Mastercard Incorporated (MA)

Investor Update

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Sep 17, 2014

Not quite as effective as in the big screen in New York, but nonetheless. 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. Every card and on behalf of the entire Mastercard management team, we'd 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. Because we've heard from you all that are of interest. And this year, we've decided to shorten the formal part of the presentations and add more time everyone for informal discussions over lunch with some of our senior management members. We also have our product everybody. Good morning, everybody. Good morning, everybody. Good morning, everybody. Good morning, everybody. Good morning, everybody. Good morning, everybody. Good morning, everybody. Good morning, everybody. Good morning, everybody. Good morning, everybody. Good morning, everybody. Good morning, everybody. Good morning, everybody. Good morning, everybody. Good morning, everybody. Good morning, everybody. Good morning, everybody. Good morning, everybody. 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 extend 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 Gary 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 Gary leads. We'll then talk about our business from a geographic perspective, beginning with Chris McWilton, President of North America, everybody. And then move to Anne Kairns, our President of International Markets. Martina Hunmejean, our CFO, will be presenting a financial perspective. And after Martina. There will be a Q and A session. And as in the past, we have the ability for those of you listening in month before we adjourn about noon for launch and the product demonstrations. The slides that are being used today and the presentations can be found in the booklets you peep as you walk 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 17. Everyone. Along with our presenters, we have a number of other members of management, the senior leadership team with us this morning and 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's a diagram in your booklet showing the location of the several lunch and discussion tables that are spread throughout the product demonstration area and executives who are not hosting a specific table will be floating around in the project experience as well. Everyone. I do want to acknowledge the other members of Mastercard's IR team who are in St. Louis today. Catherine Murchi, I don't know if Catherine is in the room. Matt Lanford, who is the newest member of the IR team, who is in the back, and Ryan Beaudry, who is our analyst. Everyone. 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. And second, as a courtesy to our speakers and those of you those around you, would you please silence your mobile devices. Everyone. And 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 see today, and additional information about the risks everyone. The company's comments that could affect our future results are detailed in our SEC filings, including our Form 10 ks, 10 Qs and 8ks. With that, I'd now like to turn the program over to Gary Floyd. Gary? Okay. I would like to also welcome you here. One more. 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 a hub every. There was 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 happened, all right. And even to this day, I probably haven't seen all the secure rooms they have, all right, to make sure that that continues to happen everybody. As we go forward, but Rob Regg is our host. He's the big fellow in the back. And if you get a chance, you should spend a little bit of time with him, okay? So 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 everyone. Awesome network and 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. So as Ajay has talked about the strategy and laying everybody. He uses the 3 concentric circles, all right. PCE, which is an overriding flavor of what's going on in the world. Everyone. Then he'll talk about cash and checks versus electronics, all right, and the opportunity that's created by the 85% that's still basically not electronic, everybody. All right. Then of course, there's that 15%, which having been here for so long was what we fought over for so many years, right. We continue to fight that battle day in and day 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. But the bigger opportunity is the one that is driven and focused on converting cash and check around the everybody. All right. So when I think about this, there's a couple of things we're doing. 1, financial inclusion. This has been a strategy that we've been talking about for a couple of years, all right. And And 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 everybody. All right. So 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 in to the ecosystem, all right, more inclusion. It also requires the buildup of our merchant everyone. 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, everybody. All right. So 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. Everyone. We had 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 330,000,000 340,000,000 individuals, everybody. All right. So we set a goal for ourselves when we worked our strategy a couple of years ago, 500,000,000 new consumers, right. So we feel good about where we're going. Now 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. So now you worry about adoption, utilization, optimization and those kinds Okay. So we have both the consumer development and we have the merchant development. Now if you think about small merchant development, Ed and I were talking on a ride over here earlier this morning, everybody. You just think about what's happened with the capability of phones that provided around the world to open up small merchants, etcetera. We have over 140 everyone. Around the world, 2 thirds of them are chip enabled, which tells you something. That wasn't the way it started out, okay. So the convenience of a device Mapping to another device and or plastic card is doing wonderful things for us. Now Gary Lyons, who everybody. Has been driving innovation for us. He had his team, Ajei 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. So 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? Dollars 20,000,000 to 30,000,000. We also set our goal for ourselves was basically was trying to figure out today we're at 36,000,000 merchant locations. I started 28 years ago, we had 3 everybody. All right. It's not going to take us 28 years to get to the next $33,000,000 If you think about technology and what Gary and his team kind of concentrate on, and there's multiple examples. Everybody. 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. Everyone. I'll be brief on this one and we'll touch on it. Transport for London went live yesterday, low value payments and 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 We have a generally a prepaid card that we're reloading by paying rent. Okay. Now all That's zeroed in on growing the pie. That's more money for our system, all right, and that's more money for all the participants. And if we do a good job enabling them, That enables us to continue to prosper and grow, right. So big emphasis on this. Right hand side is grow our share. That is where it's everybody. Honestly, day in and 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. So there I talk about the fact that we started investing everybody. And 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, 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, year and a half, EMV in the U. S, tokenization in the U. S. Everybody. Ed McLaughlin, who's sitting in the back, has been one of the leading forces in tokenization and many of those initiatives, All right. And he'll be available a bit later to talk on. Last point on this slide is participating more in domestic transactions. I'll touch everybody. We told you last year, Ajay, specifically, and then I followed up about our desire to be more involved in the transaction flow. It does a couple of very important things. Everyone. 1, it embeds you very much with your customers, right? So you're more important to them and they're more important to you, right? The other aspect to it is it lets everybody. Get on the ground and convert cash through innovation, if you're actually playing the processing role, right. Best examples I could give you right now everybody. Would be with Provus in Turkey where they're actually running the toll system through a prepaid card, right? That converted an antiquated platform everybody. All right. If I have processing and advisors, I fight real hard on debit and credit. All right. So it's a combination of assets that we've put together as well as the technical capabilities everybody. All right. So we feel very, very good about where we are. Now you can't do this without understanding stakeholder needs, what they're looking for, what role you want to play, everyone. What role your partner wants to play? We focus for a long, long time just on financial institutions around the world, all right. Everybody. Our stakeholder said has definitely expanded. If you talk to Chris and Ann, they will reflect on governments, they will reflect on merchants, they will reflect on technology companies. Just Just think about all the news you've heard over the last couple of weeks, all right. So you have to basically drive into what's important. Consumers, they want a great experience everyone. 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, All right. 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 will matter the most? All right. Everybody. 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, we'll give you a good perspective everybody. It's about what they do and what we can collectively get done. Next point on government, this one is a beautiful one, All right. Our work on governments, which is being done locally around the world through Anne's team and Chris' team is putting us in a very different position. It's a daily dialogue, all right, 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 and they want to lever what they have and they want to get as much out of it as they possibly can. All right. So with that as a frame, big opportunity, you really need to understand your stakeholder set, all right. And I think We're well down the path of working with all these constituencies in a very, very powerful way. Next point, there's 2 key themes that just everybody. 1 is this conversion of cash to electronic payments. We hear about it, we talk about it, we're 0ing 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 In the U. S, you really need to think about that proposition very, very differently, all right. So 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, everyone. All right. MNOs where we have 50 programs or 50 MNO relationships that have line of sight to 2,000,000,000 consumers. So 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 Right. So that is opening up big opportunities. Again, technology playing a role there. New merchants, everybody. To go online with a heck of a lot less friction, right? You should take a look at it. It's one of the things we're concentrating on. Everyone. 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 and now we're mainstreaming it to the corporation. And then the last one is just new payment flows. I like to think about what we do is connecting buyers and sellers, senders and receivers, all right. The senders and receivers is where everyone. Where all that new payment flow comes from. Could be insurance disbursements, financial benefits, remittances domestically, cross border. So we've done some of the things we've done over Customers to give consumers what they need and what they want. Now I'll transition a little bit into how we think we're doing. Craig Vosberg is in the back. Craig runs our core products, all right. He took over from Tim Murphy, who took over for Noah not too long ago. So 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 A lot of the co brand wins and things he's been doing with his team to put us in a pretty good position, right? So we feel good about where we are, We're particularly outside the U. S. And we feel very, very good about the work that's been done in the U. S. And Anne and Chris will reflect on that. Commercial credit honestly is my favorite. I was here in 1986 when we everybody. Ed Glassman runs it for us. We're doing an outstanding job winning business around the world, a combination of technical assets, smart data. Smart Data has over a half 1000000 corporations on it. It's an information management tool for corporations, right? Rob runs that here for And then 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 everybody. Particularly in LAC, EMEA 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, all right. One that takes ATM folks, all the way to beloved debit users. All right, so typically if you open up debit in markets, The first thing people will do is go to an ATM and take out cash, right. What you want them to do is go to the point of sale and use the card. So 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 everyone. 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. Now on prepaid, we've made tremendous strides on prepaid, all right. We're winning business around the world. Everyone. 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. So we're extremely happy with the progress everybody. Particularly on the share front, right. We are gaining share significantly. From that, when I take a step back, we have really good assets. Everybody. We're listening to stakeholders and we're executing particularly locally and on the ground, all right. Several years ago, if you remember, we made that decision To push product and capability people out closer to the action in the regions, all right. And we've gotten that done pretty well. So we feel good about this. Everyone. 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, very big difference when you're working with clients, stakeholders, could be governments, right, could be technology companies, particularly merchants, every. So I'll go to brand and marketing. Our brand is very, very powerful. Priceless has been a very forceful everyone. Our program for us around the world, Price of Cities is in 40 cities around the world. Price of Surprises with Raja launched probably about 6 months ago is in 11 countries, everybody. All right. And the combination of assets like that help us position the brand extremely well. Stand Up For Cancer is another great example, what prices caused it. Everybody. Started here in the U. S, Canada, Russia, moving around the world, right. So from a brand standpoint, we have a wonderful platform to work with, everybody. 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 everyone. 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 everyone. So this is one of the bigger growth areas that we see, as we head forward. On advisors at large, last year we About 1800 projects, this year it will be 2,400 projects, all right, working with all types of constituents, governments, technology companies, merchants, issuers. Last point I'll go here is loyalty. Everybody. We started a loyalty platform, as I said, back in the late '90s. We've worked that platform. We have 80,000,000 consumers on that platform with issuers, mostly outside the U. S. In 25 everybody. All right. Now with our acquisition of PinPoint, which is heavily based in Asia Pacific, EMEA, that gives us an opportunity to do some very, very different things over there, 60,000,000 consumers, 50,000 merchants on that platform. So 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, All right. The ability to actually connect these assets and use them in different ways will become extremely powerful. So I just wanted to touch on those couple of things, just to reinforce what we said last week. So it's how that all comes together, all right, that's what kind of makes a difference everyone. Now, safety and security, particularly in today's environment, undermines everything we do. Everyone. Okay. So first thing is authentication. Are you the person that actually can work with those back hard? So that's extremely important. So extending Secure Code, Secure Code for us will see about 2,000,000,000 transactions this year. That's a product where the issuer everyone. And the merchant or the issuer and the consumer know a code, flows back through the system. It's a form of 2 factor authentication. All right. Well, that works extremely well, dollars 2,000,000,000 transactions. We're also working to implement the device recognition. So if you use that card on that device and we've seen 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. All right. Last point there is biometrics. Everybody. You'll see demonstrations of biometrics inside. Bob Rainey is going to do that for you folks. But just think about the government programs I've referenced in Nigeria and down in South Africa, those are biometrically based. Okay. So 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, right, to try and remove some of the issues we have here given all data breaches, right. Everybody. The last point on the slide is digital transaction security and this is what Ed has spent a ton of time on, which is tokenization and developing m DES, which is our on behalf of service to manage tokenization and make it easy for our customers. So in essence, that process We'll nullify information in the system if it's compromised. We are the only people who know how to connect the token, right, to an actual account will be us and the issuer, Right. So if you remove that and make data useless, we're in a much better position, right. And that's what Ed has been architecting and working with the industry. So this is fundamental to everything we're doing, right. We have a roadmap worldwide on EMV, a roadmap worldwide on tokenization. Everyone. Next point is digital. I would say on credential management, Ed and the team have done a very good job leading everybody. We work with all parties interested in leveraging it. It's an open platform. It's foundational to what was done with Apple Pay. Chris will talk about that, all right. And now we're working with a variety of other players that want to leverage the same technology. It's technically enabled in 40,000 merchants and we are not going to back off on the distribution of Masterpass 1 Bed. All right. We have an extremely strong pipeline and we're not going to let up. Last one I'll talk to is open APIs and leveraging the developer community everybody. 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 way over this morning was American Airlines Hackathon using wearables To change the travel experience. And at the end of the day, 2 APIs, there were 4 finalists that they worked their way through, 3 of them had leveraged our locator services and our payment everybody. So 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. Everybody. The red places are the new additions since the last time we spoke, right? But this is a real business and is providing everyone. Significant leverage for us around the world. 55 countries, 40,000,000 cards, 5,200,000,000 transactions processed. We've switched 43,000,000,000 Okay. So if you think about this capability and you think about the technical things we're developing, MDES, tokenization, loyalty, everybody. It provides a very, 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. So this is key to our strategy. We referenced that last year. We've made some acquisitions. We continue to extend the business. Everyone. And Anne 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. Everyone. This I didn't want to leave before I just reinforced. Composition of assets, solutions that matter to customers everybody. Provided in the right way puts you in a position to win business. So on affluent, travel services, concierge services, hotel, priceless cities, our rewards platform and the provision of benefits and insurance. We sell benefits insurance, okay, for 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 everyone in this space, all right. But if you think about the acceptance, the data program around smart data, analytics, spending controls and virtual card everybody. 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 everybody. On all the benefits that come with electronic payments, it's about drawing up merchants, all right, and 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, right? But 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 Anne can touch a little everyone. I've touched on senders and receivers. What we're doing with HomeSend gives us access to about 1,200,000,000 mobile wallets, All right. The idea is to connect these parties worldwide. Okay. So new senders and receivers and then new and expanded acceptance Comes from the things that Gary is going to talk about, vending machines and different applications, appliances, Last point, we bought some companies, we developed some partnerships and we've created some innovations Through Gary and the team here at Mastercard. So if I can on expanding our footprint, I'd actually use Telefonica down in Latin America, the work we've done with them everyone. On launching programs in Brazil, I'd suggest simplify commerce, right, expanding the footprint by opening up acceptance everyone. For small merchants and omni channel solutions. On extending capabilities, I go to CSAM and the capability CSAM is providing us to work with merchants around the world, both mobile applications, loyalty applications, all right. I'd also think about MasterPaths, everyone. Online commerce and one of my favorites is Quikr, which Gary has worked on opening up a platform in Australia where parents everybody. To leverage Quikr as a platform to actually identify and purchase their son or daughter's lunch that day at school, 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. And then diversifying the businesses, Access Prepaid, Prepaid Program Management, I touched on Pinpoint, Data Cash. I think the things for me that are real important here would be Ford and Whirlpool. Everyone. When I started, I used to sell merchants. I worked for Citibank the 1st 4 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 everyone. Now 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. As soon as you take your hands off the wheel, everybody. Transaction is over, right. It actually measures your eyes on the road as well, okay. Think about that. Then also think about Gary will talk to you about Whirlpool. Everyone. 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 payments. Gary, you can touch on actually what you guys did everybody. And how are you developing? So I'm going to stop there, all right, and I'm going to introduce Gary. Now, Gary, you've been with us how long? 5 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 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 disruptive, Which actually has been very, very healthy for us. And I think it manifested itself this year with Forbes identifying us as a top 100 innovative everyone. All right. You'll hear more announcements on what Gary has been able to accomplish out a little bit. And he's also been identified individually everybody. So now I'm going to transfer it over to Gary, who'll take you through what we're thinking about on innovation. Great. You don't have to applaud. Great. Thanks very much, Gary. Good morning, everyone. I'm absolutely delighted everybody. 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 everybody. Fantastic demonstrations in the product showcase after the presentations are finished. So I'm going to do what I often do and I'll start with everyone. I'm 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 us. So we've identified some of the trends that sort of are linked to innovation strategy. And I'm not going to necessarily go through them all, but these are some of the ones that we think are going to have the biggest everybody. And we're going to be talking about the fact in commerce over the next 10 to 15 years. Certainly, new trends are going to emerge. Some of these trends are going to evolve, but these are ones that we see huge opportunity in. Just going to touch on some of them. So if we start with the Internet of Things, so depending on what reports you read, in 2020, it's believed that it's going to be between 20,000,000,000 every 70,000,000,000 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 It's potentially a commerce device. So we don't really care whether you're turning back in your phone, your tablets, your watch, your fridge, everyone. We've been a little believed in Mastercard that's no longer just about the payments. Like we obviously still need to be fantastic at the payments and to achieve some of the things everybody. Carrie talked about in terms of our objectives, we need to continue to make payments safer, simpler and smarter, but we also need to recognize the Payments are not the be all and the end all. They're often from a consumer perspective. They're often just a necessary step in what the consumer is actually trying to do. Because I've Never woken up and thought, God, I can't wait to pay for that cab this morning, or I'm really, really looking forward to going to pay for my breakfast everyone. In the restaurant, but we recognize that technology and the speed of which is evolving can allow me to do things many of the things I'm trying to do much, much better everybody. And 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 everybody. So that doesn't matter whether I'm potentially ordering ahead and having my breakfast ready when I get to the cafeteria, everybody. Potentially as we do in Yankee Stadium where I can actually order a hotdog and a soda and have it delivered directly to my season, have the payment just happened Purely and simply using our technology or even potentially one that we went live in recently in the UK, where I can actually pay for my restaurant Neil from my smartwatch and my smart device without even waiting for the waiter or the waitress to deliver their deliver the bill to me. So It creates a frictionless experience, good for the retailer and it's also good for the consumer. So in addition to sort of facilitating everyone. The payments, which is absolutely critical to our core business, we're also going to provide a great experience to the consumer. And you've probably heard us talk about this before, we want to deliver value to the everybody. Biometrics is something that we're pretty passionate about. We think if you can actually guarantee the authenticity of the user, makes it easier to further guarantee the integrity So Gary talked about the fact that we're looking at all forms of biometrics, biometrics are evolving as well. So you're going to see demonstrations everybody. I'm pretty passionate about is persistent authentication. And you're going to see a demonstration day. And these are 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 everyone. It's a phenomenon called persistent authentication. So you're authenticated throughout the day instead of having to bring your house key, your car keys, your car ticket into the office and a whole slew of password. So we're experimenting with a lot of things and we think biometric is going to play key parts and authenticate as a user. I'm a very simple guy and I I look at Mastercard and think we've become very, very relevant in the payment ecosystem for four simple reasons: our products, our people, our everybody. Our processes and our infrastructure. And if you look at the last 2, our processes and our infrastructure, our processes are highly documented. They're either appropriate segregation of duties or everybody. Highly analytical. Our infrastructure, as Gary talked earlier, is secure, scalable, reliable, fault tolerant. It's absolutely everything it needs to be everyone. To process 1,000,000,000,000 of dollars of transactions across 2 10 countries and 150 currencies. But the challenge with that rigor is it doesn't allow you to take risk. It doesn't allow you to everyone. With some of the trends that and technologies I have on the slide behind me. So we recognized about 4 years ago that we needed to create a complementary part of Mastercard everyone. It's allowed us to operate differently and allowed us to look at the future from a fresh perspective, taking risks, moving quickly. But the key everybody. Failure was an option. We knew that if we move quickly, we try things, not everything that we tried was actually going to succeed. So that area that we created is called Mastercard Labs and it's our global R and D department. It's focused on 3 areas. I've already said, everyone. Looking at the future from a fresh perspective, unencumbered is what has gone on in the past. It's also focused on creating new products and solutions for Mastercard. And finally, it's everybody. I'm 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 And quickly, and the key thing is, if an innovation is going to fail, we want to fail smart. And 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 give them a challenge, maybe some pizza and some beers and wishing them the best of luck. That will work, but it's not necessarily everyone. 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 ideas you can get. Everybody. You can also improve the speed at which you prototype, the way that you prototype and you can also, very importantly from our perspective, everyone. 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 everybody. So 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 everybody. 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, everybody. You guys know the fantastic assets that the company has. The other thing is that we're organized, I would say, because it is a repeatable process everybody. In 5 distinct areas. So the first is innovation management, that's very much focused on getting ideas, getting quality ideas and solving real problems. Everyone. So we want to get ideas from a variety of different sources, not a case of just ideas coming from the lab. We get ideas from our customers, everybody. From our employees, from our business units, from our partnership with universities, from our partnership with startup communities and so on and so forth. The 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 everyone. 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 everyone. These are the ones that we should actually move forward with. So we've got rigor around that. And the other thing that the innovation management team does to help drive a more innovative culture inside the organization is we run innovation everybody. So a great example of that is Innovation Express, it's just one of the many processes that we have. And it's a 48 hour Sort of hackathon, we bring people from around the organization, bring into a location and challenge them to solve a particular problem that supports the Mastercard in that 48 hours. They everybody. Working prototype, 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 everybody. The Gam Life and 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, but 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 one 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 everybody. 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 property, but How technology is evolving and how it can make people's lives easier. Read this expression, which we say, cool doesn't cut us. 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, everybody. I'm wasting everybody's time and everybody's money. So we're trying to focus on impactful solutions that drive our business forward. Prototypes are built by this team, everyone. 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. But 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. So the guys decided that they take a regular vending machine, non connected to the Internet vending machine, coin operated 1. And over a weekend, they build the hardware and the software everyone. To make that a MasterPath enabled machine, they get to see the experience today. So you've got the ability from your phone, your smartwatch or even Google Glass, everybody. 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 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 costs. So you have to be intelligent everybody. That's the way that you move forward. So we actually created a process since that Mastercard called our incubation process and it effectively allows us to create virtual startups to take new solutions every 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 every Create virtual startups 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. So use the lean startup methodology and the focus on achieving every Certain metrics, these metrics actually vary depending on incubation to incubation. So it could be with a new incubation, we want We achieved X transactions or Y users or Z merchants or some combination thereof, but the focus is on achieving certain metrics with the incubation group. So We've 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 with that first round funding. Would you do that, the focus is, Do they achieve them? No, maybe we kill it. That's okay because we kill the fast and cheaply. Do we actually incubate it further, give it further funding like it started getting second round funding Do we actually move it into the core business to scale because that's the holy grail, that's the key focus for us. And this process has been extremely effective for Mastercard and simplified commerce 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 start up into the core business to take advantage of the scale that the organization brings. We We also believe that the startup community is very, very important to us. Some of the best innovations in the world actually begin life in the startup space and we need everybody. Keep our finger on the post on what's happening there. Now having coming into Mastercard through an acquisition of a technology startup myself, everybody. I'm very aware of the opportunity that Mastercard can bring to these startups and vice versa. So we can be good for the startups, we can help those startups grow, everybody. But those startups can actually be great for us as well. So to actually work with this community, we set up the startup engagement group and acceleration every So it could be products and proposition development. It could be winning new customers. It could be integration with Mastercard products. It could even be raising everybody. Funding to help them move forward and they give us access to a new way of thinking, new ideas and so on and so forth. Now historically as a company and everybody. Gary talked about the evolution that he's been here for 28 years. Historically, rightly, we would have been focused on payments, processing and fraud prevention. Everyone. We were very core focus. It was about the payments, securing the payments, growing acceptance, enabling people to pay. Now as you're going to see when you meet some of the start In our start path and commerce innovative accelerators, we have a much broader view of commerce. The technology is driving commerce and payments is just one piece of that. And the final group in Labs is Labs as a Service. Now customers get really, really excited when they see 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 Between Mastercard Labs and Mastercard Advisors, I'm sure many of you are familiar with Mastercard Advisors, our 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 advisor everybody. And Barry 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 everyone. And we took them through a design thinking process that we've created called Launchpad. And in 4.5 days, everyone. We solved a lot of the friction that existed in commercial launch. We took it from pain. At the end of the week, they would have a mobile application everybody. Connected to that connected washing machine and you were able to pay for your washing from your mobile phone using MasterPath. There's 2,000,000 every commercial laundry machines in the U. S. And 25,000,000 people use this on a weekly basis in the U. S. Alone. So It's a big, big market. We're not saying this in of itself is the next big thing. Key two things I want every It's a great example of the Internet of Things, every device being e commerce device, but it's also the way that it was done. We were We're the problem. We used our methodology and in a really, really short order, we created the solution and again, you're going to get to see that later today. Everybody. And in fact, we got a great testimonial from Bob English, who is the General Manager of Commercial Laundry and Whirlpool. And he actually said, This is the most important innovation in commercial laundry since the front loading washing machine, which we're very proud of, which is fantastic testimony of when you think everyone. 1 week there was a problem and at the end of the week we had a solution that someone who's been in this space for some time recognized that delivering real value. So it's going beyond the payments everybody. Okay. So we have a fantastic team based all around the world. We have People based in Dublin, Singapore, Australia and many, many locations, New York, St. Louis, Miami and Silicon Valley in the U. S. And the couple of reasons for that everybody. I think first of all, we're a global company. We want to create global solutions and one size doesn't fit all. So the key thing everybody. You need to have people who understand the differences from country to country and region to region and also the needs of those everyone. From my perspective, more importantly, diversity is absolutely critical for innovation. You need to have different people, people who think differently, people who have been brought up From ways in different countries, from different demographics. You need people who have different experience and different qualifications. You need people who are going to challenge the status quo everybody. Because in labs, about 80% of the people that we bring in to labs know nothing about payments. That's intentional, because we've everybody. This is 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 everybody. Or you start with the premise that won't work because and we don't really want to do that. We are looking to create new solutions and use these technologies to drive commerce forward. Everybody. And just to wrap up, I often think of my job or innovation in general as finding smart people, and we've got really, really smart people, giving them a mission or a mandate, Given them the tools and the freedom to innovate and then getting the hell out of the way. And it really, really is amazing to see what gets created everyone. When you actually enable that to happen. So I look forward to speaking to you guys later today and you're seeing some of the fantastic innovations have everybody. Created right across Mastercard, some of them we've created ourselves and some of them we've created with them fantastic partners like Western Union, Roku, Wagamama everyone. And so on. So thanks very much for listening. I look forward to speaking later. I'm now going to hand over to Chris McWilton to talk about our U. S. Market. There we go. Green light, okay. Name 1 of the top 100 most innovative companies everybody. In the world, what Gary didn't mention is there was no other payment network on that list at all. So that makes our lives easier when Anne and I go to talk everybody. About innovation, thinking ahead, 5, 10 years and how payments will evolve. So as you know, I run North America everyone. For Mastercard, I take care of the U. S. And Canada. And what I thought I'd do is just start out with some key metrics about the market just to frame everybody. 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. And you may be everybody. 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 and when we switch a transaction, we get higher yield than when we just have an assessment on the volume and Anne everybody. Probably discussed this in her remarks. So in much of Anne's world, we do the cross border transactions. We switch those. The domestic every North America's cash penetration is 54%. And what that tells me is there's still large swaps of payments in North America that are still subject to electronification. So government payments, insurance payments, B2B payments, healthcare payments everybody. Provide a lot of runway for our business to grow. Now our strategy for growing the business in North America everyone. It's consistent with the strategy I discussed in New York a year ago. We haven't changed it. We're staying the course. And 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. Institutions by monoline, I mean those that did not have large retail branch footprints. And that approach served us well for a long period of everybody. But it did leave us vulnerable to changes in the marketplace. There are a number of acquisitions that took place and everybody. Retail branch distribution is an asset in competing in the consumer credit business. So we are moving on trying to diversify our revenue everybody. From 2 dimensions, 1st from a product dimension, we're not just focusing on consumer credit, but focusing on commercial credit, debit, everybody. From smaller banks, independent banks and credit unions, governments, insurance companies, processors. So it's a diversification strategy and I think we're well on our way. Now I know you're very interested in consumer credit. Obviously, all the calls Barbara Fields everyone. And Martina Fields 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, everyone. 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. And 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 the largest retailers in the world. They represent flips of portfolios from every other major everyone. We have the ability to develop relationships with these merchants that go far beyond the co brand. Everybody. So 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 and you're probably seeing a lot of advertising these days around the launch of the everybody. 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 tos and froze over quarters. But at the end of the day, we've replaced that volume and we're very, very happy with it. Everybody. So you may be saying to yourself, why is Mastercard being so successful in co brands? And there's really a couple of dimensions to it. One is the way we go and And manage the accounts with merchants. So 10 years ago, we had groups of individuals within my organization that called on financial institutions, account plans, everyone. Call plans, regular meetings, manage the relationship, make sure that technical issues were worked out. We didn't have such a thing everyone. And a hotel chain, there was no vertical alignment, etcetera. And Craig Vosberg came into that group and really Put some structure to our go to market approach and we're seeing dividends based on that. We're having richer conversations with merchants about their business and it's paying dividends everyone. The second big ingredient in our secret sauce here is data and analytics and what we've done with advisors. Everybody. Ajay mentioned in Dublin that this year alone, we have done 150 engagements around the world with merchants using our data and analytics everybody. To help them grow loyalty and their top line. So when you can go in and talk to a merchant about doing something other than just switching cards everybody. You can talk to them about loyalty, rewards, how to get a bigger piece of their customers' wallet. You have a much different success rate everybody. And we're seeing it all here. Last year at Investor Day, I mentioned that we had several deals everybody. On the cobrand front that were signed, but we could not disclose because our cobrand partner had asked us not to do that. They fear consumer confusion everybody. And they don't want to introduce that into the marketplace until the cards are ready to launch. We have that again this year. So in the not too distant future, you're going to hear about some more everybody. We're going to add to this list up there. So it's pretty impressive. And we've got a couple of people with us today that are going to, I hope, give you some additional depth everybody. Understanding of the merchant world, Denise Walker sitting in the back here, going to talk about new products and services we're rolling out to everyone. And sitting next to her in the back, Shawn 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 everyone. So in addition to the co brand wins, we've got great momentum in the commercial everybody. 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. And 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 everybody. When Gary first launched the program, really seeing traction there. In the debit space, continued momentum with independent banks and credit unions, everyone. Continued momentum with mid tier regional banks. So we're seeing good growth in the debit everybody. And 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 and the biggest prepaid program probably The world is the Direct Express program with the Treasury Department for Social Security benefits, so rounding out the business. So diversification, so it's not just consumer credit, it's co brands, it's debit, it's prepaid, it's processing, it's commercial business, everybody. 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. Everyone. That you can't secure your payment system with 50 year old MagStrike technology. It just doesn't work. We have to get on board with the rest of the world and migrate everybody. 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 5.70 shipments of terminals to merchants that are EMV compatible. And 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. So that chicken and egg dilemma of issuance versus acceptance, we're starting to see momentum on. Before the data breaches last year, we stuck by our liability shift dates. And there were other payment networks that were waffling. We realized that this market needs 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 down the road by deferring liability ship dates wasn't going to help anybody. We formed the Payment Securities Task Force. We've got large issuers, other payment networks everyone. And merchants sitting together at senior levels talking about how we take the obstacles and the roadblocks EMV migration out of the way. We changed our account data compromise standards. And 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 But EMV is only part of the answer. You have to remember that e commerce is the fastest This 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. And 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. So the answer there to secure you saw last week in Cupertino, Apple Pay. So we basically provide tokens that will go on the iPhone 6, the iPhone 6 Plus either NFC or in app or online. We've been working with Apple for 2.5 years everybody. 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 There's no physical card with a chip on it or a terminal to accept it. So the answer there to secure that channel and growing channel is tokenization. And simply put, tokenization is a mechanism to replace a 16 digit card credential With a one time use encrypted number. And our platform for tokenization is called MDES, Mastercard Digital Enablement System. It is an 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. So the answer there to secure everyone. And simply put, tokenization is a mechanism to replace a 16 digit card credential with a one time use encrypted number. And our platform for tokenization is called MDES, Mastercard Digital enablement system. It is the enabler of what you saw last week in Cupertino, Apple Pay. Everybody. So we basically provide tokens that will go on the iPhone 6, the iPhone 6 Plus and the Apple Watch everyone. Make payments commercially on time or either NFC or in app everyone. We've been working with Apple for 2.5 years on standing up that engine. Ed McLaughlin everyone. 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 everybody. 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, we're 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. Everyone. I joke around the office that I think there are days I think we're in Walapalooza, right? Everybody's got wallets and not all of them are going to survive. MasterPath 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 everybody. Financial institution customers and, getting the way of their relationship with their customers. So 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 every. 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 every piece of plastic. So I think we're very well positioned in this conversion of physical and digital world. Ed's team has done a great job everybody. Getting us positioned well for this, thinking through it, getting it right the first time and the combination of MDES, MasterPath, everybody. I'm going to wrap up and hand this over to my friend, Ann, friend and colleague, Ann. Everyone. 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 swaps of payments that are still subject and dominated by cash and check. There's a lot of runway ahead of us. And the U. S. And Canada is It's going to be the epicenter, I believe, for payments innovation in the world. All the digital giants are here. Apple, Microsoft, everyone. 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. Everyone. 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 Muted is a mature market, not in the more growing market. Thank you, Chris. Thanks. Well, I'm just the act before the real session with Martina, which I know you're all dying to get to. So great if someone could create something to stop my husband putting his socks in the washing machine with all my white 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. Everybody. 60 6 percent of the GDV, obviously. And but as Chris said, not that high Not as high a percentage of the revenue. And the reason is that in many countries around the world, we don't switch our own business yet. But all that says is that there's a great opportunity for us to increase our revenue around the world as we grow. Everyone. And as you can see, the volume growth around the world is incredibly strong. You're looking at Asia Pacific, MIR growing at 18%. And the other regions, I mean, surprisingly, I say this every year, Javier is here, Europe still growing at 14%, which everybody just can't fathom sometimes. I also think that this fantastic opportunity in Latin America, I've just been everyone. Latin America and so I'm sort of feeling very strong about it. But the other reason I'm feeling strong about it is Look at the PCE level currently in Latin America, 11.5%. And as you know, PCE is a big driver of our growth. And look at the cash penetration level, 92%, Which means only 8% of the traffic is electronic right now. So you've got a huge space or we've 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. So a very positive everybody. Good morning, everybody. 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 So 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 everyone. And 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 strategy. In my markets around the world, we have fantastic business looking at financial inclusion, which Gary everyone. I'm going to give you some examples of that later on. And a lot of that work is obviously working with governments because Benefit disbursements are driving the trends there and we're seeing much of the technology, the technology you'll see outside such as biometrics everybody. And to authenticate proof of life, these things are being adopted quickly in these markets because they help Reducing identity theft, that's something that governments are very interested in. Other things that we're doing is value added services everyone. You've heard this number of merchants that we're working with around the world now on big projects, 150 projects on the go everyone. Next 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 Pierre, Carrefour and Coles, Wilworts in Australia. So many different merchant stories around the world and it's becoming an increasingly important part of our business. And of course, at the same time, as expanding our everyone. 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. And the most exciting thing that happened yesterday was that the London Underground actually switched on to contactless. And I tell you that it wasn't even sort of hugely advertised, but the first commuter used it at 5 am in the morning. And I know that tens of thousands of transactions actually occurred yesterday. And I was told at 9 o'clock this morning that it had already doubled everybody. And why are we so excited about that? Well, 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 on Master everybody. Good morning, everybody. Good morning, everybody. Good morning, everybody. Good morning, everybody. Good morning, everybody. Good morning, everybody. Good morning, everybody. Good morning, everybody. Good morning, everybody. The EE network actually covers 50% of the U. K. Mobile users. And when you think we've got 6,000,000 commuters in London every day, you can see this is a huge change that's happening as we speak right now. Everyone. So 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. And what do we do? We'll go into an example, a big Turkish bank such as ZERAS And they tell us, look, the Turkish market isn't a big credit market like the U. S. It's a debit driven market. But People need some way of managing their own working capital. And so we've developed a deferred debit product for Zeread Bank. And 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. Everybody. Other things that we're doing, we have an innovative partnerships group that is working with some big infrastructure providers everyone. An example I'll use here is a business called ENET. ENET is an aggregator in the travel industry. Everybody. When you go online and buy your airplane tickets to fly, you probably think everyone does that. Actually, only 1 third of the world's airplane tickets are bought that way. 2 thirds are actually bought through intermediaries such as travel agents. So that causes Cash to flow a lot in this industry, it caused delays to the airlines and Enet has stepped in the middle as the virtual cardholder To actually connect up the travel agents to the airlines and we're providing the infrastructure for that around the world. So that's a great example of infrastructure plays at a partnership level. And 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 States right now to other parts of the world. That's why we're very excited about the processing We bought Provus in Turkey, Tribeca in Poland and we recently bought ECS in India, which has fantastic IP. So that's Europe. Moving on to Latin America, as I said, I've just had a business trip to Latin America. I flew to Sao Paulo, Brasilia, 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 everyone. And we're growing both in the commercial space, but also in the government space. I was everybody. With 2,000,000 people, but that was a start of 8 projects that we're rolling out across Brazil. Similarly with Banseki in Mexico, we've won business to do payments for 6,000,000 people together with the bank on behalf of the government. And the thing in Brazil is Caixa have teamed up with TIM, which are the big mobile player in Brazil. Everyone. So we can go mobile with the social payments there. Tim have a reach of 70,000,000 people As you can see here, only 10% of the PCE in Columbia is covered by electronic payments, but 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 Telefonica there, which is the JV that is operating the Zoom product for us everyone. In Brazil, in last year, when I talked to you about Zoom, we're about 26,000 users. Now there's 300,000 users. Everybody. 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. And I think Gary said everybody. We have great room to grow in the commercial area. So 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, and that's a deal in combination with HSBC Bank. We've won government business for purchasing through to T and E and across 26 of the government departments Out of just over about 110 in Singapore and that's with Citibank. And we recently won a deal in the Philippines together again with together again with Citibank, where we're introducing commercial cards and the first instance of that is going to be the armed forces. So 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 And then the 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. And the other side of it is we've just launched our first single brand card in China. And 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 National card, you will find that it accepts our domestic single brand card in China. So right now, we're doing a combination of different things in Asia. We've just done a 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 Indo Sac in Indonesia everybody. And that's going to give us access to something like 60,000,000 to 70,000,000 people and allow us to do remittances. Remittances are going to be a big driver of our business around the world in the future. And 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 600,000,000 Indians right now. And we're also doing partnerships with other government areas such as the National Skill Center. One of the things to say about India is 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 something like 200%. So everyone. It's one of these areas where we are also recruiting very good technical resources that Gary alluded to some of the CSAM people and we work with a whole variety of technology people in India. Everyone. Moving on to the Middle East and Africa, you can see from this slide that we're in 62 of the 69 geographies now. Everyone. So we've actually increased our geographic footprint by 7 countries this year. And one of the things about the way that we grow our business geographically is that we recruit local people. So we have In my area, actually brought in 80% of our new recruits in market. So people 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. That was everybody. Good luck Johnson did that week before last and that's those 13,000,000 cards led with payment everybody. That are rolling out across Nigeria. And obviously, at the same time, we're working with the likes of everybody. Eco Bank in Africa on pan regional deals. Eco Bank reached about 20% of the African population. And 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. And this will give us The ability to offer not just the issuer and accepting and acquiring processing, but also enrich those with all the fraud and so on that we've been developing over the last few years here at Mastercard, which are increasingly important across my geography. Everybody. And finally, just to hit on a regulatory update. Now I don't have to say too much about Europe. We've got Javier here, who I know that you'll all everybody. We've been on holiday all summer. I mean, I know I live there. And 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 We would like to see commercial excluded from the regulations, but 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 everybody. And 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 everybody. So it could be an opportunity to gain more processing business in the future. Russia, you'll be reading in the paper everyone. What's happening with Russia? From our point of view, we're working very diligently with the Central Bank. Everyone. Again, no specific new news on the Russian side from what you heard in the second quarter second half results first half results, But obviously, the Russians are moving towards having a domestic payment scheme. And 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 up to market, a lot of their discussions with the World Trade Organization. So in China, we continue to have a very strong focus There are 100,000,000 Chinese who actually travel abroad every year and that number is increasing. So cross border flow may be over lunch. Thank you very much. Good morning, everybody. Thanks for those of you who made your way to thank Louis and Thank you for those of you who are joining on the webcast. So Gary and Gary have covered products and services and innovations and Chris I have given you a little bit of a walk around the world. So I'm going to try and address a bit of a financial perspective. Everyone. 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, everybody. Talk a bit more about our acquisitions as well as provide the update on our long term outlook. Now as it has been, you guys have All the charts already in hand and everybody on the webcast hasn't obviously posted on the Internet. So 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 everyone. But let me give you a little bit of an update on the 2014 business drivers and let's review the current quarter's data through the end of August. So the as reported numbers that you see here on the left side reflect the data everybody. And the current quarter to date data is based on the process metrics, which you know is pretty much the only metric that we have available intra quarter. So the process growth trend for the July, August period is about the everybody. 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. And the slowing growth in the U. S. Process volume and transactions is pretty much in line with our expectations And it's mostly due to the greater impact of the Chase attrition. Now let's go to the next slide. And based on these drivers, our expectations for the full year 2014 are essentially unchanged since our late July everyone. So first of all, our net revenue, we expect the full year net revenue growth will remain at the low end of the 3 year range. The strong Minimal impact expected from the Russian situation as well as a good portion of the attrition that we anticipate from the Chase 14 as reported net revenue growth from our M and A transactions that we have done year to date. We continue to We 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 and A activity. Our thoughts about G and A remain the same As what we have said on our last earnings call that we expected the growth rate in the high teens, again after including everyone. So 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, yet everybody. We're not allying our tax structure with our business footprint. And on FX, when you look at the euro and the real 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 everybody. We could continue to see about 1 ppt headwinds if other currencies continue to remain the year over year everyone. Now let me switch a little bit of gears and talk about our capital structure and our capital planning initiative. Everyone. Our guiding principles really have not changed from what we talked to you before. We obviously want to preserve a strong balance sheet, everybody. Liquidity and crediting ratings so that we can continue to do the investments that are needed to enable the long term growth of our business. And given the Cash flow capabilities of our business, we expect to have excess cash flow even after pursuing our growth strategies, which we would of course everyone. At this point, our bias is still towards share repurchases as it provides more flexibility for the business overall, everybody. But we continue to regularly evaluate the dividend level. So let me put this in context with some numbers. Since 2000 everyone. We have returned more than $10,000,000,000 to shareholders either through dividends or share repurchases. Everyone. In 2013, you can see on the chart here, we returned $2,700,000,000 to shareholders and that's significantly more than 2012. Everyone. And you can see that we are on an even stronger trajectory this year having returned $3,500,000,000 through August of 2014, including almost doubling our dividend in January. You might recall that declines in stock everybody. 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 month of July August And you should expect that to continue for the remainder of the year. So now let me talk just 1 or everybody. Critical capabilities and to expand our footprint, which really fits very nicely with the strategy update that you heard. Since then, we acquired 4 companies everyone. We have entered into one joint venture that's the Homesend acquisition that you heard about. And each one of these M and A deals Really support our growth strategy. First, we have acquired Provus in Turkey as well as ECS in India, everybody. And both of those companies play strongly in the processing space. Provost strengthens our Processing presence in the high growth markets of Europe. So they don't just play in Turkey. They have a number of other markets where they're in. And ECS is actually active in 25 countries and it enables us to offer turnkey processing and switching solutions. Secondly, I want to point out CSAM, Gary already talked a little bit about that, but it really supports our physical to digital conversion strategy. CSAM is really the leading provider of engineering talent, particularly in the mobile space and is expected to help drive the development of particularly in the Asia Pacific region. And finally, let me come back and talk a little bit more about the HomeSense JV. This partnership agreement is an important Between our financial institutions, our networks and various service providers to enable safe and secure Global Money Transfers. So while the impact of M and A activities are not included in our performance objectives, they do impact everyone. Our as reported figures financial figures. So with 2 more months of integration experience Behind us, since our earnings call comments, we now expect EPS dilution from the most current acquisitions, everyone. So the $0.05 that we had year to date to be about $0.05 for both full year 2013 everyone, and 20 15. And note that we continue to screen the market for other opportunities that fit well with our strategic objectives. Finally, everyone. Let's go 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% to 14% net revenue CAGR over the 2013, 2015 period. We also everybody. We expect an earnings per share CAGR of at least 20% over the same period, excluding recent acquisitions. And 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 regulations that we talked about also last quarter. Everyone. 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 minimal margin level for our business that can 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. Everyone. As we said before, all of these objectives are on a constant currency basis and they exclude the M and A recent M and A activities. Everyone. 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 and A session. Okay. I think we're going to grab the chairs. Everybody. We are now ready to begin the Q and A session. Those listening in remotely can submit their questions by hitting the Ask the question button on your webcast player and we will intersperse those questions with the ones we received from the audience here in the room. Everyone. We'll start here in the room. We ask that you wait for a microphone to make it easier for everybody everybody. To hear your question, please remember to give your name and your firm. And in order to get to as many people, remember please everyone. We'll pass the mic around again if we do have time. So Jason. We'll go first and then we'll be second. Thank you. Jason Kupferberg from Jefferies. I think in Gary's presentation, you mentioned that one of the tenants that you live by when you're running the innovation part of the business is that cool doesn't cut it. So 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 everyone. Offers a loyalty platform around this. So what's your view in terms of what the consumer adoption of Apple Pay might look like? Ed, you want to take that? 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 2 or 3 times using their card, They never go back to the prior behavior. If you look at the experience you've just had with transit for London, when we launched Chicago, millions of taps everyone. So 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 percent 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. So So I think what it does is it put it to consumers fingertips, the credentials, the cards that they're already using, gives them another way of using their account everybody. And gives you an ability to experience all the benefits of a genuine Mastercard transaction using a better shopping experience around that. And consumers always gravitate towards what's better and this is part of it. Why don't you just pass the everybody. Thank you. David Togut with Evercore. Gary and Chris, you expect to express a lot of everyone. Enthusiasm for the commercial card growth opportunity. What are some of the major end markets in commercial that you're not in today You could be in the next 2 or 3 years. Maybe Anne can reflect on that as well A lot of these are in her market. Yes, absolutely. I mean, around the world, there's only about 80% sorry, there's only about 20% of the total SME population globally that our banks Have access to electronic payments. So it's a bit of a similar argument to the consumer space where we say there's massive We'll 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 everyone. And all of the things we're developing in our commercial platform. But what we've seen in terms The big issue is 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 everybody. In a good consumer portfolio, you might be up at say 40%. So what it's telling you is around the world, even in the existing platforms today. And finally, what I would say is, if you look at procurement around the world everyone. And the world systems for procurement, we currently signed a big deal with Baseware, which reaches about, I think it's something like everyone. A 1000000 Companies, but e procurement is still very much in its infancy. And 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. So that's another area that's really, really under provided for. So massive growth space in the commercial area. And remember that commercial payments are much more profitable than consumer payments and much more 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 can really attack the large market, the middle market and the SME market. So we have made strides when you look everyone. Especially in Chris' portfolio, but also in Anne'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. We do have a select every 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 everyone. So 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? So it's not we're just sort of selecting based upon our own judgment where we think everyone. Good customer 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 in Europe, a lot of AP going forward. Everyone. Thank you. Yes, 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 everyone. I'm still from other fee buckets. And I'm curious for MDES who the target buyer is of that everyone. 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 everyone. Evolve over time like all of our pricing does based on market dynamics, where we have leverage everyone. 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 everyone. Platform, but it's one other thing that we can do and provide a safe secure payment system and make some money along the way. Everyone. I think Tien Tsin, where you don't have contactless cards rolled out to a large But you're mobile ready, then I think MDES can really play very well in those markets because obviously if you stand Cash conversion in quite a few economies without the pain of issuing new cards, which is actually pretty exciting. I mean, I've everyone. I've been thinking in that that in respect of London today. As I said, 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. Everyone. Hi, thanks. Chris Brennan from Stifel. I wanted to focus on processing for a second. You had a nice chart that showed some new geographies. But if If I look at the numbers, it looks like GDV growth 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 everyone. And maybe I'll simply address Europe and what's happening with sepa and how much we've grown the processing Penetration there. Thanks. GDV growth in processing, sometimes they misalign, get in different ways. I think quarter quarter. It's hard to draw judgment because of the tos and fros of some of the pin based routing decisions that are made everybody. By retailers, so you might see situations where some of that business might go our way 1 quarter, might go against the next quarter. 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. Everyone. 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, 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 And we need to see a decent return. So I think what you're seeing last quarter, the processing coming down or some other PIN debit routing. And everybody. 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 So if I perhaps you referred to Europe. That's one element, absolutely. The everyone. The only element you see and this is certainly the case in Europe, maybe 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. Everybody. So instead of just buying a trip that is worth whatever, 2,000, they're not going to you're going to see some coffee everybody. Coming into the equation, right. They're going to start using their card. So that's one factor that which you're going to see constantly is everyone. Once you're going to see a very nice healthy growth on number of transactions, the volumes may be less simply because everyone. The transaction gets smaller and that's normal process. This is completely standard and is healthy actually. That means everybody. People are using their plastic more and more. 2nd component of your question was what's going on in Europe? I mean, we've been hearing about CIPA for so long. What's going on? And perhaps let me bring your attention and we can talk some more during lunch about this. But 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 everybody. 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. So whether it would be a domestic scheme, whether it would be domestic interchange, whether it would be domestic, everybody. Whatever it may be that we had in the past. So you got to watch for that because that's an interesting development SEPA, if you like. And that I don't know if you have seen the announcement that Beauchamp 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 Okay. So that is going to accelerate the cross border flow that you're going We see in Europe of transactions moving across from one country to another to a central hub. So that's an important Phenomena to watch for. We can definitely talk some more over lunch. Just give it to somebody. Glad I got it that way. Hey, it's Darrin Peller from Barclays. Look, just want to start off, I mean, 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. But from that standpoint, you also mentioned your continuous everyone. 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 every 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 their own solutions and maybe take some of those dollars and put it elsewhere, maybe towards perhaps processing locally or everyone. 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. And 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 everybody. 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. So So we're also providing with MasterPath, if you will, the digital equivalent of what the MasterCard acceptance mark does, knowing that if you have a MasterPath enabled account, you can use that everyone. So you'll absolutely see going forward us enabling these great experiences like Apple Pay, while also providing you as every Mastercard cardholders, the ability to use Masterpass everywhere it's accepted. So they're actually fully working together and it is a continuum 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 everybody. The difference in your pitch for that volume? Secondly, are you concerned, as Visa looks to regain some of that performance But they don't pursue a scorched earth policy on price to make sure we get that back at any cost. Everyone. I think just on course border, course border has been a focus for us, pretty intense focus for a couple of years. Everybody. We actually organized the team essentially to concentrate on that, to work with our clients and to work with merchants on enabling experiences buyers and sellers Q4. We've also spent a lot of time zeroing in on the things that weren't working, could be things like approval rates everybody. And we've integrated Raj's team, the marketing team to actually drive behavior. In addition to that, the product set has been pretty organized around making sure we go after the right types of programs, right. So, affluent, of course, has real good cross border characteristics, so does commercial. So we continue to drive hard along those lines. The other one that actually has been amazingly resourceful on the Corus border side is prepaid, Right. 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 a pretty good opportunity. So it's not any one thing everyone. That we've lined up to go after. It's been a series of initiatives through corridors as well. So whether it's Brazilians coming to Miami to shop or Brazilians coming to New York to shop or Nigerians go into London to shop at Harrods. There's a lot of give and take blocking and tackling that has to go on. And 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 in all the diagnostics that a bunch of us touched on, right. So understanding where those cards are, those opportunities and how you make the experience happen For the consumer. So we feel like we're going to stay at it. We're not backing off at all. And we feel like the product sets good, the analytics good, the people The marketing integration has been really good. So let's add. I don't have Visa. You're going to have to ask Visa what their response to that is going to be, but to amplify what Gary said. I have someone in my business whose sole job is to grow cross border revenue for us. So I've got people decked against financial institutions, people decked against merchants, everyone. And they have cross border revenue within their individual P and Ls, but I need to I have somebody who looks across the board and it works with people everyone. And the organization to say, all right, we've got a good quarter 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 everybody. And experience wise, to make sure when somebody gets to their destination, they pull out Mastercard and it's working. And we have every concierge services in 400 airports around the world. So when you arrive in Shanghai, which I hope to do on Monday, You can get you can use your card to actually be met from the plane and so on, things like this in the affluent everyone, space. And 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. So 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 everyone. 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. And 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? So I just come back to what we say We really repurchased our stock from an opportunistic point of view. I think we expanded on that in the first half of the year quite And we take that call from time to time. And at this point in time, we're running out everyone. The rest of the program that we have and then we'll reassess and see what we're going to do going forward. Okay. Next question. Everybody. Thanks, Barbara. It's Jamie Freeman at Susquehanna. One of the trades was reporting that you had an August bulletin that everyone. You referenced a digital enablement service lifecycle management fee. I'm not sure what the acronym on that will be. But I wanted to ask more generally, and I know there's been some revisions to Cardenal Present definitions, But I want to ask more generally, do you make more or less or the same in a digital transaction than in a physical transaction? Well, everybody. Our pricing philosophy there is that in an e commerce transaction, cash is not an alternative. Everybody. You can't stick a $5 bill through a Internet connection. So this speed you're referring to was announced in a bulletin and it's basically everybody. Putting a premium pricing premium on e commerce transactions versus a space transaction. It's a network fee. It's not has nothing to do with interchange. Everybody. But we're investing a lot of money in MDes and tokenization and working with Apple and Google and everyone else. Everybody. And we're just trying to make sure that we get compensated appropriately for that investment and for the leverage we have on those every transaction that you can't use cash or check, and that's the philosophy behind it. Okay. Next question. Everyone. Thank you. A couple of questions. Can you identify yourself, please? Sorry. Giller, Wedbush Securities. A couple of questions. I'll ask them at once, If you don't mind, one is a follow-up to that. Well, maybe we'll answer the second one. Go ahead. If 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, but will Apple Pay transactions at the point of sale every We 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 everyone. Google and PayPal and currency and SoftCard in terms of the treatment of how that payment is? And then the second question about Security, very related to this is the weakness of the current system surely is at Mastercard. Everybody. Nobody takes any information from Mastercard. Many have tried. You've created this massive infrastructure of trying to prevent others from losing information, but 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 To be the safeguard on a chip and link at least at some level link My biometric information, my fingerprint and as I went today, my EKG to a payment information, Doesn't that create a new payment vulnerability? And if not, how does it work? How does that connection between My biometric information, my payment information. Thank you for the question. Everybody. You have 18 minutes. Two very simple points to your two questions. Everyone. One, transactions that are contactless at the point of sale are an EMV Mastercard transaction. They have been that way. They've always been everyone. When we were first in the world with Samsung in Australia using the Galaxy for a tap, that was an EMV Mastercard transaction. Everybody. As we said last year at Investor Day, card present has nothing to do with cards and nothing to do with presence. It's one of those terms we just use to confuse So 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 qualifies for the same treatment. So from the first every. Retail mobile contactless transactions we did about 5 years ago. To today, they have always been everybody. 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. Everyone. 2nd 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 everything 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, everyone. Make sure that every transaction is uniquely signed with the highest level of cryptology available in the industry. Everybody. What we're doing with MDS, with the tokenization system is we're bringing EMV based security to those digital streams. Everybody. So 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. And the final question is 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. So as you'll see in the Innovation Center, whether I'm using a PIN Some authorized and valid biometric method to validate UR still the same principle we've had in the network for 40 years, These are just new technologies we're incorporating to increase the certainty of that transaction and to enhance the overall security. Everyone. So the transactions are what they are, whether they're delivered from plastic or from an alternate device. And the security we're using everybody. 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. Everyone. 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, you'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? Are you referring to private label or co brand because they are 2 different? Yes. Yes. Well, I mentioned in my everybody. 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 mean, I look back Over the people we've hired into that side of our business over the past 2 or 3 years, we've got people with expertise and experience, real live everybody. It was a pretty neglected part of our employment base and our skill sets around the world. So just having somebody to To be able to go in and talk to a merchant about their daily life and then 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 everyone. Around the world. And a lot of it is momentum too. Walk into or 9 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 everybody. The statistics that the spend per card post conversion is higher than it was. So if you're working with sort of one of the big retailers, For example, in Europe like IKEA, well IKEA are open in China as well. And I think what they really appreciate from us It's our knowledge and expertise about how to operate on different countries around everyone. And to give them local support as they're opening up new marketplaces. So often, if we're dealing, say, with Walmart North America, we've got NACOMAT in Africa. Then that's the kind of power that we're bringing to the retail. So if you're working With sort of one of the big retailers, for example, in Europe like IKEA, well IKEA are open in China as well. And I think what they Really appreciate from us is our knowledge and expertise about how to operate on different in different countries around the world and to give them local support as they're opening up new marketplaces. So often, We're bringing to the retailers now and it's developing into a really strong relationship. Everyone. Steve Farley, Farley Capital. Anne, 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. Yes, yes, but how it fits in with sorry, missed the thing. With current or proposed European regulations. Okay. The product is in Turkey. Turkey is not part of the EU currently. Everyone. So it's not under the current auspices of the new regulations. But 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 everyone. 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 Actually, need money during the week, but they earn money over the weekend by selling their produce at the local marketplace everybody. On a Saturday Sunday, so we introduced the Turkish bank introduced the 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. And that product is a commercial product and it makes money in Turkey because people don't necessarily all pay everybody. 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. So 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 to 25 basis points of the interchange. And 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 mean, I think in the past Google really hasn't suggested that they were not going to get any of that interchange, but clearly Apple is. Everybody. So 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 everybody. So 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 the Hi, it's Chris Donat with Sandler O'Neill. I had a question for Anne about contactless payments because in the United States right now there's about 200,000 Including with the tube yesterday? Yes. Well, actually, I think it was 39 countries now around the world everyone that have contactless technology rolled out. The largest country in the world is not in Europe currently, it's actually Australia. And 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 everybody. We really was successful with Poland. And what worked there is probably what we're seeing in London now, where complex contactless machines were put on buses in Warsaw and we started to issue wristbands that people used in pop concerts And so on, so use adoption programs. And as soon as you go into an everyday payment scenario, that's when it really starts to hit. So fast food restaurants, grocery stores, rapid Anything where people really want to get in there, get out quickly and have a very easy method of payment. And that's a great example as well. High penetration. Everybody here. Hi, Charlie Gal from Naida Capital. I had a question for Gary Lyons. So you mentioned that innovation is very important company. I was just wondering, can you talk a little bit about who you're hiring? Is it in terms of like people straight out of school, a bit 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. So I talked about diversity being very, very important to innovation. So historically, you might have thought, computer science team is always going to hire computer But we've also got people who have trained in the Air Force. We've actually got people who had a previous career as stand up comedians. The list is on and on. The key thing really is that we consciously decided where we want to place our initial labs are very much in technology centers, everyone. Dublin, for example, other than the obvious, I think the key thing is 9 of the top 10 technology companies in the world have their European headquarters in Dublin. And the reason for that, we own a tax everybody. But it's also the quality of education system. So we made a conscious decision at the earliest where we weren't going to go initially because we want Hire the best engineers possible. So you have to, 1st of all, establish credibility. It's all very well to say, we're going to do great stuff. We're going to create every. You're going to see A, Dean, interesting innovation. 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 to be passionate about technology. We have a lot of graduates, we have a lot of millennials in the lab. The key 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 everybody. And do they understand that technology is the enabler, it's about using technology to create solutions to make people's lives easier. Everybody. And 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. Everybody. Ed talked about NDAF, 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. So 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 Labs, but Ed, in partnership with Rob's team, opening our facility down in Silicon Alley, we'll probably have A couple of 100 folks down there, not too far out. This month, we're opening this month. We're opening this month. And that again was everyone. People I mean, we have a beautiful campus, but it's a beautiful campus. And I think attracting the right kind of talent, Rob and Ed thought that everybody. We really need to step up that and Martino has helped one up to help us get it done pretty quick in the burbs too. Well, I think in general, people are shock that how few people we've got in our company. Just think 2 10 countries and territories, people think we're huge and we've got over about 9,500 and actually we get more people a month applying for jobs with us than we've gotten the whole company. So it's not one of those things where we have real problems that has attracting good talent. Not just in labs, but if you look at our millennial proportion In the company, I think 4 years ago it was 12%, 35% right now millennials. Everyone. It's a different feel in the company right now. Gary has been around longer than I have, but when I walk the halls, boy, it is a different buzz, it's a different everybody. Energy level, it's changed a lot. Hi. It's Lisa Ellis from Sanford Bernstein. Everyone. This is for one of the Gary's. Can you talk a little bit about how you see or what the strategy is for ensuring the visibility of the Mastercard brand in everyone. In front of the consumer in the sort of fast moving world of the various machinations going on with the various wallets and in both the online and digital world. Yes, it's really important. I think with Apple Pay, you actually see the card represented, right? So when you pay, the card pops. I mean, these are things that are very, very important to us and we work it day in and day out. And I think that's an actual that's a great manifestation everybody. People understanding what actually works best for the consumers. 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 our card, whether it's loyalty or fraud protection, things like that. So we work hard with partners everybody. 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. So I think it's going to continue to move, everybody. But so far, we feel pretty good. Ed, do you have anything you want to add to that or Jerry? I just wanted everybody. On our consumer marketing that Gary's department runs obviously has things like priceless surprises. Everybody. And actually, when we launched 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 50,000,000 hits. Everyone. One last question. Matt, you pick. It's Brian Kane. I'll ask the question probably people are thinking about. Martina, the long term guidance you every Stay with 2013 to 2015, 2015 is only a few months away here. So when do you think you'll update through '16 or 'seventeen or how do you think about when that will be or do you just move to an annual guidance? Well, look, I mean, first of all, Let me just tell you a little bit how this works, right. In order to either reaffirm your guidance or put a different guidance, you're going to have to make sure that you 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 every 2013 to 2015 guidance. But 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. And I'm I'm sure over the next year or so, we're going to see some more clarity. So 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 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. So as soon as we get our hands around it, you will hear from us to be thinking about the next period. Everyone. Okay. Thanks, Martina, and the rest of the executives. Before turning the program back to Gary for just some quick final closing comments, everyone. 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 of the project 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 StartPath program. Also we have set up 4 tours of our data center starting at 12:30. 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. And 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 2.5 hours we've got for the afternoon. So please take advantage of it. Gary? Everyone. One minute. One, again, thanks for coming. We all appreciate your interest in our company. We work extremely hard to make sure We keep producing very, very good results and we're going to continue to do that. Key couple of points. I mean you've heard Ann and Chris talk about everybody. 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, everybody. And I think Gary can best demonstrate that and the product showcase you're going to move to will also demonstrate that. So one, everyone. 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 and 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 everybody. And with Chris here in the U. S. And Canada is what makes this thing run well every day. So we're going to continue to invest in that. Everyone. 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 everybody. In terms of acquisitions and we're going to keep investing in Gary on the innovation space. Safety and security underpins everything we do. So So 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 is on target and we're not going to waiver. We're going to stay at it. It's producing results and we have a well oiled everybody. All right. So with that, Barbara, that will conclude the remarks. And if we can just go that way, we'll join you in that room down at the end. Okay? Thanks.

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