility to cross-border acquire a transaction in any country in Europe will be possible without having, if you like, to respect domestic circumstances as it is the case today, right? Whether it be a domestic scheme, whether it be domestic interchange, whether it be domestic, whatever it may be that we had in the past.
You got to watch for that because that's an interesting development of SEPA, if you like. That, I don't know if you have seen the announcement that Auchan did a couple of weeks ago in France. To me, was very interesting because they already went public and said, we're going to acquire all the transactions, all our European transactions in one hub. Okay? That is going to accelerate the cross-border flow that you're going to see in Europe of transactions moving across from one country to another to a central hub. That's an important phenomenon to watch for. We can definitely talk some more over lunch.
Okay. Just give it to somebody.
I'm glad I got it that way. Darrin Peller from Barclays. I just want to start off. The announcement from Apple, it seemed like a very elegant way of working with you guys with the networks around tokenization, and it was nice to see the coordination. From that standpoint, you also mentioned your continuous investment in Masterpass and your own technology. It brings to light the question of where you decide to invest money going forward. Is it better to really just let the big consumer powerhouse companies do their job and invest in reaching the consumer their way, and you can maybe work with them on helping them along rather than really trying to go out with your own solutions and maybe take some of those $ and put it elsewhere, maybe towards perhaps processing locally or things like that we're talking about.
Yeah. If I could. Our goal, we want to make sure that if you have a Mastercard, you can have a great and secure shopping experience in anything and any device you want to do. We think Apple Pay is a great example of that. The tokenization is a foundation technology that will enable that to work. Likewise, you know as a consumer, every device you have will be a commerce device, your PC, your tablet, your game system. When you go to the innovation center that we have, you'll see washing machines, connected cars, and everything else. We're also providing with Masterpass, if you will, the digital equivalent of what the Mastercard acceptance mark does, knowing that if you have a Masterpass-enabled account, you can use that anywhere.
You'll absolutely see going forward us enabling these great experiences like Apple Pay, while also providing you as a Mastercard cardholder the ability to use Masterpass everywhere it's accepted. They're actually fully working together, and it is a continuum from what we do with the credential to what we do with the acceptance and how you can use it.
Hi, Craig Moore with Autonomous. A quick question on cross-border. By their own admission, and pretty clear from the numbers, you've been taking share from Visa in certain corridors. First question is, what's been the difference in your pitch for that volume? Secondly, are you concerned, as Visa looks to regain some of that performance, that they don't pursue a scorched earth policy on price to make sure they get that back at any cost?
Well, I think just on cross-border. Cross-border has been a focus for us, pretty intense focus for a couple of years. We actually organized a team centrally to concentrate on that, to work with our clients and to work with merchants on enabling experiences for buyers and sellers cross-border. We've also spent a lot of time zeroing in on the things that weren't working. Could be things like approval rates, declines, which were probably too high in that space. One, we assembled a team. Two, we've worked hand in glove with our clients, both issuers and merchants, and we've integrated Raja's team, the marketing team, to actually drive behavior. In addition to that, the product set's been pretty organized around making sure we go after the right types of programs, right? Affluent, of course, has real good cross-border characteristics. Does commercial.
We continue to drive hard along those lines. The other one that actually has been amazingly resourceful on the cross-border side is prepaid. If you think about the Qantas program we did last year, taking their loyalty program and making it a prepaid card, that also has provided pretty good opportunity. It's not any one thing that we've lined up to go after. It's been a series of initiatives through corridors as well. Whether it's Brazilians coming to Miami to shop, or Brazilians coming to New York to shop, or Nigerians going to London to shop at Harrods. There's a lot of give and take, blocking and tackling that has to go on.
I think we made the decision a couple of years ago to actually get very organized, and we put a pretty senior folk in charge of it, and it's based pretty much on all the diagnostics that a bunch of us touched on. Understanding where those corridors are and those opportunities and how you make the experience happen for the consumer. We feel like we're going to stay at it. We're not backing off at all. We feel like the product set's good, the analytics good, the people are good, and the marketing integration's been really good. We're going to stay at it.
Just to amplify what Gary said, I have someone in my business whose sole job is to grow cross-border revenue for us. I've got people decked against financial institutions, people decked against merchants, and they have cross-border revenue within their individual P&L. I have somebody who looks across the board, and who works with people in Ann's organization to say, "All right. We got a good corridor here. We've got the U.S. to the Caribbean. We've got the U.S. to Brazil around the World Cup. What can we do promotion-wise and experience-wise to make sure when somebody gets to their destination, they pull out Mastercard?" It's working.
I mean, we have concierge services in 400 airports around the world. When you arrive in Shanghai, which I hope to do on Monday you can use your card to actually be met from the plane and so on. Things like this in the affluent space. Also, I would say we're gaining share in most of the big geographies around the world, and the cross-border portfolios are embedded flows inside the big issuer flows. There's a sort of natural rising of cross-border flows.
I'm going to honor our commitment to take questions from offline for people who are listening in online out of the room. We have one question from a Mid-Atlantic buy-side firm. I will not identify them since they're not here, but that's who it's from. The question is: Why would the pace of share repurchases slow in the second half given the current valuation, and do you feel it's not attractive to buy back?
I just come back to what we say before. We really repurchase our stock from an opportunistic point of view. I think we expanded on that in the first half of the year quite significantly. We take that call from time to time, and at this point in time, we're running out the rest of the program that we have, then we'll reassess and see what we're going to do going forward.
Okay. Next question.
Thanks, Barbara. It's Jamie Friedman at Susquehanna. One of the trades was reporting that you had an August bulletin that referenced a digital enablement service lifecycle management fee. I'm not sure what the acronym on that'll be. I wanted to ask more generally, and I know there's been some revisions to card-not-present definitions. I wanted to ask more generally, do you make more or less or the same in a digital transaction than in a physical transaction?
Well, our pricing philosophy there is that in an e-commerce transaction, cash is not an alternative. You can't stick a $5 bill through an internet connection. This fee you're referring to was announced in a bulletin, and it's basically putting a pricing premium on e-commerce transactions versus face-to-face transaction. It's a network fee. It has nothing to do with interchange. We're investing a lot of money in MDES and tokenization and working with Apple and Google and everyone else. We're just trying to make sure that we get compensated appropriately for that investment and for the leverage we have on those transactions that you can't use cash or check. That's the philosophy behind it.
Okay, next question. Right here.
Thank you. A couple of questions.
Could you identify yourself, please?
Sorry. Gil Luria, Wedbush Securities. A couple of questions. I'll ask them at once if you don't mind.
Well, maybe we'll answer the second one. Go ahead.
You choose which one to answer. Hopefully, you'll answer both. First one relates to that question. Maybe I missed it in all the discussion, will Apple Pay transactions at the point of sale be considered card present, card not present, cardholder present, person present? How is that rate going to be different? Are you going to allow the same treatment to Google and PayPal and CurrentC and Softcard in terms of the treatment of how that payment is? The second question about security, very related to this is, the weakness of the current system surely isn't Mastercard. Nobody takes any information from Mastercard. Many have tried. We've created this massive infrastructure of trying to prevent others from losing information.
We've gotten to a point where your retailers and payment processors are not doing a very good job and may as well be posting our information online because it's all there. You're going towards a different scheme now where you're going to allow these tech companies, you're going to allow Apple to be the safeguard on a chip.
Yep
Link, at least at some level, link my biometric information, my fingerprint, and as I learned today, my EKG to a payment information.
Yep.
Doesn't that create a new payment vulnerability? If not, how does it work? How does that connection between my biometric information and my payment information work?
Thank you for the question.
They're both questions.
Paul's wife has stand up.
You have 18 minutes. Two very simple points to your two questions. One, transactions that are contactless at the point of sale are an EMV Mastercard transaction. They have been that way. They've always been that way. When we were first in the world with Samsung in Australia using the Galaxy for a tap, that was an EMV Mastercard transaction. As we said last year at Investor Day, card present has nothing to do with cards and nothing to do with presence. One of those terms we just use to confuse ourselves. When we take the chip off the card and use the chip as a device, the secure element we talked about, you're delivering the same transaction, the same type of transaction, therefore it qualifies for the same treatment.
From the first retail mobile contactless transactions we did about five years ago to today, they have always been a contactless EMV transaction, regardless of the device it's delivered from. That philosophy, as Chris talked about, also does for the in-app payments. Those have always been remote transactions, and they will continue to be treated as such. Second point on the safety and security. Our goal from the start has always been to make sure that digital transactions can be even more secure than anything we could do in the plastic world. The way you make data truly secure is you make it useless if it's used out of context. That's what EMV does.
The security we're upgrading all of the U.S. to, that we've implemented in Europe, that we've implemented in countries around the world, makes sure that every transaction is uniquely signed with the highest level of cryptology available in the industry. What we're doing with MDES, with the tokenization system, is you're bringing EMV-based security to those digital streams. Whether you're using the chip on the card in a contact terminal, whether you're buying in-app or contactless, the security is the same. The final question's on the biometrics, and this is important. Privacy is the highest principle of that. All Apple is doing in this is locally validating that you are you. That doesn't transit the payment systems. The biometric never leaves the device. It's just simply another factor of authentication that we can bring in to increase the certainty of the transaction.
As you'll see in the innovation center, whether I'm using a pin or some authorized and valid biometric method to validate you are, still the same principle that we've had in the network for 40 years. Are you you? These are just new technologies we're incorporating to increase the certainty of that transaction and to enhance the overall security. The transactions are what they are, whether they're delivered from plastic or from an alternate device. The security we're using is simply, as we've always done with pin, another way of validating that you're you, but it's done locally, never transiting the network.
Thank you. Bill Carcache with Nomura. I was hoping you could talk a bit about some of the successes that you've had in private label. In particular, historically, we've seen some very strong relationships between issuers and certain networks, and I wonder if you could talk a bit about what's changed there and perhaps given you the opportunity to get some of the wins that you've had in that space.
Private label.
Are you referring to private label or co-brand? Because they are two different-
Yes.
Yeah. Well, as I mentioned in my remarks that there's a number of ingredients to the secret sauce that we've been able to secure a lot of these co-brand wins with. Our go-to-market, our account management capabilities, and the skill sets we're hiring into the merchant side of our business. I look back over the people we've hired into that side of our business over the past two or three years. We've got people with expertise and experience, real live experience working for airlines and restaurant chains and hotel groups and who've worked for acquirers. That really, frankly, was a pretty neglected part of our employment base.
Our skill sets around the world. Just having somebody to be able to go in and talk to a merchant about their daily life and the challenges they have, the customer experiences they're having, and how we can bring solutions, makes a huge difference. Data and analytics, huge. I've mentioned, Ann mentioned 150 data and analytics projects with merchants going around the world. A lot of it is momentum too. To walk into a merchant or a hotel chain and be able to tell them that over the past year, you've done eight or nine or 10 co-brand conversions flawlessly. You've got a core competency in it, you've got muscle at it, and you can actually show statistics that the spend per card post-conversion is higher than it was-
If you're working with one of the big retailers, for example, in Europe, like IKEA, well, IKEA are open in China as well. I think what they really appreciate from us is our knowledge and expertise about how to operate in different countries around the world, and to give them local support as they're opening up new marketplaces. Often, if we're dealing, say, with Walmart in North America and we've got Nakumatt in Africa, that's the kind of power that we're bringing to the retailers now, and it's developing into a really strong relationship.
Stephen Farley Capital. Ann, in your presentation, you discussed a deferred debit product in Europe.
Could you tell us more about that and how that fits in with any current or proposed European regulations? Thanks.
The what? Sorry.
Deferred debit.
Yeah. How it fits in with Sorry, missed the thing.
With current or proposed European regulations.
Okay. The product is in Turkey. Turkey's not part of the EU currently. It's not under the current auspices of the new regulations. It's just an idea that in that kind of market where people want to pay now but actually fund later, that we have mechanisms for enabling that to occur in the consumer space and actually also in the corporate space because in Turkey we work with one of the biggest banks that deals with farmers across the region. One of the things that we did there, a similar kind of idea was we knew that farmers actually need money during the week, but they earn money over the weekend by selling their produce at the local marketplaces on a Saturday and Sunday.
The Turkish bank introduced a product which actually funded the farmers, say, on a Friday evening, and provided they paid back on a Monday morning, then there was no cost to that. That product is a commercial product, and it makes money in Turkey because people don't necessarily all pay back on a Monday. Some of them pay back on a Tuesday, some pay back on a Wednesday, but everyone's happy with the situation. It's a product that optimizes what you can do in the local market. It's that kind of thing.
Bob.
Bob Napoli with William Blair. Just further on Apple Pay, there's been discussions about Apple getting 15-25 basis points of the interchange, I just wondered what your thoughts were on how that might affect pricing in the industry and who's going to lose that share of the payment pie. I think in the past, Google really has suggested that they were not going to get any of that interchange, but clearly Apple is.
Without commenting on any relationship that may be between the institution and Apple itself, I think the fact that on launch for both debit and credit, we'll have over 80% of the spend of the U.S. covered indicates the strong bank enthusiasm for the construct that's there. We see it as a net positive for the industry for fraud reduction, elimination of cash, and obviously this is a benefit the banks want to bring to their customers.
Hi, it's Chris Donat with Sandler O'Neill. I had a question for Ann about contactless payments because in the United States right now there's about 200,000 terminals that work. In Europe, I believe the number is more like 1.5 million. Can you give us some color on what succeeded in Europe and how long that's taken including with the Tube yesterday?
Yeah. Well, actually, I think there's 39 countries now around the world that have contactless technology rolled out. The largest country in the world is not in Europe currently. It's actually Australia. The latest statistics I heard from our head of Australia was something like 50% of payments that are below $100 are now occurring contactlessly. Which is a pretty major adoption. Across Europe, the first country that really was successful was Poland. What worked there is probably what we're seeing in London now, where contactless machines were put on buses in Warsaw. We started to issue wristbands that people used in pop concerts and so on, so youth adoption programs. As soon as you go into an everyday payment scenario, that's when it really starts to hit.
Fast food restaurants, grocery stores, rapid transit, anything where people really want to get in there, get out quickly, and have a very easy method of payment.
That's a great example as well.
Yeah.
High penetration.
Yeah.
Rich here.
Hi, Charlie Gallo from Ninth Island Capital. I had a question for Garry Lyons. You mentioned that innovation is very important for your company. I was just wondering, can you talk a little bit about who you're hiring? Is it in terms of people straight out of school, people more experienced, computer science majors? I guess follow-up to that is how do you feel about your ability to compete with guys like Google and Facebook in terms of attracting top talent?
Okay. Yeah, I talked about diversity being very, very important to innovation. Historically, you might have thought a computer science team is always going to hire computer science majors. We have such diversity. We've obviously got great computer scientists. We've got great data engineers, but we've also got people who've trained in the Air Force. We've actually got people who had a previous career as stand-up comedians. The list goes on and on. The key thing really is that we consciously decided where we wanted to place our initial labs are very much in technology centers, Dublin, for example. Other than the obvious, I think the key thing is nine of the top 10 technology companies in the world have their European headquarters in Dublin. The reason for that, we own a tax safe partner, but it's also the quality of education system.
We made a conscious decision that there were areas where we weren't going to go initially because we want to hire the best engineers possible. You have to first of all establish credibility. It's all very well to say, "We're going to do great stuff. We're going to create great solutions." You're going to see 18 interesting innovations. There's obviously lots more behind the scenes that we're working on, some we've decided not to show. You're going to see that we've started to establish a level of credibility that allows us to have a lab in Silicon Valley and to not get the guys who couldn't get jobs somewhere else. We're only interested in hiring really, really smart people. We want them to be passionate about technology. We have a lot of graduates. We have a lot of millennials in the lab.
The key thing I'm interested in is not whether the person is a computer science major or a biology major. It's like, do they have a passion for what we're trying to do? Do they understand that if technology is the enabler, it's about using technology to create solutions to make people's lives easier. You'll see that today. There's a huge focus on the consumer experience. Yes, the payment is absolutely critical. Yes, we need to make it safer. Ed talked about MDES, tokenization, biometrics, the importance of that. At the end of the day, the consumer wants to know that they're safe and that they've got a fantastic experience however they're transacting. It's smart people, all different areas, all different experiences, passion for technology, and focus on the customer.
I think Ed as well. I mean, Gary on Mastercard Labs, but Ed in partnership with Rob's team, opening our facility down in Silicon Alley. We'll probably have 200 folks down there not too far out.
This month. We're opening this month.
We're opening this month. That again, was We have a beautiful campus, but it's a beautiful campus. I think attracting the right kind of talent, Rob and Ed thought that we really needed to step up that and Martina Hund-Mejean was helpful enough to help us get it done pretty quick.
In the burbs, too.
Well, I think, in general, people are shocked at how few people we've got in our company. Just think, 210 countries and territories. People think we're huge, and we've got over about 9,500 people. Actually, we get more people a month applying for jobs with us than we've got in the whole company. It's not one of those things where we have real problems attracting good talent.
Not just in Mastercard Labs, too, but if you look at our millennial proportion in the company, I think four years ago was 12%, 35% right now. Millennials.
Yeah.
There's a different feel in the company right now. Gary's been around longer than I have, when I walk the halls, boy, it is a different buzz. It's a different energy level. It's changed a lot.
Hi, it's Lisa Ellis from Sanford C. Bernstein. I think this is for one of the Garys. Can you talk a little bit about how you see or what the strategy is for ensuring the visibility of the Mastercard brand in front of the consumer in the sort of fast-moving world of the various machinations going on with various wallets and in both the online and digital world?
Yeah, it's really important. I think with Apple Pay, you actually see the card represented, right? When you pay, the card pops. These are things that are very, very important to us, and we work it day in and day out. I think that's a great manifestation of people understanding what actually works best for the consumer. Consumers want to know what card am I using, and they want to be rest assured that they're going to get all the protections and all the benefits that come with utilizing a card, whether it's loyalty or fraud protection, things like that. We work hard with partners to make sure that our card and our brand is represented the right way and that the issuers get what they need out of it as well. I think it's going to continue to move.
So far, we feel pretty good. Ed, do you have anything you want to add to that, or Gary?
I just have room-
I wanted to say on our consumer marketing that Gary's department runs obviously has things like Priceless Surprises. Actually, when we launch things around the world, it has quite stunning results. For example, we had Lang Lang involved in a Priceless surprise in China, and we got 50 million hits. We're really sort of thinking now in the digital age about how to be using our assets to really connect into the markets in a very, very powerful way.
Sure.
One last question. Matt, you pick.
Hi, it's Bryan Keane. I'll ask the question probably people are thinking about. Martina, the long-term guidance, you stayed with 2013 to 2015. 2015's only a few months away here. When do you think you'll update through 2016 or 2017, or how do you think about when that'll be? Or do you just move to an annual guidance?
Well, look, first of all, let me just tell you a little bit how this works, right? In order to either reaffirm your guidance or put out different guidance, you're going to have to make sure that you have the right kind of data points in order to be able to do that. At this point in time, we feel very comfortable about our 2013 to 2015 guidance. There are, when you think about rolling the guidance into 2016, 2017, 2018, there are a number of things that we're currently working through. I'm sure over the next year or so, we are going to see some more clarity. I give you some examples, right? The Russia situation. There is uncertainty in the Russia situation. We work very successfully, I think, so far through it, but we don't know the total outcome.
The EU regulations, there could be some things that we might have to work on, but we wouldn't know that at this point in time. As soon as we get our hands around it, you will hear from us to be thinking about the next period.
Okay. Thanks, Martina, and the rest of the executives. Before the turning the program back to Gary for just some quick final closing comments, a few administrative details. After the closing comments are over, please head back down the hallway the same way you came in. Beyond the stairs you came down, is where you'll find the product demonstration room. The lunch table discussions are in there, as well as all the product experiences. As you go into the room, there'll be boxed lunches that you can grab as you enter. When you checked in this morning, you received a brochure like this one. It outlines the 17 product stations that are staffed with our subject matter experts. Also, don't forget that there is one station that is located right at the bottom of the stairs that you came down.
It's where you can meet with a representative from one of our startups that we've partnered with through our Start Path program. We have set up four tours of our data center starting at 12:30 P.M. They'll run each half hour. We need you to sign up in advance because we have a limited number of people that we can take through at one time. As you walk into the product demonstration area, there'll be a sign-up sheet. The meeting point for those tours will be the ATM machine that's at the bottom of the stairs that you came down from the lobby. We got a lot of stuff packed in the two and a half hours we've got for the afternoon, so please take advantage of it. Gary.
One minute. Again, thanks for coming. We all appreciate your interest in our company. We work extremely hard to make sure that we keep producing very good results, and we're going to continue to do that. Key couple of points. You've heard Ann and Chris talk about markets. You heard Gary talk about innovation. We have tremendous growth prospects and opportunities that are out there. The company is in a very big, I'd say, adjustment and change, and I think Gary can best demonstrate that, and the product showcase you're going to move to will also demonstrate that. One, we see pretty good growth opportunities, very strong growth opportunities. The shift to digital is going to open up more opportunities and more ways to make money, and we're hell-bent on making sure we capitalize on that.
Solutions, we talked a lot about solutions and capability, whether it was Martina who reviewed M&A-related activity and JVs, some of the functional attributes that we talked about around processing and products. Those coming together on a local level out distributed in Ann's countries and with Chris here in the U.S. and Canada is what makes this thing run well every day. We're going to continue to invest in that. We went through acquisitions. We kind of touched on what they mean to us, what they're doing. We're going to keep developing partnerships. We're going to keep looking for the right types of fits in terms of acquisitions, and we're going to keep investing in Gary on the innovation space. Safety and security underpins everything we do.
If you have any more questions on that, Ed McLaughlin will be right in that room, and he can kind of give you a sense of what we're doing and why we're doing it. Last thing is our strategy's on target, and we're not going to waver. We're going to stay at it. It's producing results, and we have a well-oiled operating machine. All right? With that, Barbara, that'll conclude the remarks, and if we can just go that way, we'll all join you in that room down at the end, okay? Thanks.