Mastercard Incorporated (MA)

Investor Update

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Sep 11, 2013

Good morning, everybody, and welcome either those of you here with us in New York or those of us who are joining on the webcast, which is being video streamed for the first time this year. I'm Barbara Gasper, Head of Investor Relations for Master are. And on behalf of the entire Mastercard management team, I'd like to thank you for joining us to spend time today at are Annual Investment Community Meeting. We think that we have developed a program for you again this year, which addresses many of the topics that we've heard that are of interest to you. And we are again as our standard practice combining a morning of formal presentations with an afternoon like demonstrations. Ajay Banga, our CEO will kick off today's formal presentations with a strategic overview and our are progressed today. You'll then hear from several members of our management team beginning with Gary Flood, President of Global Products and Services, who will provide an overview of our products and services efforts. He will then hand it over to Ed our Chief Emerging Payments Officer for some thoughts about what the opportunities for Mastercard are as the physical little payment spaces converge. We'll then move to hearing about the regional perspective beginning with Chris McWilton, who's President of North America. And then Chris will be followed by a panel that includes Craig Bossburg, Group Executive, U. S. Market Development Tim Murphy, Chief Products Officer, Kevin Stanton, President of Mastercard Advisors, who will discuss some of our efforts to provide value to our merchant partners. Following a brief mid morning break, Anne Carens, President of International Markets, will give an overview of our non U. S. Operations and then kick off a panel discussion with 3 of her regional leaders, Daniel Moynihan, Bella Stebchynski and Eddie Grobler along with Cathy McCall, who will each talk about delivering on several of our key priorities in their respective are. After that, Martina Hun Meijon, our CFO, will provide the financial perspective on our business. Are. And then after our second Q and A session, Ajay will be back up for some closing comments before we adjourn about 115 for lunch and the product demos. Copies of the slides that we are using today can be found either in your binders for those of you who are here and they are also posted on the Investor Relations section of our website wait for your reference. Additionally, there will be an audio replay of this event available on our website for 30 days. Along with our presenters, we have another a number of other management members on the from the senior your leadership team here with us this morning. And rather than take time to introduce them now, I would just point you to the back have the bio section in your binder, where you'll see a list and their pictures. So those are the other people who are here, are not up on stage. To help facilitate the dialogue with our executives over lunch, there's also a diagram in your binder right behind joined the agenda, showing the location of several lunch and discussion tables that will be down on the lower level are and the executives who will be hosting those tables. Any executives who are not hosting a table will be stationed around the product experience don't. Before I go any further, I do have to acknowledge the other members of my Investor Relations team who put a lot of effort into this event, Catherine Murchi, Brian Beaudry and Tina D'Amato. Just a few administrative items to get out of the way. You can see from the agenda that this year we're splitting the Q and A into 2 sessions. The first one will begin about 11:15 and the second one at about 12:40. Are. As in the past, we will have the ability to take questions both from the audience and those of you who are joining us by the webcast. There is an Ask button on your screen if you're dialing in or listening in on the webcast and you can give instructions there as to how to submit your question. Our agenda does call for a brief 15 minute break at approximately 11:30. Those of you on the webcast can reconnect or stay on for 15 minutes, you might just want to stay on. And as a courtesy to our speakers and those around you, I need to ask people who are are in the room, if you would please silence your phones and your Blackberries now. Are in New York. And then finally, just as a reminder, today's presentation includes some forward looking statements about our expectations for future performance. Actual performance could differ materially from those suggested by our comments today. Additional information know about the risk factors that could affect future results is detailed in our SEC filings including our Forms 10 ks, 10 Q and 8 And now with that, I'd like to turn the program over to Ajay Banga. Ajay? Good morning, everybody, and thank you for being here. And thank you for your Over the course of the year, we guys get to meet you in a number of different settings and this is only one of them, but it's good to be together. So thank you for Let me start off by there we go. So something looks familiar here and you'll see this coming up in a couple of times over the course of today, those 3 concentric The reason I've got them is because they inform the basis of our strategy. The fact that personal consumption expenditure, which grows on the average through cycles between 4%, 5 odd percent and Martina will talk about this in between 4%, 5 odd percent and Martina will talk about this in some detail later. That is think of this as the 3 We circle as being 3 legs of a stool for a minute. That leg of the stool is the one that has the most instant reaction on the company's revenue. It's also the one that in which we have no control. That's one of the realities of how our revenue comes. It comes out of how much people spend around the world. The only good news is over the years, while Some countries may be going up at a particular point of time and others may be struggling. Overall, the world has been demonstrating a 4, 5 odd percentage point growth of personal consumption expenditure. The second leg of the stool is a second concentric circle and that's really the share of those transactions that contribute to that personal consumption expenditure, how many percentage of those transactions are in cash and check versus how many of them are in electronic And that typically has been 85,515 and over the last few years it's still 85,515 because what's happening is that the developing world, the emerging Markets which are growing faster in terms of their consumption. But remember they're starting from a slower base. They're much more cash intensive In general, whereas the developed world, which grows a little slower in personal consumption expenditure would offer much higher base. And therefore in the waiting, we still play a large number. They tend to be much more electronically oriented, although remember Germany is 78% cash. Remember that Japan is 78%, 80% cash. Remember that the United States is 50% But relative to an India or a China or a Russia, they are more electronic sort of oriented. That growing the pie Right. Is what you see us working on through the things we're doing on financial inclusion, whether it be what you've heard or you'll see downstairs with the South African Social Security System, Sasa or whether what we've been talking about in Nigeria, where we're doing both the ID system for the government as well as their social Payments on one two sided card or what we're doing with the U. S. Treasury Department or what we're doing in India with the unique identifiers team. And in fact, we now have 100 such things around the world that are going on in 20 different countries right now. That's one aspect, the World Food Programme, digital food, there's just A series of examples of this. You'll see a number of these in the product setups. So you'll see that by the way we've tried to set up The product exposures in a way that they connect back to what you're hearing, so you can get a good sense of touching and feeling what you're listening to from us during the next couple are. Other examples are growing the pie, small merchants, low value payments, high value payments simplify. You will see an effort downstairs to begin Making it easy for merchants to sign up to accept payments, card payments online in a way that hasn't been as easy for them if they were doing a Mastercard, Visa kind of connect. We think we can make it easier for them. You'll see that downstairs. You'll see efforts in Parkia on a parking equipment manufacturer and supplier that So runs parking franchises and you will see new betas coming up in New York actually in Queens in a few weeks, which are solar powered are also intelligent and can generate offers and rewards powered by True Access, which also you will see downstairs. And the guy who sold us True Mr. Schwach is now part of our management team. He's downstairs as well. So you'll see different aspects on small merchant acceptance, low value High value acceptance in the system downstairs. That growing the pie, the second leg of the stool is longer than the first 1st leg of the stool, meaning it takes longer to respond or generate revenue to us. It's also less volatile than personal consumption Maybe in any one country. Overall, personal consumption expenditure for the world as a whole, remember, is not as volatile. By country, it can create challenges The guys who run countries and their scorecards and they get their knickers in a twitch sometimes. But that's part of what the business is about. The 3rd part, the most inside concentric circle, the 3rd leg of the stool is the part that people tend to focus our share in what is today electronic. And there we've got a lot of things going on. You will see in a number of presentations in Gary's as well. So we've done well in certain aspects of growing our share in commercial payments, in debit, in prepaid, in credit consumer We're doing well outside of the United States. In the U. S. As I've talked about openly, we haven't done enough. They're changing. They're winning 60% of every cobrand deal who That has been around in the U. S. And Chris will talk about them including a few more that we've signed and he'll refer to them, which of those he can talk about and which of those he can't talk are. But we've got those deals. That's changing where we are. But the other three product categories debit, commercial as well as the old prepaid Yes. We've clearly grown share. Now we're doing it through not just going out and fighting with price, because that's the question that I and Martina get But actually through building competitive advantage through technology and services. I've talked about in control and I've talked about smart data. Actually you'll see smart data But I've also talked about other things that you'll begin to see downstairs, one of which is an effort we did in Mexico recently, which is called Miamo, which is really interesting. It's It's how you take music and you make it part of somebody's digital life. So we talk about physical digital convergence. It's not just in using a phone to tap and pay or somehow using your eyeballs to pay. It's how you interact with the consumer. It's how you interact with the merchant. It's how you interact The government, it's how you interact with everything you do when you do commerce. And you will see examples of that again downstairs. So that's the first part. We haven't changed What we're trying to do. The company is changing, Budd. It's been I've been here 4 years. And who We've over the last 5, 6 years I'd say from the IPO, but I know for the 4 years as a personal experience. We have tried to not only focus on issuers, obviously, we focus on issuers. They are the point of entry into But also to provide the right kind of engagement with merchants, with governments and with consumers. And I'm hoping you'll see a number of those have examples in the conversations today, but also in the product demos downstairs. We believe that our brand has improved tremendously. And without the brand, we've who Again, in Gary's slides, you'll hear about going from number 87 to number 20. And the fact is we're spending the same money. In fact, in dollar terms, Around a little less or more than we used to 4 years ago. It's how we spend it that has changed. We think we've got differentiated offerings. I talked about a couple who in terms of smart control and smart data and in control and the likes, but you'll see more. We think we're far more oriented towards innovation. This is one of Gary's Our strategic plan of the Board and he wrote that more jump in our innovation step and I would encourage you to ask him to jump a little. It's Attractive site. But that's basically what this is about. We believe that we have the ability today to embrace technology And fight for being seen as being innovative with the products we're doing and bringing to the market. The most important thing is we've got the people. We have in the last 4 years of the top 100 people more than 25% are brand new to their jobs from outside the company. Another odd twenty 5% have moved into their jobs inside the company. That number is not different for the top 200. When I joined here 4 years ago, the percentage of millennials In our population was 4%. It's now 30%. 30% of the company is as young as a few of who In the room and way younger than me. That's a good thing for us because they ask different questions. They make us think differently. They're making us respond And I think we need to encourage them to be a part of our company for many years to come because that mix of experiences is what makes us who We are. We've put more people overseas. We used to have 60 odd percent close to 65% of our people in the U. S. We're now down to The rest have moved out overseas. We've actually physically moved people. We have product categories run from overseas. We have Ann Cairns who runs international It's based in London. There's a whole series of efforts going on to move resources closer to the bank, the merchant, the government and the are consumer in the countries. And again, Anne will talk about that. So we think we're changing. And we're changing because we want to be more than Payments. And Gary Lyons describes this really well that nobody comes to sort of wake up in the morning or go shopping waiting and looking forward to making the payment. That's not the most exciting part of that whole interaction. It's all the rest of it. And so whether you're a consumer or a merchant or a government or a bank, our objective is to try and get Beyond just being slotted into all that little payment space there. I think we can add value with our data, with our technology, with our people, with our expertise in the whole interaction, whether it be what a merchant wants to do, grow their business, attract new customers, keep customers longer, increase their profits, figure out where to locate their stores, figure out which marketing offer gives them a high ROI, all those things, just one example, The merchant. You can have those examples on the slide for all the other categories. We believe we can play a role in that form. And that's part of what the investment is going Later on in the deck, you'll see us talk about investment. A large chunk of that is going into making ourselves more than just payments. So today, what I hope you'll get at the end of today and you'll hear it through every one of these slides is the first one that 85% Our retail transactions that are still cash, they provide us with a long runway for growth. It is changing. The markets are changing in the way they respond to electronics, but the electronics. But the convergence of physical and digital is changing not just the percentage of payments, but changing the entire payments experience, which is why we've been investing in trying to get past just being the in trying to get past just being the payments guy to providing more value to merchants, to governments, to banks and to consumers. We're clearly trying to expand our reach therefore across the ecosystem to get that done well. And most importantly, you will find us putting our money where our mouth is are growing our expenses hopefully at least in some of the cases in the right way. We make mistakes like everybody else, but we're trying to put our money in investing The growth of what we think could be our future. And we haven't changed how we're executing that strategy, aim for the 85% by growing the core business that's Consumer credit, debit, prepaid and commercial businesses, win those deals, have products that are differentiated, have offerings that are differentiated, have a brand that is differentiated, have the capability to bring those to the market at the front edge by investing in the right resources at the right point in the countries, In the regions not in purchase. And that's kind of the difference that we're trying to put into growing our core business. But then we're also trying to Our geographies and our customers. And Anne has opened up a number of offices in the last two years that she's been here. And you will see that expanding geographies, but also are expanding into merchants of different types as a customer, into governments, into telecom companies, all that is a part of what we Building new business is an obvious one. We've all talked about the physical digital convergence, but most importantly, the data that we think can really inform How we do things with this wider ecosystem. And Kevin Stanton is on a panel later that Barbara talked about. He's going to talk a little bit How that data is used for just merchants and so is Craig and so is Tim. So you're going to hear about merchants in a number of ways as we go forward. The key to all of this Having the data and having the technology with the right people and I've already talked about that. So that's what I am. That's what we're trying to do. Go off the 85%, Do it through growing the core, diversifying geographies and building out those new businesses, have a little spring or jump, as Gary would say, in our innovation And earn the right to get the business from all the players in the ecosystem, the banks and the financial institutions, but also merchants, consumers and governments. And with that, Mr. Flood, over to you. Those of us that get to work with Ajei every day, we know what jump means, all right? We also have understood the definition of quick. We know what that means, right? So what I'm going to do is take you on a little bit of a journey. I'm going to share kind of how we're thinking about things, progress, What's happening on the ground, the progress we're making and then I'll kind of conclude with what's on our mind, all right? And then I'm going to transfer it to Ed who's going to dig deeper into the physical Digital convergence discussion, which is on many of your minds, okay? So as I think about showing up every day and it seems like it's Earlier and later, which is very, very healthy. The two things that I concentrate on are growing share and growing the pie. It doesn't do us any good every day if we come in and we're not share in debit, credit, prepaid and commercial around the world, all right? And we do that fundamentally by having the right people on the ground in partnership with Anne and teams locally, all right? But we embed certain value added components into that mix, all right, which differentiate our proposition versus All right. Couple of things I'll talk about, I'll talk about IPF. Kathy is on a panel later. That's our prepaid and debit processing platform. We've been able to actually work with That to drive brand decisions. So not only making processing revenue, but driving brand revenue as well. I'd reflect on advisers. This year alone, advisers will do 1200 are Worldwide. All those are working either with issuers, governments or merchants focused on driving our business, okay? That's up about 40 5% from last year, right? So that's their trajectory. Last one that's interesting is MRS for us, which is a rewards loyalty platform, one that we started building several years ago. We have 70,000,000 accounts on that platform around the world, mostly outside the U. S. So when you combine those types of Assets, all right, with the people we have and the competencies baked in data, the propositions work, all right? And I'm going to in a few slides, I'll give you a little sense of we are and the progress we're making. Now processing is interesting. I talked about it in a sense in terms of extending brand decisions, right? But it also puts us on the ground locally, all right. I'll build on this a little bit later and then Kathy will pick it up on the panel this afternoon. When you think about innovation, there's nothing better than being on the At the point of sale, working with merchants, working with issuers, working with acquirers to drive innovation, all right? And I'll build on A lot of times we focus on the 10,000,000 cards that are out and the potential for many, many more, all right, and what it's doing to include consumers. Those are absolutely true. We're digitizing benefits. But what's interesting is you're also including merchants, more merchants coming into the system, more accepting merchants of digital So down in South Africa, the team locally work with a technology firm called Blue Label. They basically had a technology infrastructure in place Dealing with mom and pop convenience shops. If you think about beneficiaries, this is where they shop, all right? But acceptance wasn't needed to be. So the local team leverage the competency and capability already in market to grow acceptance and we're on our path to about 20,000,000, twenty 1,000 of those locations accepting payments over time. That's the ingenuity that occurs locally on the ground. When I talk about payment flows, new payment flows maybe for us, But there are payment flows that are additional payment flows. They're out there. Whether that's government benefits, whether that's businesses providing benefits are paying people or whether that's me sending money to you, all right, P2P type payments. We estimate that's about $62,000,000,000,000 around All right. So we see that. And in cash conversion, we wake up every day thinking about cash conversion guys. I will tell you that the best example I can kind of play off on this one would be the work we've done with PayPass. I'd say Canada, Australia and Poland where PayPass transaction penetration is north of 20 It ranges. The teams later will talk on Ann's panel. The average transaction is $21 That's cash displacement, okay? So when I take a step back and assess kind of where we are. We've got cash front and center, all right? And we also have this convergence of digital, physical and the opportunities That creates worldwide. Building on that, 85% of the world's transactions are still All right. You have emerging markets developing a little different than developed markets. Chris will talk about the North American markets, each of them possess opportunities to convert cash, all right? Each of them are going to provide wonderful are opportunities to balance and pay off the conversion of physical and digital. Now the best way I like to talk about this is kind of bring in a little bit of what you're going to So I'll go to align with government goals. Ajei talked about Parkion, all right, which is a parking management company, one of the biggest Around. They're in about 50 countries, 3,000 cities and they have 100 of thousands of devices deployed. Well, we think of them maybe as a transaction device. No. They're actually working with municipal governments to make the paying of tolls to provide local merchants with the opportunity to communicate you when you park your car, all right? Think about it. It's a little different than just a transaction, all All right. Next one, consumer and merchant extension is huge. I talk about at a time saying, all right, today we have about 36,000,000 merchant locations worldwide. Would If you think about what's going on with technology and phones and things like that, I mean, this will could quadruple over some time, right? Ajay touched on the World right, versus dropping physical food in a location. But on a parallel path, one of the biggest opportunities is what The implications are for merchants, whether it is a convenience store that doesn't accept or a farmer that wants to sell their goods. So not only again are you including consumers, But you're including merchants that haven't been included. You're digitizing, all right? And you're managing the convergence of physical and digital, Right. Those two examples you're going to see downstairs. Now when I think about 66% of the world's adults connected, Yes. Let me go to an example you'll also see, which is Zoom in Brazil, which is part of our Telefonica relationship, All right. In that scenario, they have about 64,000,000 consumers in Brazil, many of them not touched by financial institutions. So So you're going to have a prepaid physical card and you're going to have a phone. You're going to have ability to use the card at point of sale and you're going to have the ability to make P2P as well as bill payments And you're going to be able to load it, all right, in all their retail stores. For me, that's extension, all right, that's enabling issuance And again building more and more acceptance for our franchise. Last one is improving the buying and selling experience. I'm not going to spend time on Masterpass, Although that I think is an outstanding demonstration of what this means, Ed is going to do that for you. What I'm going to do is Let's go to Quikr. Think about sitting in the Legends part of Yankee Stadium. You want a hotdog? You want a soda? You want some popcorn? The ability to take your phone, can have it delivered. How about a movie theater in Australia? Same scenario, all right? So the technology will enable us to deliver A user experience that's convenient and simple, okay? So cash is a big focus. And again, leveraging that convergence of physical In digital is front and center and you're going to see that demonstrated downstairs. Now coming to work every day, we have to make sure that consumer credit, Debit, commercial, prepaid and processing are on the right trajectory. Ajay touched on these. There's no give and take, all right? That's fundamental to our business. I'm going to dig into that in a minute, a little bit more. Customers and geographies, governments and merchants. I've given you examples of government programs, All right. SaaS is 1. Non government type organization program, World Food Program. Those represent big opportunities for us to expand and grow our franchise. When I think about merchants, about 10% of the advisor projects are merchant focused. The panel that will be up in a few minutes, they're going to share some of what they work on with merchants and how we leverage our data with merchants. It's about more from existing customers and getting more customers. Unbanked and underbanked, I've touched on as well as new markets, convergence of physical and digital. The best example I can share with you Consumer patch of about $1,200,000,000 This will all take a lot of time, but we're embedded, we're engaged and we're defining experiences and working are with them. The last point is Advisors and Information Services. Advisors is fully integrated with all of our go to Market disciplines. As a matter of fact, downstairs, there's a demonstration of a cashless journey. The fellow who's going to be orchestrating that discussion is Mark Barnett, who runs our consulting Services for us worldwide, all right? The data and the information behind that are foundational to what we do with our clients. When we leverage it the right way, we produce more accounts, more volume, newer products and more growth. So let me dig in just for a second. Ajay touched on consumer credit, double digit growth. We're focused on affluent. We're concentrating on mass. We're looking at new universes coming into the system by the virtue of convergence of Digital, we're growing faster than the market outside of the U. S. Around the world. Chris is going to talk to you about the progress we've made in the U. S. And what we're going to do to make sure we keep are working that through. On debit, we're concentrating on optimizing portfolios, converting ATM to point of sale, leveraging IPS as Prepaid debit processing platform. We also have advisors fully engaged on portfolio optimization there as well. On commercial, we made a Number of investments, we deploy people who work with corporates directly around the world. We've invested in smart data. We have 5 over 500,000 companies on our smart data around the world, all right? 180 countries, 220 issuers, all right? And here we also have advisers integrated, concentrating on extending our penetration to small business around the world. Last point is Prepaid, we're growing faster than the market everywhere. We're growing our share. We're leveraging IPS and we're integrating Listen to all the MNO and all the government programs that we're concentrating on executing. With all these, it's a concentration of rich have a very strong position, which are based on the assets we've built over the last 4, 5, 6 years and the on the ground coordination with Chris Now a lot of that is driven off issuers, but you got to stay focused on the extended set of stakeholders. So on the consumer side, you'll hear about Masterpass. I'll touch on Priceless Cities in a couple of moments, buying and selling connected consumers domestically and cross border. But Qantas Airlines converting their loyalty card to a dual loyalty card prepaid card with the ability who To hose non currencies and to manage that through a mobile app as well as benefit from in airport experiences like Lounge access, trolleys and the like, right? All of this leveraging IPS and access prepaid are worldwide as a processor and a program manager. If I think about merchants, I touched on advisors, about 10% of their products and programs and Our merchant base, Aje hit on simplified commerce, which is what we're doing to make it easy for small e commerce merchants to get online to accept payments. That will be demonstrated downstairs. But then I think about DataCash. DataCash is connected to 68,000 merchants around the the combination of the gateway we had in Asia and what we purchased with DataCash has put us in a wonderful position. DataCash alone will add 20,000 new merchant locations to Masterpass in 2014. And then True Axis, the work we're doing with Schwarc will also be are in targeting offers and providing the right kind of value to consumers and issuers, so that they value what we bring to them, right? But at the same time creating currency in the system, right? Merchants want value. They want the right consumer at the right time and they're willing to pay for it, Okay. Governments and NGOs. The one I'm going to concentrate on here is just the World Food Program. We talked about SASSA, Direct Express, India, UID. You're familiar with the program. We've kind of touched it a couple of different ways. There's one unique twist To it that I love, which is the fact that as a consumer, one of our 2,000,000,000 cards around the world, you can register to make donations every time you use your are. All right. Now what's great about that is that's a reason for merchants to want to switch through us, okay? The only way we can work to do some very interesting things. Now brand momentum. When you run a network worldwide, you have to have a variety of things that are. Right. You have to have your acceptance infrastructure. You have to have your technology. You have to have your people. You have to have the confidence of your participants that you're going to be able to run for them worldwide that's going to enable them to grow. And brand is fundamental, all right? Priceless is 16 years young and I'll Size young, all right? It's in over 112 countries. It is an asset that partners want, all right? So our ability to create, To innovate and to leverage that platform worldwide provides us with outstanding opportunities, All right. Ajay mentioned the budget and how we're basically managing that. We ensure That our ROIs on programs are exactly where they need to be. We inform all of our decisions with very, very strong analytics. We've integrated Kevin's scientists that produce and execute data analytics for us for our advisors are within our marketing group. So we have all the insight, intelligence we need to make sure that we're optimizing that investment and getting as much out of it as possibly can. And I think the results here speak for themselves. Now, how do you pay that off? I'll just give you a couple of examples. Priceless cities, Okay. Connecting buyers and sellers domestically and cross border. We have about 120 issuers supporting the program. Our satisfaction scores are strong and our net promoter scores are up. When I think about Stand Up to Cancer, 3rd year in the program in the restaurant category, We're up about 3.5 percentage points over industry growth as we execute this program. Started in the U. S, Now it's off to Russia with Bella and she's extending that across the rest of high growth and emerging markets as we speak. Priceless music, this integrates with Ajay mentioned, which is Meeamo, right, which is that digitized profile. But it's a comprehensive platform focused on new consumers, youth, 25% of the world's Which is their passion or one of their passions, all right, in the right way and format, digitized and social. So strong marketing assets, leveraging the right partners around the world puts us in a position where we'll keep winning big business. Next point I'll go back to is just processing. Ajei touched on it. We've been very thoughtful about extending our participation in the processing From MIGS and DataCash on the acquiring side, where we'll touch 68,000 merchants SPS in Australia, Where we're driving about 5,000 ATMs, 20,000 point of sale devices, 600,000,000 transactions. And then ECS and Treveka. ECS, a minority investment in India, Trevika, a wholly owned company in Poland, both providing us with agile competency and capability are on the ground in those areas and both extending beyond those particular countries. On the issuing side, IPS, 16 customers, 25 countries, getting done exactly what we want to get done, working hand in glove with Access Prepaid. So I've got a processing platform and a program and a program management platform. Combine that with outstanding product people, we should be in pretty good shape on prepaid and we share that's what is are driving a good amount of those results. And again on the Issuing Processing side, ECS and Trevika, local installations, agile, relatively small, can take care of the smaller opportunities that are represented in these parts of the world. So as I think about this, the one point I want to leave you with here is touching more transactions. If we touch more, our ability to innovate is enhanced. Have actions. If we touch more, our ability to innovate is enhanced, all right? So this is the road we're on from a processing perspective. Now I just want to go back to grow the pie. We talked about the unbanked and underbanked. I don't need to get too much more into that, dollars 2,500,000,000 From a market organizing perspective, you have sources of funds coming in, all right? For us, the challenge is getting at those funds before it gets activated in the form of cash. So you want to digitize it, right, whether it's on a phone or a prepaid Okay. I mentioned how large those sources of funds are, all right, dollars 62,000,000,000,000 Then storage of All right? Multi dimension accounts, 1 dimensional accounts, prepaid accounts with not a ton of flexibility, debit cards, so variety. And then use of are. This is the part that actually resonates extremely well for me when I think about the World Food Program and SASSA. Funds in is one thing, funds out is another thing. So I go back to that farmer, I go Back to that convenience store, all right? That's Fazashop in South Africa. And the need to connect both of those things, all right? The ability to have funds and not use it doesn't are. All right. So our initiatives along those lines. So when I think of new small merchants, I think about all the progress you've all seen with phones and enabling merchants To leverage phones. I think underpenetrated categories, I think it's transit, right? Whether that's Moscow, Chicago, Seattle, doesn't matter, transit. Acquires and non traditional partners, I'll go to the firm that Michael Mabek's team use in South Africa, blue label technologies to help us solve an issue and open up a wonderful opportunity and keep it going. And then scale new streamlined acceptance models Simplify Commerce, which you're going to see downstairs. Take the friction out of the process for a small merchant who wants to be able to accept payments. Now, world beyond cash, we've been talking about this for a few years. I'm not going to go through every part of this slide, all right? The journey or the cash journey Mark are. Barnett can explain to you downstairs, we'll cover many of these areas. We know that cash isn't free. We know we got to concentrate on low value payments. We know engagement with Government matters, all right? 20 countries, 100 programs with governments, growing every day. And we know that acceptance It's fundamental, all right, determining how you can open up new acceptance channels. I've talked about that. Mobile payments, again, happening in in front of us a lot of activity around the world, over 30 programs we're working on right now. But what I want to do is demonstrate one thing for you. The diagnostic that goes into understanding how a consumer converts from cash to electronic payments. It's a journey. This is a small component of what Mark will share downstairs. But you can see as a consumer This is from relatively minor use of a debit card to a habitual user where the category Extension is broad, all right? So what we do is work with customers, go in, diagnose their portfolio, will see where consumers are on this particular journey and then develop and execute programs that will help them advance through these stages. What we found is this works country to country, right? Of all the projects that Kevin and his team have done, we've kind of synthesized it down to this framework, all right? Size it down to this framework, all right? So at any point in time, we probably have 10 to 15 of these going on are around the world. And it's all about that conversion of cash. Going to conclude in a minute. So I've talked about differentiated are assets driving new business. We've invested in payment gateways, data analytics, program management with access prepaid processing with Yes. We invested in the staff that we have as part of our team on advisers. We made this decision 10, 12 years ago to build this functionality capability. Loyalty, I touched on. Ed's going to kind of take you in a minute through emerging payments. But these things So access and IPS, driving home Qantas, processing program management. DataCash, white labeling an acquirer solution to RediCard in Brazil. When we bought DataCash, it was a straight to merchant are in the position. Now, we're working to acquire us and proceeding to address more and more of those around the world. DataCash was live, I think, Gilberto, August 20 FraudShield in Germany, leveraging our InControl platform, data analytics from advisors, 50,000,000 accounts drove fraud down 60 Okay. It's the leverage and the ingenuity behind the assets. And then advisors, last year Kevin was up here. He talked about the 3 Divisions within Advisors, Consulting Services, Managed Services and Information Services, all right? I've reflected for a minute Over 40% growth in projects, almost 10% of those projects are merchant based, all right? So that group has advanced and has provided tremendous leverage for us worldwide. So now as I think about going forward, strategy efforts are paying off. Frankly, Scaling more of the solutions and initiatives to drive more markets is what we're concentrating on right now. Broader stakeholder focus, the business opportunities that are coming by working with governments and merchants around the world. They're not shallow. They're deep and they represent wonderful opportunities for our franchise. Cash is converting to electronic? Yes. Make sure we're getting at it as fast as we possibly can, all right? Big opportunity for are in the franchise. Ajay touched on innovation, technology, I'll touch on execution. We structure our organizations regionally and locally. We've developed customer delivery out in the regions to enable us to get a lot more done on the ground with pace, all right? This is going to continue to be a key focus for us. Many of these projects, they're not easy. So you got to make sure you have the right people with the right focus driving hard. Next is don't take your eye off the basics. Tim Murphy is accountable for debit, credit, commercial, prepaid and a few other things are. We got to make sure that those things are humming and that our growth rates continue to be faster than market. As I said on credit, we're are doing really well outside the U. S. Chris has made great progress in the U. S. And he's going to share that with you, but we're not going to take our eye off the core at all. Last thing is we get a lot of questions on the convergence of physical and digital. Hopefully, what I've kind of expressed to you is we are tackling this worldwide. We are embedded and in the middle of all of this. We are not taking it lightly. We are investing and we're getting after it, All right. So with that, I'm going to conclude and I'm going to invite Ed McLaughlin to jump up here, All right. And talk to us a little bit more about this convergence. Thanks, Gary. Thank you, Gary, and good morning, everyone. So I'd like to take a moment. I'd like to take this opportunity to expand on the incredible growth opportunities that we have as a result of the ongoing convergence of the physical and digital worlds and also take a moment to tie together, I think, a lot of the examples and a lot of the experiences you're going to see with from us today. But let me start with something you already know. As you've already seen In your own life, and particularly in the lives of our children, we are in the midst of a global transformation in consumer behavior. In both the developed and the emerging markets, what is changing is nothing less than how consumers interact. It's how we interact with our families, how we interact with our friends and how we interact with our communities. And these fundamental changes in how consumers interact will also transform how they transact between the physical and digital worlds are becoming even more blurred. So what does this mean for Mastercard? Well, we believe the opportunity is nothing short of enormous because it now enables us to do things we could never do before with Simple Plastic. So for the consumers who use the nearly 2,000,000,000 Mastercards that we have out there Ricard or for issuers evaluating their portfolios, we will win share by being better at what's next. And as exciting as thinking about all the new experiences are that we can provide for those consumers we have are. I think it is absolutely inspiring to think of how we can use digital to serve 100 of millions of new consumers. And these are consumers we could never reach before with our traditional products, with our traditional channels. And this conversion The physical and digital is creating incredible opportunities for Mastercard to generate more value and drive more business for the nearly 30 6,000,000 merchants who accept Mastercard today. But as Gary said, beyond the merchants we already work with, convergence enables us to reach Tens of millions of new merchants who previously had never had access to the Mastercard network, and we can now bring them all of the benefits of electronic payments and eliminate even more of the cash transactions. But the last point I'd like to make and the really The reason to say is every one of these new merchants extends the reach of the Mastercard value network. It increases the value of the Mastercard It makes all of those products that our current consumers have and those hundreds of millions of new consumers will have that much more valuable. So the next question, how are we delivering on this promise? Well, let me quickly cover 3 key topics. First, we're optimizing our network. We're making it easier to access. We're allowing richer data to flow through the are using digital technologies to make it ever more secure. We are creating an operating system for digital commerce and we are making sure Every Mastercard issuing bank, every Mastercard accepting merchant can be fully enabled for digital are. And everyone is ready for this world moving beyond plastic. Secondly, we're engaging with New partners. And you'll see examples of that all through the presentations today. Gary mentioned the over 30 active mobile partnerships we have around ranging from Samsung to Deutsche Telekom to our joint ventures with Telefonica to ISIS right here in the United States. And with our open APIs, our goal is to make it simpler for developers, both corporate and independent, to deliver consumers make payments. It's also about helping them receive the funds that they deserve. And that is where this focus on government benefit distribution, payroll and other access to funds come from. But as importantly, after consumers have received their funds into Mastercard We have tremendous opportunities to provide payment flows that are relevant to them in their communities, whether it's domestic transfer or bill payments or being able to shop online for the first time. Never do before. We know consumers don't want to make a transaction. They're trying to do something else. They're looking for better experiences. They want shortcuts. They want things to be simpler and faster. And we also know they certainly don't want to lose Any of the security, any of the benefits they enjoy today from a genuine Mastercard transaction. So what are these digital shortcuts that we can deliver? Well, first, when you're at the register, Mastercard's PayPass allows you to tap your phone, now your watch, anything for a fast secure And what we have seen in 56 markets around the world is consumers love the speed and convenience of It's the ultimate proof. After they tap 2 or 3 times, they almost never go back to their prior payment behavior. And merchants are seeing this benefit. We've had 136 percent growth in PayPass locations in just the last year to over 100 have 1,200,000 locations globally. And new markets like Japan are opening up for Mastercard contactless with over 400,000 terminals announced to go in, in just the terminals announced to go in, in just the new next few years. And this is because merchants are seeing the benefits. At Kohl's, which is one of the largest retailers in Australia, over 60% that's over 60% of Mastercard transactions today are already contactless. He told us, we have seen the share of cash payments fall. Contactless is replacing cash. And our view is that customers are at a tipping point in the way they wish to pay. That's straight from how this is helping Kohl's business in Australia. And this is not just for retail. As Gary mentioned, transit systems from London to Chicago to Las Vegas are implementing contactless to help speed commuters through the turnstiles. This is an environment where seconds literally matter and contactless is by far the best way for consumers to pay. But beyond what happens at the physical point of sale, we know that perhaps the best way through the queue is to avoid it entirely. And are. And Mastercard is doing exactly that by enabling consumers to shop in aisle or shop in app, So merchants are no longer constrained by their physical store or even their online website and they can now reach their today is still through the e commerce channels. And in that channel today, over 20% of Total consumers worldwide use a Mastercard directly for online purchases. Now to put that 20% over 20% in have access. We're building on that advantage, providing consumers with simple and more secure ways of using your Mastercard from any device. And finally, as you know, Mastercard's position has always been that any device will be a commerce device. This was never about PCs or even smartphones. And now we're seeing with connected watches have accesses and even appliances getting wired up. Mastercard is now ready to enable all of them for commerce. And one great example, perhaps my favorite Example from earlier is when you go downstairs, you'll be able to see a pair of Google Glasses that Mastercard Labs has already enabled for Masterpass payments, Which I think really brings home our fundamental point. The device doesn't make the payment system. It's the payment It's Mastercard that makes the device that much more valuable. And one other point and to be clear, we believe that For consumers, it is not about any one of these experiences. It's about all of them. So we may have many competitors trying to enable alternatives in some of these areas. But what we have seen is what consumers really want. And think about it. What you really want is for all of this to work together, and that's what Mastercard does. And perhaps the best use of all is, you can't use cash, you can't use checks in any of these environments. So to echo what Gary We said the convergence of the physical and digital world, these new shopping experiences are a major driver of that world beyond cash. And Mastercard is ready. At the Barcelona Mobile World Congress in February of this year, we formally announced globally like Commonwealth Bank of Australia, Bank of Montreal, Citibank and we'll have 7 additional markets implemented by the end of this are here. Our merchant acceptance is also gaining momentum with over 20,000 merchants live in just the first few have orders. And we are working to make Mastercard available to all Mastercard issuers as an integral part of the overall Mastercard global Network. So Masterpass is digital Mastercard and our focus remains the We're providing a globally interoperable platform, supporting all types of digital transactions, are designed to enhance, not to interfere with the relationships our customers have with their customers. Masterpass has been designed to enable integration across a wide range of partners. And Mastercard has Masterpass has been designed to make it as simple as possible for merchants to integrate are aligned to make it as simple as possible for merchants to integrate it in with their systems and leverage the investments they already have in place. So finally, while it's still very early days in this overall conversion of physical On digital, the opportunity for Mastercard is tremendous. In fact, we see this as the greatest opportunity for Mastercard since we first helped introduce the But every channel today, and we are ready for whatever the future will bring. And we are executing. We're delivering new capabilities more rapidly in more markets than any of our key competitors. So with that as a backdrop, I absolutely look forward to seeing Later today in the product demonstration area, so we can fully demonstrate Mastercard's digital technologies and the incredible potential The digital convergence holds for Mastercard. So with that, I'd like to turn it over to Chris McWilton. He's going to cover The North American markets. And thank you very much for your time and I look forward to seeing everyone later. Chris? Thank you. It's great to have someone like Ed who is so passionate about his space and so knowledgeable leading us in this great convergence we're are going to be undertaking. Well, again, good morning and thanks for coming. I know this is a difficult day for many people being the 12th anniversary of those terrible events just a few blocks from here. And if you remember last year, I was introduced as Chris McWilton, President of U. S. Markets. You're probably aware that on January 1st this We combined our Canadian and U. S. Regions under a North America umbrella and we're really glad we've done that. Besides Anne Karen's Not having to cover additional three time zones, which I know she's happy about. The U. S. To Canada consumer Cross border quarter is one of the biggest in the world and we're seeing increasingly our customers whether they be merchants like Target or Walmart Or issuing banks like Capital One or TD Bank or BMO cross borders in both directions to meet their growth Objective. So we're seeing a lot of good business coming out of that reorganization. We're very happy. Betty and her team continue to do a great job are up in Canada. So for the next 15 minutes or so, I'm going to share with you the journey we're on in North America markets. It's a journey that's taking us to a place That we're going to be a very well balanced and diversified profit engine for the company for a long, long Hi. We're doing really well in debit in North America. We're doing really well in commercial credit and I'm going to spend have time sharing some of the great news we're seeing in that space and in the prepaid space as Gary mentioned. I know there's a great interest U. S. Consumer credit position and I'll spend a few minutes of my remarks sharing our progress in that space. But I hope you leave with an appreciation that While North America is more developed than some of the markets Anne covers and her region presidents cover, that doesn't mean it's a No growth or slow growth region. It's a high growth region and we're very bullish on the prospects. So let me if I can find the button. There we go. Let me just frame the North America region with some factoids. First off, it's the largest revenue generating region of our company, generates about 40% of our revenue. And we've maintained strong financial results through a very complex operating The environment. We've obviously lived with increasing levels of government regulation, starting with the Card Act, the Durbin Amendment to the Dodd Frank Bill. We've seen consolidation in the Commit to the Dodd Frank bill. We've seen consolidation in the industry, not only the financial institution side of the equation, But on the merchant and our co brand partner side of the equation. And obviously consumers have been impacted significantly By the economic conditions, the high unemployment rates and the foreclosures in the housing market over the past 5 years. We've been pretty resilient through that. The 1st 6 months of 2013, we've grown our revenue 11.6% And we're quite proud of that. 8 of 10 of the largest cross border quarters that we see consumers Mastercard products and services, either start or end within the U. S. So it's a key market for our cross border activities, are particularly affluent and traveling consumers. Our revenue yields in the U. S. Are quite high relative to our other regions, are. We've been a leader in technology and innovation. Betty and her team led the rollout of EMV and have broad based acceptance of PayPass our NFC enabled contactless technology. She's doing a great job up there with MasterPass as well, which Ed has talked about. And Rogers Telecommunications, a large cable and television network In Canada, has been the first telecommunications provider to receive a payments license in Canada and we're really honored that they have selected that haven't been fully tapped health care insurance and rent. There's still a large swath of underserved and unbanked customers. Gary talked about that in terms Cash convergent opportunities. Small merchants are continuing to look to ways to sell their products and services online and simplify you're going See down the product showcase and we have Masterpass rolling out. I'll talk a little bit about the success of that in the U. S. And elsewhere. But we're very optimistic. We've got great So let me rewind 5 years ago, explain where we are and then I'll let you know where I think we're In terms of changing our business. 5 years ago, we had a very concentrated customer base. We were highly reliant on are a large credit card issuer. We had no debit franchise to speak of, insignificant. We had no real merchant interactions. Within the halls of Mastercard, we referred to merchants as customers. But to be honest with you, it was probably a little lip service and it was real interaction and concern about helping them grow their top lines. We were reactive to government regulation and we certainly didn't consider in any broad way that the government could be a big customer of ours. And we had a good brand, but a brand that consumers were aware of not necessarily that they were engaged with or necessarily preferred. So fast forward today, we've got a much broader mix of customers, So much diversified mix of customers including regional banks and a growing base of independent banks and credit have a great revenue yield compared to some of the larger issuers. We have a very robust debit franchise. We are enabled either are on a signature or PIN basis on half the debit cards in the United States. We have gone from approximately a 3% or 4 share of the pin debit network of pin debit to becoming the largest pin debit network in United States. We have a growing commercial base. Again, I'll talk about that in a few minutes and a growing prepaid business. So we've diversified our product in addition to our customer base. We significantly expanded our merchant interaction and this isn't something that happened 6 months Craig Vossberg, who's going to be on the panel in a few minutes, has been leading our efforts in merchant development and market development for about 3 years. We have 40% of our account management personnel dedicated to merchants. It wasn't even close to that 5 years ago. And we've made investments in this space. Gary mentioned Truaxxus, which I'm very excited about. It gives us a chance to interact Merchants and with issuers in delivering products and services to consumers based upon their payment patterns. And you'll see that down in the product showcase. Government is now a big customer of ours. Direct Express, the The Social Security payment program is issued on prepaid Mastercard cards. The disbursements are made on prepaid Mastercard Products. And we have a brand as Gary mentioned that is in a significantly different place than it was 5 years ago with stand up Cancer and priceless, both consumers and our issuing bank customers and merchants view our brand much differently than they did 5 years ago. So let me talk about credit and I'm going to talk about credit holistically in terms of both consumer and commercial because That's the way we view it. In the past, I've highlighted the reasons why we weren't where we thought we should be and need to be from a U. S. Are in a consumer credit perspective. And I've discussed things like the fact that we probably underinvested in big T and E co brands in In the past. And I talked about customer mix as well, the fact that some of our large issuer issuing bank customers and our large co brand partners had more difficulty navigating the Great Recession than those of our competition. I also talked about the fact that getting back in the space was not going to happen overnight. It wasn't going to be a grand slam home run. It was going to take doubles and singles and Stolen basis to get our share back to where it needs to be. And speaking of stealing basis, we're actually stealing a lot of co brands from our competition. As Ajay mentioned, 60% of the co brands that have been up for RFP up for bid over the past 12 we have taken from the competition while not losing any where we were the incumbent. You can see some of the co brands up on the screen here, InterContinental Hotel Groups, which is a co brand with JPMorgan Chase Virgin Atlantic, which is a co brand with Bank of America Bass Pro Shops With Bank of America as well. We drove our production people a little crazy over the past several days. We did have 2 other co brand that are signed and will be announced shortly. However, the co brand partner in that case Called us up and asked us not to announce that, because they didn't want to create customer confusion in advance of actually reissuing the cards work. So we obviously honored their request. It's not just in the co brand space, but in the financial institution proprietary card space that we're seeing progress. Bank of America's Better Balance Rewards card has been issued and will be issued under the Mastercard The network SunTrust and KeyBanc are rolling out and expanding their credit programs. And we're seeing increased interest again from the growing base we have in independent banks and credit unions of getting into credit as a way to diversify their revenue streams. Shifting to commercial credit, this is a great story and it's a space I'm really excited about Because a couple of reasons. One is I think we have a distinct advantage over the competitors in this space. With respect to American Express, we have have distinct acceptance advantage not only domestically, but internationally. And when business people travel overseas, they want assurance that their card is going to be accepted. It also tends to be sticky revenue. Consumers today are bombarded with card offers, teaser interest balance transfer offers, new rewards propositions, new cards, etcetera. So they can sway between card they carry in their wallet or which card is top of Many times during a year. When you get into and embedded in the financial reporting systems and in the wallets of employees Of a large company. They're not going to change that on a whim. They're going to be thoughtful about it. It's going to be in for a while and it gives us an opportunity to then sell in our consumer products to those employees. So it's It's great sticky revenue. We've got great product differentiation, smart data in control really gives the back office insight into how employees are Spending and procurement organizations are spending. And the proof of the pudding here in all of that is that if you looked at the Nielsen A couple of weeks ago, we've actually grown our commercial credit business 25%, which is pretty impressive and again is supporting the growth we're seeing in our overall credit position. Legal and regulatory landscape, I'll touch on that for a minute. You can't Escape it. I was actually down in Washington yesterday and had an audience with Director Cordray of the CFPB. Clearly, regulation is Going away. It's here. We've done a pretty good job, I think a very good job of navigating it. We don't like it. We particularly don't like We don't like government price controls. However, the fact of the matter remains we've done pretty well when the regulation And the legislation has challenged the incumbency positions of our competitors. And I'm referring here to Durbin and the great wins we've seen You're probably all aware that the federal district court objected to the Fed's implementation Of the Durbin Amendment of the Dodd Frank Bill. Again, we're glad the Fed appealed. We believe that overall more regulation in this space This is going to hurt consumers and hurt the industry. I saw a statistic the other day that there's been a reduction of 49% in the number of financial institutions are offering free checking accounts since Durbin was implemented. And I don't think consumers are feeling that they're the beneficiary of about $7,000,000,000 of interchange that was moved between parties in the system. But change that was moved between parties in the system. But once again, this may present an opportunity on the Signature side to pick up some market Sure. We've dusted off the secret sauce we had for PIN and we're ready to go if in fact it ends up that way. Again, not something we're looking forward to, but we will take advantage of it. North of the border in Canada, we received a favorable ruling from the competition tribunal on the key rules we have governing acceptance of Understood. We're glad the competition tribunal ruled in that direction, obviously, reinforcing the The policy team are working hard to make sure we get to a favorable spot on that venue. The merchant settlement very timely. Tomorrow is the court hearing for final approval of the settlement. There have been a number of large big box Retailers that have done their best to disrupt the progress in that space. Noah Hamp and his team here as well as others in the supporting cast for the banking industry have done a great job in getting us to a settlement. We're addressing opt outs Financially, we're very comfortable. We'll get to a good place on that and very comfortable this will move to final resolution and we'll get it in the Rearview mirror quickly. One of the areas we are watching is the prepaid space, particularly in payroll. And there was some Discussions yesterday with Director Cordray around this. And Mastercard is out front with our public policy team and our prepaid product team Making sure that this doesn't become another black eye for the industry and another tarnish on Mastercard that we really promote best practices in this area and protect underserved consumers that may be using prepaid products going forward. So with that, I'm going to wrap up here. I hope you appreciate after my remarks that North America is a growth market for our Company, there's incredible verticals out there like I said that are untapped. You probably read the paper over the past couple of weeks that many large employers IBM, Time Warner, etcetera are moving their employees out of company sponsored health care plans into employee Directed health care plans, the exchanges, etcetera. And just think about the dislocation and payment flows that's going to create in this country once Obamacare kicks in and we're going to be spending some time looking at opportunities with all our products and services in terms of how we perhaps navigate and pick up business in that space. 20,000 merchant locations, we have PayPass enabled on in the U. S. Great, great progress. And that's just a snowball running downhill. The more you get signed up, the more issuers sign up and we've got some great momentum in that space. You can't forget that the U. S. Is the backyard, the home turf of the digital giants of the world, the Amazons, the Googles, the Facebooks, The Apples, etcetera. And they're going to change the way consumers behave, live their life and purchase products. And we're going to partner with them in ways that make sense in ways that expand the reach of our brand and our network going forward. So we've got momentum. We're making the right investments and North America is going to continue to be a big are in the business and North America is going to continue to be a big part of the growth story of Mastercard for a long, long time. So with that, I'm going to turn it Barbara, who will introduce our esteemed panel. Thank you. And while my fellow panelists are wandering up here. I just want to edit a statement that Chris just made over 20,000 merchant locations is Masterpass. PayPass is actually 100 of thousands of locations. So with that, we're going to move to our merchant panel. We want to talk a know about the merchant value proposition that Mastercard is driving, has been driving, will continue to drive. I want to start out Craig with you. I know some of the folks here in the audience have met you in some are small group meetings. But for a lot of people here, this is their first time to hear from you. And as Chris mentioned, you've been in your job have for just a little over 3 years. So why don't we set the stage with what we're doing around merchant relationships, what's your group doing? Sure. And for those of you who do remember What's your group doing? Sure. And for those of you who do remember Greg Bousin, Greg left IR a year ago and is now are reporting to Craig, so For better or worse. I like to think for better. So anyway, let me just set the stage a little bit in terms of what we're doing with merchants in the U. S. As Chris mentioned, this is an area that we've been focusing on and investing in for a number of years in order to deepen the The merchant account teams that he referred to are directly engaged in managing have relationships with more than 200 of our largest merchants that cover 16 industry verticals that we prioritize as being important for our current and future growth. And just to give you some scaling sense of the scale of that, those 16 verticals represent roughly 60% of our volume in the U. S. So you can see we're directly engaged with areas of the Market that represent a sizable portion of our merchant customer base. That, of course, is in addition to the more than 60 acquirers, ISOs and merchant service providers that we work with on a B2B basis to continue expanding the network. And the approach is it's delivering results for us in areas that are important to and increasing the use of value added services and solutions. Let me take just a second to expand on the point about Acceptance. Acceptance is a really important source of competitive advantage for our company. Our acceptance footprint is unsurpassed by any network and work and continues to grow at a healthy pace through our focus in a couple of areas, some of which have been already this morning. But we're focusing on bringing large merchants into the network in, verticals that have traditionally have been cards accepting verticals, but where individual merchants may not have accepted the full range of Mastercard products. The dollar store category is a good example of that, 1 of the fastest growing segments in retail in the U. S. Over the last several years. We now have full acceptance of the full suite of Mastercard products within that important New verticals have been alluded to, areas like rent payments, tax payments, B2B payments, Areas that have traditionally been very heavy in cash and check based payments constitute a large part of that 85 dollars in payments that are available to us to pursue and we're working aggressively to bring those into the network. And then finally, small merchants, both expanding the reach of the network to include small merchants through things like working with mobile point of sale partners, taking advantage of the new Technology that's available there to expand the network and deploying our own proprietary solutions like Simplify Commerce, which has been mentioned a So we've made some great progress, but what's behind it all? What's driving the success have all this. Well, there's a couple of things. I think first and foremost, the value of acceptance is strong. We've worked with a number of In fact, to quantify the value of accepting Mastercard products for payment. And while there is and there will continue discussion about the cost of acceptance. We've consistently seen the benefit in terms of increased sales, reduced risks, outweighing the cost. And that's a good position to be in as a starting point. But beyond that, A lot of the value added products and solutions that I mentioned earlier are being developed with the specific intention of Addressing areas that matter to merchants and matter in improving the performance of their P and L, things like attracting new customers into their increasing the amount of sales they have with their existing customers or increasing operating efficiencies in their And while we have a wide range of capabilities that address some of those needs, data and analytics and the avenues through which we We turn insights into action for the benefit of merchants are particularly important. There's real value in the data and the insights that we can derive from that data in addressing a variety of merchant issues. And in fact, as one measure of that value, more than 20 percent of the merchants we manage directly in the U. S. Today are using Mastercard data and analytics in some capacity to power That's in addition to very an even larger number of small merchants who are leveraging similar insights in their business. Kevin will expand a little bit more on how we're using the data. But underneath that is what I've described as an important dynamic that's really helping us change the nature of our dialogue with merchants. And by focusing on things that matter to Business and matter to their P and L, we're able to have much more balanced discussions about their business rather than being singularly focused on cost. So Craig talked about the 3 critical elements that a merchant looks at in their P and L with increasing sales, attracting are new customers and improving operating efficiencies. And that third one might be the one that isn't quite as obvious to some as to why Mastercard can help in improving that working with merchants. So Kevin, why don't you talk a little bit about that if you would? Sure. We do it in lots of Lisa, not least to which you have to I'm going to note that Craig is an Advisors alumnus since we're going through pedigrees. But before I get into specifics on Maybe it would be useful if I cover some of the basics that we've talked about before. Because since last year, the data analytics business has made a lot of progress. I think Gary talked to you about the number of engagements going up to 1200, 40% In the first half of this year, we saw our revenue growth north of 20%. We expect that to improve over Including the data we have and I'll go through some of that. The data we have, the people we have and the technology We have all which drive at scale, enable this business to return pretty high margins as well. So So that's a good thing. So going through that, we've been able to scale the human element of big data by doing things like opening 1st, our data is anonymous. We don't have the name or contact details of the cardholder. And that's important and Keep in mind attractive to our customers in a world of greater and greater complexity around privacy. Our data is received on a real time basis. It's have not lagged. And that means our customers can act on our insights on a near real time basis. And finally, our It isn't survey data or reported data. So it never needs to be corrected. And you have to put that in contrast. A lot of data sources merchants rely on heavily are often corrected, government sources, for example. So that's a bit of the background on the data. I think it's important to note, I think we've had some questions. Who our data delivers a lot of value in and of itself, but we can and do augment it with other data sources in order to tailor the data to the needs of the particular engagement. So I'm going to get to your question to avoid Seem like a politician these days around efficiency. And I'm going to do it by way of 3 examples. I think that's the best way. And some of them are going to And I'll start with some work that we did with a discount a major discount retailer. There, they needed to understand how consumers spent across multiple categories from store to store on that most critical day of the Retailers' Year, which is Black Friday. And we were able to use our proprietary geographic spend sequencing analysis to reveal to them that their customers in particular spent 70% of the money they were spend on Black Friday at the 1st store they visited. And that number popped up to 98% by the 2nd store. Now that's information a retailer can use to really focus scarce promotional dollars. And it delivers in spades. And we'll talk about some of the metrics later. But this isn't just for the big guys. You talked you heard Craig, you heard from Gary and you heard from Chris that we are going to place enormous importance on maintaining Our lead in acceptance. And that in large part relies on delivering value to small merchants beyond the basic payment functionality. And we can do it with our data and the power of our data. And we have a market work specifically geared to small merchants. It's easy to use. It provides some basic but powerful analytics about their competitors, how they're benchmarking against their competitors and where their customers are coming from and where their customers could be coming from. That helps some resource scarce dollars as well. And then the last I think might be the most surprising and that's work we did for a specialty clothing retailer. They had grown very, very quickly And they realized that they needed to get more scientific around site selection and store closures. So they came to us and we were able to use our geographic Spend draw analysis, which is slightly different from what I talked about before. And now they use that tool to make some very tough capital intensive decisions on a multiyear engagement basis. At the end of the day, the common theme here is that while a merchant may and I say may have good data about what their Customers are doing when they're in their stores. Our data reveals what their customers are doing when they're not in their stores, when they're are doing things with other people. And that can drive some pretty powerful efficiency decisions, but it can drive lots of business driving decisions. I targeting is a good example too. That's an interesting point that you bring up, Kevin, with targeting. I want to build on that a little bit because targeting is such an important component in terms of the loyalty proposition that merchants are interested in. And Tim since loyalty Rewards is was one of the things that falls under your bailiwyg. What can you offer on Sure. So we've touched on it a little bit today already. You heard Ajay and Gary mention it. Mastercard has a strong and growing loyalty and rewards business. It's business is very much grounded in data and analytics as Barbara mentioned. We are investing to really position our network as a loyalty platform that can serve issuers, merchants and other partners. You'll see some of them downstairs today. That's already been mentioned. We like the space because it generates have incremental revenue from the network because it generates really sticky relationships with issuers and merchants. And then it lets us power very strong Products for our consumers. We're particularly focused on the merchant loyalty space. We've had an issuer rewards business for a number of years are now focused on merchant loyalty. Main driver there is the acquisition of Truaxxus, which really closed now about a year ago. And as Ajay mentioned, Shor Satovalu, who The co founder of True Axis is running the business for us today. He's in the innovation the product innovation space and we'd love you to stop I will show you what it can do. But the reason we like that model, we like being in this business is that it's uniquely positioned to serve the needs of all our stakeholders, right? TerraXis provides merchant funded rewards. And in doing so, It really gives consumers the ability to get a targeted offer, a very relevant offer, not that undifferentiated mass of offers that people are getting through the daily deal sites and to redeem those offers very quickly and easily because they're linked to card use. So great consumer Great issuer value proposition. It's really a way for our issuing partners to provide more value to their consumers without having to pay But the really interesting thing happens in this with True Access and its business model, which we call card linked on the merchant side. In that, because True Axis is leveraging actual consumer spend data, because it has very strong targeting capabilities, It means merchants can be very precise and focused when they do their marketing through the channel and earn a very attractive return. And that's really how we think of the We think of it as a merchant marketing platform that really through our network allows merchants to tap into a whole new marketing channel, which Just getting to consumers through their banking relationships, really much in the same way that Google opened up. Search is a marketing channel a number of years ago. So very interesting space. We're seeing some very good progress with Truaxes and its growth. We now have relationships with Over 900 financial institutions in the U. S, both directly and through processors. We're connected into our own processor are IPS that Kathy McCall runs and she'll be up here a little bit later. Through those relationships, we're serving literally millions of consumers are today. And our merchant partners are really starting to take notice. We've built relationships with a lot of names that you'd know, people like Neiman Marcus, like Sears, Walgreens, Theory, Oshkosh, Lane Bryant. So a lot in the retail space, a lot of T and E and restaurant customers Commitments to the platform. So we're very happy with what we've seen so far. So what attracts them to come work with us? And maybe more importantly, what keeps them coming back? You said you have a lot we have a lot of repeat opportunities. Right. So it's a couple of things. It's a very easy to implement platform. It's a pay for performance model, which I think helps Craig as you talk about an overall merchant value proposition, right? We have to deliver value in order to get paid for this business. But the real value, the real reason that merchants are coming back is because of really the first question, Which is targeting, right? We acquired the business because we thought it had the most effective targeting data analytics platform in the industry. As Kevin's data and as Kevin mentioned, it is doing targeting on the basis of actual consumer spend data, which is by far the most accurate, not only predictor, but story, right, of how consumers are actually behaving and showing preference. You are what you spend. You are what you spend in so many ways. And then it's doing it actually on a very wide data set. So in addition to the Mastercard network data, because we work directly with issuers, we have access to a whole range of data beyond a single form of payment. So it's actually an have wider data set than the network itself sees, which is which in itself is quite big. So there's if you can do all that, good engine targeting access to a wide data set, it means the platform in Traxxas can help merchants be very precise in how they market. And that precision earns the return, right? So if say merchant wants to do new customer acquisition, it can focus and offer through the targeting capabilities only on customers who've either gone away, who've tried it or who've never shopped in that store before. It doesn't have to put the whole store on sale. There's a lot of value in that. If it wants to focus It's on increasing spend. It can provide offers only to consumers who are an occasional shopper. And if you're a shopper who's in the store every day, you don't have to get the offer. Again, it's that precision, reduces marketing waste, drives a very strong return, and we're seeing good results. So for I'll give a couple examples like Kevin did. For a national retailer, over the course of this year, Tractus ran a campaign focused on new customer position, 39% increase in new customers. For an international auto rental chain, we did a campaign focused are. Another campaign for a it wasn't a national, it was a regional quick service restaurant chain, also focused on Increasing spend, 164 percent increase in frequency, so customers coming back. So these are strong numbers who And they show that loyalty through the targeting capabilities based on the data and analytics can really help Craig and merchant relationships because these are exactly the things that he talked about The main needs that merchants have from us. Before we get to wrap up, There are 2 other priorities, the new customers and the increased sales that are also important to merchants. Kevin, can you give us a couple of quick examples focus on what Advisors does on that front with data. Sure. We do a lot of that kind of work. Just getting to the point. I'll start with a major national discount retailer, Sorry, of Consumer Electronics. We did work for them around Christmas time. We were able to use our digital audiences product and help them run a campaign that pinpointed did late holiday shoppers likely to buy consumer electronics. So it's very, very targeted the way Tim was talking The second example I can give you very, very quickly is some work we did with an oil and Best retailer. We conducted a very sophisticated analysis of the behavior of their high loyalty versus Moderate loyalty customers for promotional purposes. And then the third example I'll give you is a grocery store, for example. And they retained us to identify specific growth opportunities in their existing loyalty and rewards program. Let me just add to that actually because I know we're focusing mostly on data and analytics a lot of the things we can do through advisors, but we're also building and investing in platforms across the business that merchants can leverage to increase This afternoon, Tim already talked about Truaxes. The Fuel Rewards network is an example of that. Priceless Cities cross border marketing campaigns we're are executing to attract international shoppers. Stand Up to Cancer has been mentioned a few times. So these are examples of platforms that we're putting in place for merchants to leverage to achieved some of those objectives. And Tim you had some stats I think on the success of merchant campaigns and what their payoff is that the Truaxes is able to Yes. I mean it's so we I gave some specific examples, but the Triaxis' major measure of value who to merchants is return on ad spend. So it's a measure of for every dollar of advertising spent through the platform, how much top line revenue can be And the network is consistent the platform is consistently delivering return on ad spend 5 to 12 So 500% to 1200% really suggests the value that we can provide and the value we can through uniquely through network having embedded Traxxas in it untapped in terms of our consumer relationships, reach through issuers, really delivering value to merchants. So just to wrap up, Craig, I'm going to let you give the last word in. Yes. So I'll close just by reiterating a point I Earlier and that's that by focusing on and investing in things that really help merchants deliver on what's important to them and driving P and L performance, we're are fundamentally changing the nature of the relationships we have with many of our merchants. That's not something that happens just by are saying it. It's not something that happens quickly, but we're years down the road in making that into a reality and it's an area that will continue to be Real priority for us going forward. Okay. Great stuff guys. Thanks a lot. Thanks Barbara. Okay. So now we're going to have moved to the first of our 2 Q and A sessions. And I'm going to invite Gary and Chris and Ed back up on stage for this won. And if we can turn the house lights up so we can see who the audience is instead of just have an ability to take your questions. So far, nobody on the web has queued in. So we're are going to start here in Brian, you want to? Bob? Thank you. Bob Napoli from William Blair. I guess with the Fed appeal and just The Judge Lee on. If you could maybe Chris talk about the challenges of implementing dual signature, the time frame, something like that would take. Dual signature the time frame something like that would take and how if you could think of maybe go through Value added there would be to merchants or consumers through adding dual signature. Sure, Rob. It took second to find you in the lights out there. Okay. So I think it's a longer term proposition than most people would anticipate. I think Noah can help me here. The appeal is probably Tate, I think Noah can help me here. The appeal is probably going to take About a year. About a year to get through before we have a decision As to whether Signature exclusivity will be permitted to continue. We get frequent questions How hard is it to do it? It's not impossible. It's not an easy thing to do. But as I joke with Barbara Gasper recently, I mean, we Robots on Mars, we ought to be able to figure out how to do dual signature routing and debit cards. There are people smarter than me that know the network And are working very diligently to make sure we're prepared for that to happen. I think what it does is it basically gives more flexibility to merchants in terms Routing decisions. I mean, they're looking for cost savings on every line of their P and L. Payments is a big one. They felt over the years that they Didn't have the appropriate voice in routing. The first passage of Durbin gave them the ability at least to route over different pin networks. But if you're not in a pin environment, if you're in the restaurant business or hotel or a situation where The final amount isn't known at the immediate time of the transaction. It didn't do you much good. So I think adding Signature, we'll give the merchants more flexibility and maybe take some air out of the balloon in terms of their angst and anxiety about payment choice and And routing. And just maybe as a follow-up, does the Fed a change in the head of the Fed, maybe you got this through it, I don't know if you have any answer. I mean, we're going to have a new head of the Fed. Does that change The enthusiasm of their appeal. That's a good question. I imagine that this is probably The level of the Fed organization that is not going to be as influenced by a change in the head of the Fed. It's anybody's guess where it will go, what how the court will rule, etcetera. But I don't see the passion Either waning or increasing based upon a change at the very top. That's my thoughts, personal opinion. Okay. Up in the back. Are Gene right there to your right. I can't say who it is. Narapelle, please. Thanks Barbara. There's obviously been a trend As you alluded to earlier, it's towards more focus on the merchant side, really trying to get more loyalty solutions, more value add there. I think with the regulatory, just to follow on Bob's With the regulatory intervention you're seeing here in the U. S. As well as in Europe, there seems to be a shift towards exactly what you were just talking about With regard Chris to trying to put more in their hands around routing decisions. So beyond just the loyalty and the TRUEXXIS, I mean, what are you doing to work on the pricing model in the Pricing model in the sense of it looks like the relationship that you have and the way you interact with banks might have to shift more you might have Ship a lot more attention to merchants over time. Do you think that might impact pricing? And maybe not just to Mastercard or the networks, but to the in the entire food chain, the interchange It's a good point. I think the influence in the payments ecosystem is shifting more to the merchant inside of the house. And they're obviously not standing idly by as we're experiencing the shift to new forms Of payment in the mobile factor and near field communication. I mean, they are going to battle for control of the Till, as Ed says, as we go through this change in technology. From a pricing standpoint, we're always in the game of balancing, Right. We're always trying to figure out how we price something so that there's broad based issuance and broad based acceptance. We get as many cards into the market as we can. We displace cash and check. We get as many merchants accepting as we can. So there may be changes in the balance of who's getting the economics at the end of the day. But since we sit in the middle of all this and the fact the matter is there's going to be more transactions, we hope, as mobile takes And as merchants embrace more electronic forms of payment, then we'll navigate it like we've navigated all the other shifts over the many We've been in business. So I don't necessarily see it cataclysmic. It'll be gradual evolution over time. But there's no doubt that merchants are getting Influence in the system. So would you expect to see a shift of incentives in terms of going from the banks to merchants or even reduced overall over time? Thanks, Hans. Again, it's balanced. I think it's fair to say that if you have more influence in the system, there is more appetite from a network like us to incent those who determine routing or determine whether it's Those who determine routing or determine whether our network carries the transaction. So the drift will be in that direction. Again, don't see it cataclysmic. Don't see it falling off a cliff any one specific quarter. Right up. Thanks. Don Fandetti sitting. I was wondering if you could the You said Chase deal seems to have gone a little quiet in terms of discussion. I was curious what your thoughts what you're hearing from issuers. Looks like Wells recently did a deal with American Express. I was curious if you could talk if that's really shifted any The balance or psychology of how issuers are thinking today. Yes. It is it has gone quiet. You're absolutely right. And I think it's It's very early days in terms of what the impact of the Chase Visa relationship is going to have on the market. As I talk to folks who run card businesses for large institutions and small. There the emotions run a spectrum from A yawn to a little bit of what happened here with our network partner and the relationship with Chase. But one of the things that you realize about the banking industry is people that run these businesses are not rash decision makers, right? They're not going to run out in makers, right? They're not going to run out in an emotional fury and all of a sudden change the network they've been partnered with are in the market for many, many years. I think it will end up in sort of one of the fact patterns as new deals emerge, as agreements come up for renewal, As the dialogue with Mastercard and other networks changes over time, it won't be again, it won't be something that dramatically. We're still scratching our head to be honest with you on how this all works. I'm a former finance Sky, you do the math in terms of the value in the system of a transaction and how you provide additional benefits to a consumer to buy at a certain merchant and keep the issuer hole and keep the merchant hole. It's pretty tight economics. So we're are still scratching our head in that space. We still have the opportunity to do it. If another issuer is interested in doing it and has The acquiring footprint. It's not rocket science what was done. So we would be prepared if it made sense based on a number of factors to do that. So again, slow evolution not revolution based upon that transaction. Okay. How about somebody else vote. Jason? Jason Kupferberg from Jefferies. The increased engagement with the merchants is certainly encouraging. At the same time, we're hearing more and more about MCX and obviously a lot of the big merchants coming to market perhaps sooner rather than later with their own Global Wallet. So wanted to get your read on how much of a competitive threat that could be because we've heard that they may be focused Some kind of non Visa Mastercard funding options in that wallet at least initially and perhaps even with some real time authorization capability That physical point of sale, which is something that ACH in its current form can't provide. So just your general thoughts On that as far as competition. Yes. You want me to I'll take that one and you can chime in. Sure. Absolutely. I think in the MCX space, we haven't seen a lot of details around I think a lot of it is speculative and to their credit they've sort of kept things to themselves. I think a lot of the impetus for MCX and like programs has been diffused by the price caps on debit interchange, right? So when a merchant was paying 140 basis points for a debit transaction, yes, there's a lot of impetus to go and create your own network and take the till back, so to speak, particularly as the technology changes and what's going on at the point of sale changes. But if you're down to $0.21 for a debit transaction and perhaps lower depending upon how the transaction and perhaps lower depending upon how the Fed appeal of the district court ruling goes. You've taken a lot of the economic incentive out of that space. So again, I don't think you're going to see this get traction Really quickly. It's something obviously we monitor and we'd love to be a part of that system. If it's going to embrace our cards, we have a network. We We can switch we do switch between issuers and merchants. That's our bread and butter. So we could play a role in MCX or another like type Opportunity going forward. Ed, you spend time in this space too. Yes. I would say these are all incredibly are professional people. And 15 years ago, I ran an ACH based bill pay business and I would have killed for the real time capabilities to what Mastercard can provide with the debit network. And I think as some of the economics come off the table and our eagerness to embrace them and enable the Technology. And also the recognition like I talked about earlier, consumers don't want lots of different fragmented options in their They want it brought together. So I think the merchant community and the consumers are best served by figuring out how we can make sure that best offer is being preserved through the new technologies. Craig? Yes. Thanks. Greg Moore, CLSA. It seems like with all the everything we've talked about this morning, Mr. Pass, whatever. The Holy Grail is to capture consumer pre shopping intent and convert it into And it seems like there might be 2 companies in the world positioned to do that. How do you partner with those companies? Or do you or are they moving on their own? But without that everything else is noise. So Well, I think and that's a great point because you can never consider any of this a 0 sum game. So we believe Mastercard is bringing tremendous to all of these environments where consumers want to shop. That's the basis of opening up the network through APIs. That's what we're doing with the Masterpass So we're absolutely open for that partnerships because our objective is to make sure every Mastercard cardholder, every Mastercard institution, they can get the best possible experience in whatever context they want to do. So that's why we're engaging with the new partners. That's why we're enabling our network for digital commerce. So I think we're incredibly well positioned to work to some of the So I think we're incredibly well positioned to work to some of the organizations you're alluding with and many others across the I think that's the great message of all of this convergence is it allows us to serve new markets and help new constituencies and create that have greater value than we could with the simple plastic that we had before. I'd just add, 5 years ago, people thought the Mobile telephone operators were the death star of the networks, right? They put us all out of business. And now we have partnerships in how many? How many partnerships around the world? More than More than 30 partnerships with telecommunications company. And I think, what happens is over time, it looks like a shiny object to a lot of players to sort of play in space, right? Then they realized that it's a heck of a lot difference, different running a telecommunication network than it is a payment and the infrastructure, the movement of money, the controls, the redundancy, etcetera, and The network economics is very hard to replicate. So instead of doing it themselves, they partner with us and we're going to partner All those players you referenced and more in ways that expand the use of our network. Obviously, we'll protect our turf. We're not going to just seed it We'll not fight, but Okay. Before we run out of time, Gary is not getting on stage for that answer to your question. So who's got a question? Gary, question for Gary. There we go. Right here. David? Don't pick the Jets. Thanks. David Togut, Evercore Partners. Gary, I think you and Ajay both talked about the partnership with SASSA In South Africa. So two questions. Number 1, what do your economics look like on that type of a business? What's the business model there because there are a number of people involved there for example like in that one. And number 2, how do you extend that business model to other countries, where you have extensive social welfare benefits that are essentially given out through Prepaid cards or other payment cards. Yes, sure. I think each market is different on economics. I think you know that. I think in that example, Michael, We're basically processing and earning revenues off of the typical processing and switching type of fees we would make. I think taking that and Sending it. You learn an awful lot by working these programs locally. And the combination of both the issuance and the point about the inclusiveness on the acceptance side and the variety of technologies that actually can get you there is the big differentiator, particularly in developing economies. So I think our work locally that I believe that Michael and his team has done and his team around the world. Working with governments, they understand what it means to make things more efficient and how much money they're gonna I mean, I think that program alone is looking at $375,000,000 in savings over just a few years. So empowering consumers, saving money On more efficient benefit distribution and then leveraging technology on the acceptance side and vendors and people that are out There that can do it, all right, and the ingenuity behind that. So there's learnings on both sides. And I think packaging And working at country to country is frankly what we're doing. We're doing that through our Enterprise Development Group, which Walt McNee runs In partnership with all other division presidents sitting over here. What are the other major What do you want to add to that? Ajay, Kathy, could you give Ajay like. Okay. So the only thing I'd add to that is that in the beginning what happens is The first thing they do is they go take out cash because that's what they're used to. It actually in some ways when we get questions in earnings calls About the yield of transactions around part of it is the good news, bad news is they're getting more cards in there, but they're basically taking out cash. The key is to let that Happened, so you at least get a card or an electronic form of payment into their system, so you intercept the money coming in, which Gary talked Earlier, money going out is where we typically make more money when they spend using an electronic form of payment at a merchant. That requires acceptance and education. The blue label idea in South Africa is all about building acceptance through a provider who had installed electronic terminals in tons of small mom and pop outlets where there was no electronic terminal acceptance for a card, but there was for things like top ups and lottery We're cashing in on that and getting a whole bunch of new outlets that will accept cards. Now you've got to educate consumers to use the card there and not take out It's a very slow build. And that's why when I started out, I talked about those 3 legs of the stool. Those lecturers too have got time involved in them. Doing worse with governments unless it's the Social Security card in the U. Which has got a more developed infrastructure tends to be a slow build on revenue. But the economics are based off the same way that we build economics in our traditional business Processing fees, transaction fees, yackety yack. Okay. We are running are about 15 or 20 minutes behind schedule. So we are going to keep a hard 15 minute are. Are. Hello. Thanks to everyone who made it back from the break. I still think there may be quite a big queue down are there. But my name's Ann Cairns and I'm Head of International Markets. And I'm here to introduced the 2nd part of the session and talk to you about the things that we're doing all over the world. So just to start to talk a little bit about our growth rates. We continue to have very good growth rates in international markets as you can see from this slide. And probably the number that surprises you on the slide is the volume growth in Europe still up in the double digit range very are respectable at 13%. I'll start there to describe what's really driving the business there. Now you've probably heard Many times that Mastercard is in a great position in Europe because we're very strong in the north in the strong economies and we're also are extremely strong over in the Eastern Bloc. And we're less exposed in the Southern economies that are still having difficulties. So that's one of the reasons why we have have such a good growth profile in Europe. The other thing is that in the U. K. We are the major credit card provider. And the U. K. Is having are in good PCE growth of about 4% right now. And we're winning deals in the merchant sector with the 2nd Biggest retailer in the U. K. Alstair for credit cards for their 18,000,000 consumers. We're winning in the airline business. We just signed a deal another credit card deal with Flybe, which is the biggest regional airline, 65 countries covered. And we're also doing really well in the commercial sector that I know Chris said he was very excited about. I'm very excited about too because that's massive growth for us around the world. And for example Bank of America just signed up with us in the U. K. This year. So good growth story there in the U. K. If we look at Northern Europe going into the Scandi area, you're all well aware of the Swedbank deal, but now we consolidate our position in the Nordics where we've actually signed up Nordea and we've signed up Damske Bank. So we're very, very are very strong in Northern Europe. At the same time, we're growing our business in Italy and it's really a prepaid story in Italy. We've got very Russia, Poland, Turkey is included in that. And we have Bella here with us on our panel this afternoon who's going to tell you About the growth story there. Moving down to Latin America. The growth is very strong still in Latin America 16% as you can see from this graph. And the story in Latin America is our business remains still very strong in Brazil, which is the largest market in which is the largest market in international markets. And Brazil has PCE growing at 3%, so it's pretty healthy. We're not only winning good core business there, but as you heard earlier from Gary, we're actually going into the mobile space in a very meaningful way with our joint venture with Telefonica and that's called Zoom. That's rolled out to 26 1,000 people right now, not in the main towns yet, not in the main cities, but you're able to do P2P payments you're able to do payments to merchants. Later this year, we're adding bill payment. And early next Yes, you'll see us rolling out in the massive urban are there in Brazil. Other parts of Latin America, Mexico sort of had a weaker will start the first half than we thought, but it's actually getting better in the second half. Mexico is a story about acceptance And we're rolling out new infrastructure to reach the unbanked there in a partnership with a local provider called Huela and Argentina that may well have valuations devaluations towards the end of the year. Our business is are doing well there. We're not overly exposed there. So we're not concerned that it would affect these growth rates. Moving across to Asia, the Middle East and Africa. Well, of course, this is our star region of the world in terms of growth fantastic PCE and cross border PCE growth rates out in Asia something like 7% 12% to 13% respectively. And what we're seeing is very strong growth in all of our core businesses across these continents actually gaining market share in the large markets, big e com deals, opening new markets as as RJ talked about, building from the ground up in Myanmar. And in the Middle East in service, which is going to reach about 5,000,000 users to start with. But all of the telcos are joining this, which would bring in working with the WTO and China discussions there about opening up China, so that other players can be involved in the domestic deals there. Right now, there's certainly view that China will open up, but we don't know when and the shape of it and how it's all going to play out at this point in time. But in the meantime, we have been closing big deals in China. And for example, we've closed deals with ICBC, An agricultural bank to do global travel cards sort of dual branded cards. And our business continues to do are extremely well in China. So that was a quick trip around the world. RJ mentioned at are beginning of the session all about how we've been changing over the last 4 years. And that change has really been quite dramatic. So what I've tried to do in this slide is just to sort of say to you what we've been focused on in the recent past and where we're moving to what's our current direction. So one of the things that said was we've got many more people actually outside the States now than we had to begin with. And that's because we're actually driving our down to a country level having people on the ground that understand the business, know the people, know the governments, know how to execute things on the ground, while continuing with Gary's area to build those much needed global products to be able to get the have scale to rollout around the world. So it's a distributed execution model with a global product model overled, very successful have a business model. We're moving away from just focusing on financial institutions to governments and telcos are in the international markets. And I'm going to talk in detail about 1 or markets to give you a real flavor of that. And the panel that follows me will also do that after my part. We were very, very issuer focused. But and Chris alluded to this how the sort of balance continually shifts. Our balance who it's now really starting to focus on acceptance. We're still issuer focused, But we are putting acceptance people on the ground. We are building relationships with local partners because we want to reach the next 500,000,000 consumers. And in order to do that, you have to get into the underserved, the unbanked sector and you have to work with local partnerships want to be able to do that. Originally, we played a very traditional role in the value chain. Now we're really very much in the digital space. I'll illustrate that with some of the things I say about Asia. And our approach and taking a much wider consumer base because obviously the thing we're trying to do is really reach So just to take a deep dive on a few countries around the world. I'm going start with Italy and the U. K. And the story here is going to be prepaid. I mean that might surprise do because you might have thought that I would do prepaid in an underdeveloped country. But actually no prepaid is something that's really taking off across Europe. And the reason that this business is so exciting is that a study about global open loop prepaid cards has told us That the flow through these will be about $822,000,000,000 by the year 20 are in 2017. And just shy of 20% of that will be in Europe and 50% of that will actually sit in the U. K. And Italy. So these are very important markets for that space. Already in Italy today, we have 10,000,000 prepaid And we actually you've heard a lot about the South African government, but in Italy, we have The first major prepaid social card program rolled out across the country about 1,000,000 cards. It's actually done through the Italian Post are in the bank and all their branches on the ground. So this is a big benefits program just again to say, look, it's not just governments are in emerging markets that we're dealing with. And it's not just emerging markets that need prepaid. The other thing that we've been doing is You're all well aware of ENI. It's one of the biggest companies in the world. It has petrol gas are in the UK. So, it has coffee bars and so on in Italy. They are actually rolling out contactless infrastructure all across the country. So, they are changing the way structure all across the country. So they are changing the way that Italians live, the way that they use are rolling out with them contactless loyalty cards as we have done with Vodafone in the past. And also are in Italy in the market. The big banks have been working with us for a number of years to create what's called a prepaid light And what's that? That's basically a bank account on a card. It's a card which has an IBAN number on it. That's a number that's sort of used internationally for banking purposes. And on this card, you can send and receive money. And this is now becoming very popular in Britain. Britain is growing at something like 40% in the prepaid space. The prepaid space has started to be all about what's What's going on with the big telcos in Britain. The first prepaid telco card launched there was launched with Orange in 2011. Now it's everything Everywhere. But we've moved on and we're starting to have Samsung handsets that you can actually go out and buy things So, it's a completely it's going to completely revolutionize the space. And I can't leave this page without mentioning that it's also becoming a very big thing in the airline industry as evidenced by the fact that we've done our first card with British Airways, which at the end of the day is my have a second home. Actually my husband said it's my first home, but it's great. I'm looking forward to getting my new card. So the next The area of the world I'm going to talk about is Latin America and change to a completely different tack. And the tack here is all about what's are going on in the merchant sector. Now when we were looking at Latin America about 5 or 80% of unbanked Latin Americans actually live in Brazil. So while we think of Brazil have a very advanced economy in Latin America, there's still a lot of underserved people there. And we knew that in order to reach these are people. We were going to have to really work with the retailers. And that was a big challenge for us actually because our rules weren't written in a way that retailers were issuing or the way that we're developing our products wasn't designed that away and also our people didn't come from that sector. So we had to change all three things in order to really be able to address this are in the sector. And in 2010, we issued our first really true retailer license. And now we're reaching have 30,000,000 consumers through our retail relationships today. And just to give you a sense of that, that's something like have 16% of our volume in Brazil going through these channels, going through these customers. But we didn't just stop in Brazil. We said this is a great model for the whole of Latin America. Let's do it in Mexico. Let's are doing Argentina, let's do in all of the other Latin American countries we can. And now Brazil is only 40% It's actually occurring in the rest of Latin America. So a very, very clear example of how somebody asked Chris, who are things switching towards merchants. I would say, hey, they already switched. They switched a Number of years ago. And this is really evidence of the fact. So moving on to Asia Pacific. As I said, fantastic growth region for us. We're going to hear from Eddie soon who's come flown all the way from Australia to talk to us about what's going on in Australia and the whole digital Convergent story. But here I'm going to focus on e commerce in Greater China and Singapore. A very big market. You can see here over €500,000,000,000 worth of flow. It's one of those markets the statistic here about 22% growth. That's just a general growth figure. These markets that I'm talking about are practically double that size right now in terms of growth. And What we're doing here is, again, we're thinking about retailers as an entry into this segment, especially the e commerce segment. And that's why we have signed this fantastic deal with Alibaba in China. And you know that they have millions of merchants on their sites And they have 100 of millions of consumers. And so we are talking to them about are issuing. We're talking about them connecting up to our Internet gateways. We're talking about being the fraud infrastructure that they operate on. We are talking about lots of different avenues for flow of this absolutely Enormous probably biggest e commerce site in the world. And these are the types of opportunities that offer themselves in these geographies. At the same time in Singapore, if we actually look at what we're doing on the NFC Seaside, we've signed up all 3 of the major telcos in Singapore. Already you can go to Singapore. You can walk up Orchard Road, you can buy things in the shop, you can tap and go. That's all all that infrastructure is there. But now with these 3 major telcos, Singtel, StarHub and M1. If you have a smartphone in Singapore, you will be able to have whichever telco you use, you will be able to have a Mastercard on there that you can use to actually buy things. And the thing is it's completely sort of open loop solution are from the point of view of Mastercard. And that's something which we are striving to do everywhere in the world. And it would be remiss me to leave this slide without mentioning that also in Taiwan, it's the first time we've sort of launched an NSC see mobile solution in the market working with 4 different operators. Taiwan is very advanced as well in this space. And finally on the South African side, you've just heard a tremendous amount about the government deal in South Africa. So I'm not dwell on it too much. Suffice it to say, it took only a year to get up and running. Those of you who were here last year probably sold that little case that has biometrics on where people go and put their fingerprint and voice recognition and they get their SASSA Well, that was used all over South Africa to launch 10,000,000 cards in a year, reaching 22 1,000,000 people because 11,000,000 of the recipients of the benefits are actually children. So their benefits go on to their parents' The great news and you've heard about Blue Label is that now those little shops in the township are starting to be able to accept cards. And I was actually in And there was a lot of excitement in the rest of the queue when they actually saw this happening, because it is an education process. As Ajay was are saying to you, you're trying to get people to move from taking cash out of the ATM to actually using their card to buy things. And that revolution is starting to happen And it will happen very quickly. I can tell you when I was there the people in the queue started to talk to each other saying, hey, you can use this card to buy live I mean, revelation. So very exciting story. The other thing we're doing in South Africa, you've heard us talked previously about transit solutions. We are actually working with 2 of the biggest banks there Standard Bank and ABSA to have contactless transit solutions. So when I got out of the airport in Joburg, I could actually will tap a card and go through the turnstile and get on the train into the city. And these transit solutions are being rolled out in taxis are using buses so that they will actually reach something like 15,000,000 of the population. And it's not just South Africa where like 350,000,000 consumers when they're competed. And one of them you're going to hear about is in Nigeria. And that's a great segue for me to invite my panel up today, which is Daniel Mohan, who runs Sub Sahara Africa for me and he is going to tell you the Nigerian story. Belis Savdansky, who actually runs the high growth markets the whole of Eastern Europe a huge area of growth for us. And she will be talking are out the development of PayPath across Europe. Eddie Grobler who's come in from Australia to tell you about moving are into digital convergence in one of our biggest markets in the world. And Kathy McColl, who's actually our guru in processing, because as we said at the beginning, processing is one of our bread and butter things that we're focusing on doing everywhere in the world we can because when we process we can do our information products and we can layer all of the great fraud detection and all of the wonderful have technology that we've bought and deliver that to the customers. Thank you, guys. Thanks. Thanks, Ann. My name is Daniel, Daniel Monaghan. I joined Mastercard almost 7.9 years ago in Canada, run the Canada Finance as who For 4 years and then follow the money to where the investment was going, which was Africa. So actually this month, 3 years Ugo was employee number 1 in Nigeria, tax with growing the business in the heart of Africa. So very exciting to be here and very excited about what we're doing in that part of the world. And I was joking with Ed that when he wins business who In this part of the world, it's about market share, it's about new revenue. For us, it's all that and then seeing the lives of the people Change. I mean Anne alluded to that there. It's very exciting. But changing the world one person at a time is a big challenge because The enormity of the opportunity, 2,500,000,000 people worldwide are underbanked or unbanked at all. And going about it in A traditional method where it isn't working for us. So it's obvious that a new model is needed. Approaching it as a charity, it's obvious that that's not are working because international organizations and NGOs are finding out that throwing money at this challenge, it's not going to make it go away. So it's Obviously, the new model is needed. Approaching it as a business model by itself, as a business entirely by We'll give a lot of CFOs a headache. So it's not working that way and the new model is needed. That new model is what Mastercard is rolling out in Africa. You've heard about South Africa. We're rolling it out in Angola, in Mozambique, in Kenya, in Morocco and Egypt, Just to mention a few. But what I will hone in on right now is our story in Nigeria. And that story will illustrate to you why we cannot do it 1 person at a time and why we cannot do it alone. And why we cannot do it as a charity purely or as a business entirely by are Itself. But what's needed is a collaboration between the private sector and the public sector, a partnership Between state of the art technology and very strong political wheel and a handshake between the global multinational and Local players and local financial institutions, which is overlaid by very solid business plans that now make sense to The CFO. Right. So why Nigeria? The problem there and which is you can apply to all Africa is that people need money to spend and where to spend it in a safe secure electronic format. Basically that's what's going are. And Nigeria is a country of 170,000,000 people, the largest African country. If there were 4 people here in this audience, one of them will be a Nigerian, In terms of economic growth also, it's very solid. For the past 3 years GDP of 7%. But 70% The people are on the banks, all on bank. And a few years ago, there was no payment, there was no acceptance structure the card schemes were all local. But in the past 3 years, we've partnered with the government, we've partnered with regulators, partner with financial institutions to open up that market. And it's exciting what you see. Acceptance has grown more than 10 times In that short period of time. It's like it's what we've been waiting for to make happen. And so we've taken care of where people could spend money. At least we made a lot of progress there. And in terms of issuance Mastercard has grown tremendously. Q1 this year we grew by almost 100% in terms of card issuance. But looking at the enormity of what we have to do that want. But looking at the enormity of what we have to do that model is still not enough. And therefore on May, in May 20 In the backdrop of the World Economic Forum, we made an announcement about the most transformative financial inclusion program ever witnessed on the Of Africa and in some respect the world as well. And in that model with one fell We will eradicate financial exclusion in that country by giving access because that's the biggest thing to crack when you talk about Financial inclusion is access by giving access to everyone 16 years old and above. And how does it how is it rolling are. We're right now at the pilot stage. Let me discover the pilot is in Nigeria. The pilot is 13,000,000 cards. Now to put it in perspective, 30,000,000 is more than 34 countries the population of 34 countries in Africa. 30,000,000 is more than the population of 171 countries worldwide. Are. That is a lot of numbers. And that's what we're rolling out. And Mastercard has been chosen as the lead payment provider for that. And so these cards are biometric enabled and payment functionality, Mastercard payment functionality enabled and protected by EMV Chip and When EMV Chip and P was introduced in Nigeria 4 years ago, after a year of introduction, fraud plummeted by 98%. It's almost non existent in that market. So the people are getting very comfortable using their card. Now a few years ago this have been unimaginable without the right technology in place. It will have been impossible. It will have been useless without the acceptance infrastructure that we now are in place. It will definitely be like walking through a wall without the right partnership with the government and the financial institutions And the local technology players on ground in there to make it happen. The local the large financial institutions in the We are strongly behind this because we've seen that it's an avenue to reach people that use the cost a lot to reach, but leveraging our technology They can reach them at lower cost to them away from the brick and mortar approach that was a traditional approach. So what we see now is that the cards are not just being distributed, but the government is going to use the vehicle of that card to put money on there through Payment of salaries, payment of pensions, social benefit. It's going to take on a life of its own. And why I'm so excited is the change that's going to happen in that country in that it's It's going to change the way the people receive money. It's going to change the way they store money. It's going to change the way they transact the money. It's going to change the way they transfer And Mastercard will be in the heart of that making it happen. So when it comes to financial inclusion in Africa, we're not doing it 1 person at a are. We're doing it one large country at a time. And we're very confident that's going to change the face of Africa. It's changing it already. We're very confident that it will move Mastercard to the Next 500,000,000 customers, starting with a country like Nigeria is a very good step in that direction. And therefore, as Anne concluded in Africa, we're definitely doing well, but we're also doing good in the process. And on that note, I'll pass on to are Bella, who is also in a similar market, but a lot more advanced and we're looking forward to your part of the world. Thank you. Thank you, Daniel. My name is Bela Stachanski and I'm in charge of high growth in European markets. It covers 30 countries and spread are around 11 time zone. So if you picture the map, we're starting all the way Russia and South, Turkey and Israel, Czech, Slovakia, Hungary, all the way to Asian are. So it's a really big part of the world, but it's very interesting part of the world. We're going to talk about Australia pretty And Eddie will mention that his population is 23 €8,000,000 A little bit different. So opportunities here. One more only 14% car penetration on 3,000,000,000,000 PCE. That's why we call out Uber bullet as an innovation tool. PayPay brings a lot of benefits to our consumers. It's a fast and more convenient are way to pay. And it's a building block for conversions and Eddy is going to talk about this later, conversions from PayPal to MicroPass. But for us, We need to build infrastructure first. And in order not only to have a pay pass, but have a second step is an NSE enable Acceptance. So I'm going to talk about Poland and that's why you see it on the map about Poland Tap and Go Revolution. We really call it evolution. In this case, it's a positive word, not negative like in Russia. So let's go to Poland. Live. We started it was not in itself. Customers were very reluctant to sign for this Initiative of this program, it was new. It was not proven. It did not make a lot of economic sense at that So we found 2 key players in the market. 1 is share and 1 acquire. The one who really want to change landscape, the one who always look for innovation, new technology, new way of doing business. They've been our bread and butter. We started with them and they support us. And also we went to the merchant. Of course, the merchant was 2nd stage in our program. And the biggest segment of merchant was in fast are in the food segments like McDonald's, Cottage Shop and so on. Consumer embraced it right away. It was really In 2nd stage, we decided to go to big supermarkets, gas station in transit and that make a huge Difference for us. On top of it, we looked at the chain type of merchants. So if you have a great acceptance in So the consumer has to experience the same type of acceptance in Poznan, completely seamless for them. Also, we looked at a lot of marketing investment. We It's in investment. We support that. We spend a lot of money for right type of very focused approach. We looked at special promotions in stores, in supermarkets, in big department And we did a top in we call it buy and get type of promotion and some of them founded some of them more specific retailers. But it was very significantly prudent in consumer education this are. We really saw big change. Another way we looked at our education is through festival. In Poland, we have A lot of music festivals. It's really musical country. So we put a lot of The devices in festivals music festivals and consumer adoption went to 60%. So it was really, really good move on our part. So PayPal has become a generic term for Tap and Go. And even now people don't understand about PayPay. They always say PayPal even even see other brand. So that's how we really achieved great results. And you can see it. It's on a slide. I mean, we right now really are leading brands in the market. The consumers adapted so fast that 30% of that debit portfolio of PayPal's holders exhibit top of the wallet behavior, which means their card spend year over year increased by 70%. And voluntary attrition really reduced. So all these factors combined produce really great results. We took these learnings from Poland and we apply for other high GM countries. And but we did it We have experience already. And what took us 3 years to achieve 10% penetration in Poland took us only 1 year are in check and the same on the same side issuing and acquiring. But it's not only consumer who really embraces benefits Or move to contactless Pay. Merchant is eager as well. They love increased spend. They love loyalty that produce And they love opening new categories. Look at Moscow. We just introduced Metro Moscow Pay Pass. Metro Moscow never accept cards. Plastic was not even in their lexicon. Now Metro Moscow and you can buy ticket with PayPass. Another one Air Express in Moscow. And I don't know how many of you been in Moscow, but Moscow is not easy part of city type of city and it's always congested. We have Air Express that takes you from center of the must go all the way to airports. You just stop and you board the train and you will be in airport. You don't need to sit 3 hours in a car to get to your are destination, which is a big deal. So we use all kind of traditional form factors. We use Stickers, we use watches, we use PayPass card. But now we're going to most of its sophistication level. We're using mobile phones. And in In 10 countries in Hygiene, NSC programs already live and well working. In 3 are in the country, Hungary and Poland, we have a very big major multiparty rollout with NFC. So consumer loves PayPass. Merchant love PayPass for its loyalty in a high In Hygiene, we always look for new way of doing business. We always look for innovation and new technology. Our goal to see in the future not only a cashless society, but Thank you. Eddie? Bella, thank you. So internally, we refer to Bella as the Iron Lady of the High growth markets and hopefully it's clear to you guys now. And she even takes Australia on as well from time to time. I grew up in It's amazing to see how the franchise is actually developing in that part of the world. But I don't want to discuss Africa. I want to focus on Australia. And I specifically would like to focus on 3 strategic topics that's important for us. The first one is cash Displacement. The second one is innovation. And then the third one is our digital convergence agenda. So if we look at cash displacement, the vehicle that we're using for cash displacement is PayPass. And we've started on this journey about 4 years It's on Mastercard debit. It's on Mastercard credit. And it's even on Mastercard prepaid. The Qantas car that you will see downstairs today has got the PayPass application on it. So we've seen very, very strong penetration on the consumer side in terms of Paypal's enablement. But what's very interesting as well is that we've reached that tipping point in terms of usage. In August, we processed 16,000,000 transactions through our own network. If we add the as well, it will be close to about 30,000,000 transactions. So in other words, 1,000,000 transactions per day. Now it's actually referred to Kohl's and the fact that they really like contactless. They're very intensive in terms of time The cash transaction. So that fits very well in terms of their strategy for their consumer experience and where they want to go on that. Talking about consumers as well is we've seen that we've actually moved through the early adopter phase now and we're now in a phase We're consumers. Actually 40% of the consumers use the PayPal's card for more than 4 times a month. A year ago, it less than 20%. So we're through the early adopter phase and we're now in the mass phase where it's really moving forward. I think what is very important as well is that we look Look at the trend in terms of cash displacement. So currently what we see is that 3 out of 10 transactions below $100 are PayPay's transactions. But if you go down and you look at $30 7 out of 10 transactions on our PayPay's transactions in Australia. And what's quite interesting as well is that there's been phenomenal growth in that category. There's been a 50% growth In that lower ticket value space. And Gary Flatch actually touched on it as one of our strategic objectives is to grow in The low value tickets. And that's really going very fast in that area as well. But just to demonstrate this to you lower than on a debit PayPass contact transaction. The gap is even bigger on credit. The difference is 80 9%. So again, a very, very strong evidence that we're actually moving down into lower ticket values. But we've also got very strong evidence that the PayPal's application on the card and to use a term that we use, bring the card to the top The wallet. So the usage is more for other applications as well. We've seen very strong penetration in markets, food stores, restaurants and obviously in Australia bars as well as for petrol or gas. So from that point of view, phenomenal growth. And this brings me into NFC and our NFC agenda. Now what is in place currently is The strong acceptance network for contactless, which is obviously the foundation for NFC Mobile. And we're currently working with 2 issuers in Australia with mobile applications. Again, I believe that cycle will take some time. It will take About 12 to 18 months really to get into a rhythm on that, but it's very high on the agenda. This moves me into the innovation space that we're And again, I think if you focus on Mastercard Labs, Mastercard Labs identified an opportunity With Quikka. And the demonstration will be downstairs as well. We took that application to 1 of are acquirers, they loved it. And we took it into a sports stadium where we've actually enabled about 1,000 seats in the sports stadium, where you have a quicker application, who You read it on your chair, the menu comes up, you order your food and it's delivered where you sit. But what's even more exciting is that we took it to the Schools with the state government in Australia. And we've enabled Quikka in 3 areas in the school environment. The one is for canteens where parents can actually order food for their children in advance. The other one is that they can order pay the school fees and order school uniforms and stuff Like that. So we're currently implementing that in 8 schools in Australia. And the interesting one in the 1st week that we've implemented. 1 of the grant teams actually decreased their cash in their system with 57%. The schools love it, the parents love it. So again, this is innovation in action. We took it from Mastercard Labs and we've implemented it and it's now in And it's now in a production mode. The next one that we're extremely excited about is Masterpass. That is the real digital convergence mode that we're going to move into. And if you look at what consumers and merchants want, they want easier, faster and safer payments online. This is what Masterpass offer. So what we're currently doing is we're actually following exactly the same approach that we did with Master with PayPass. We focused on the consumer ecosystem to develop that ecosystem in terms of cards. In this case, we worked with 4 issuers in Australia to enable their consumers or cardholders to use Masterpairs online, but we also focus on the merchant And in that context, we've developed partnerships with 16 payment service providers to enable merchants with who have the potential to be able to get the Objectives, we've executed on that. But a point that I want to make and this has been raised by Anne earlier as well is this would have not Impossible if we haven't had the resources on the ground. So down under, we see the benefit of resources and the strategy in getting some of our resources closer to our customers. So that being said, I'm going to pass on who Kathy, just to talk to you about our network capabilities as well. Okay. Thanks a lot, Eddie. I think no doubt really, really impressive work What is going on in these markets around the world? So as Eddie says, I'm Kathy McCall. I've been with Mastercard now for just over 5 ideas actually. And I guess by this time, you can also tell that I'm Irish, sometimes very Irish. But what I guess as I wrap up here For our panel, what I want to point out is that, of course, none of all the magic that you've heard about this morning and also the real magic that we've heard about at the Today where it happens on the ground, none of that's possible without processing solutions actually available in the local markets. So one of our major objectives as The company is to increase our transaction share above the 50% that it is today. And Gary earlier on demonstrated the Daniel talked more about how a market comes together and lots of different Companies and governments integrate to provide better infrastructure. But I want to focus a little bit more on the strategic investments that Mastercard is made in order to fast track product enablement in the market. So we bought Access Prepaid back in 2011 With an eye to that overall global travel prepaid market that Anne talked about. We have invested organically in IPS issuer processing platform really to get after large scale customers. We had acquired Trevika very interestingly in 20 are well because of the iron when the Iron Lady demands, then the Iron Lady usually gets. But to enable her to achieve At Fast Track, we acquired Trevika to help build out that processing infrastructure that she talked about. And now, of course, she's taking it across are in the 11 time zones of other pitch gen countries. MPS is our joint venture with Smart Hub. And that enables our mobile processing capability, really important in these days ahead. And then finally, DataCash acquired probably late 2010, rounds out our overall processing capability with a focus particularly on e commerce are processing along with other channels of course. So you'll see a couple of examples back here, but I'm only going to focus on the 2 that you can actually But we became even closer as Access and IPS worked with the local market teams and the product teams to build out that Leading Edge loyalty card that we referenced earlier with Gary. And you will see this downstairs. And I really do urge you to look at it through the eyes of the traveling consumer because that's what we all are at the end of the day. So you heard a little bit and you'll see a little have such that enabled us to introduce a new product to a new market in less than 6 months, cutting our time into revenue by over a half. That's the power of integration. And of course, now our pals at Access actually have a very compelling proposition to take to other global airlines around the world. So now of course, Ed always woos us Internally, and I'm sure he did you guys as well as he talks about this converging world ahead of us. So MPS has been working closely with Trevika and IPS to build out that mobile money capability that is so important for the work that we want to do in emerging markets, enabling financial services and access to banking for the under aren't. So you'll see that downstairs. Anne referenced it again. It is amazing to go to that Zoom stand who and watch the power of putting financial services in the hands of the underbanked. Absolutely very compelling. So I'll conclude really with the point that our financial innovators are really, really dependent, are very operationally dependent on processing in a very fundamental and compelling way in order to implement in the market. So we know that it's our ability to integrate the functionality that we have that delivers the technology and the operational infrastructure that these guys really need. That's what enables us to fast track our products into market and therefore help want to achieve overall our company objective of increasing that transaction processing share. So on behalf of my panel, I'd like to thank you very much for to us and invite Martina and I to come and talk to our about our business from a financial perspective. Thank you, you guys. I'm not really sure about Daniel's comments. Are either it's budget season, he needs more investment or he might want to come back to finance. That would be great. So anyhow, hello everybody and thank you for joining us here in New York or listening are in on the webcast. And this is the last presentation of the day and then we have another Q and A session and then you're free to go down to the demo are. But I like to just pull our morning session together, both from a business driver and a financial perspective point of view. So let's get the agenda are up here. So first of all, I would like to take a look at our 2013 outlook, again from a business driver and Capital Planning and I will be closing then with some remarks about our long term growth and financial performance home expectations. So let's start with 2013 year to date business drivers. What you see here on the chart for the Q1 and the In quarter you see actually our as reported numbers. Those are the numbers that we typically review with you during the earnings releases. And as you know on an intra quarter basis, we really can only use our process metrics and that's what you see on the right hand side. We pulled out process metrics for the Q2 as well For the July August period, so the July till end of August period is here featured versus the Q2. And what you really see in all of the metrics that we are about 1 to 2 percentage points higher from a growth perspective. And that is very consistent with what our expectations actually were for the second half that the second half is trending a little better than the first half. And in part, we are also seeing have positive signs coming through in the U. S. And the economic environment. So based on these drivers, our expectations For the full year of 2013 continue to be in line with what we said on the last earnings call in Early August. We expect that the second half net revenue growth will be similar to the 12% that we saw in the first are in New York. And as I just said, this is really based on the business drivers that we are seeing at this point in And we have exactly assumed those business drivers before, so there's no change. But what we did do is we included the higher level of rebates and centers are offline. So we also assumed a certain amount of incentives that will be only recognized when these deals come to fruition. And as who These deals, they come to fruition whenever they come to fruition. So these amounts will be recognized in those particular quarters. So 8% versus 2012 as we continue to spend on the right things that support our growth. And when you take that together with the top line that is providing for some operating margin expansion in 2013. For modeling purposes, you should continue to use a tax rate of 31%. And on foreign exchange, if the euro and the Brazilian Real stay as they were at the end of August, August 31. And if they hold for the balance of the year, then we expect that and so I thought it would be helpful to provide some insight on this. Over the last three years, we have invested close to $2,000,000,000 and roughly half we have actually invested in acquisitions like Access Prepaid and Traxxas, but also the investments that we make in joint ventures such who You heard about Zoom in Brazil. There's Wanda for the rest of Latin America, the joint ventures that we have with Telefonica. Now this amount actually doesn't include data cash, which we acquired just in 2010. The other half of this roughly $2,000,000,000 of investment was actually invested organically. And how we think about it is we are really thinking about it in 3 categories. Live. So first, we have investments delivering growth right now. And as you heard this morning, we have done a number of investments in our core are outside of the United States as well as in prepaid. But it also includes things like expanding the local presence of our sales and marketing team, are. And all of this, as you can see, really supports our strategic objectives of expanding our geographic reach and our consumer base, such are working with governments and with merchants. The second category that you see on here really includes investments that support the expansion of our payments capabilities as well as innovation. So these include the loyalty and reward space, the information services space and you heard quite a bit about that this morning as well as our continued investment are in excess prepaid and in data cash. On the topic of innovation, as Ed mentioned, we are very focused on staying on the forefront of the The digital convergence with products like MasterPath and our Mobile Money initiatives. But also Mastercard Labs is driving our pipeline future innovations and many of which you're actually seeing downstairs when you're going to be released from this room. So finally, we also continue to invest in our technology and infrastructure background. As Gary mentioned, we must Our global processing network as we transport more transactions. And you heard that from a number of our executives are in the position and that we have all the tools that we need as a premier technology company. So to summarize, about onethree of our organic investment has gone into the delivering the shorter term growth. And almost half of our investments over the last 3 years have been going into gearing medium term and long term growth through expansion are in the position. And the remainder went really into the technology and infrastructure backbone. Now let me talk a little bit about M and A, mergers are looking more actively at potential M and A opportunities. So here is a have a summary of how we evaluate the opportunities. I mean, to start with, we assess whether there is a good strategic are. And clearly, we're interested in technology investments such as assets that can help us in the physical, digital, convergence are based in anything related to keeping consumers, financial institutions and merchants safe in the payments related are. Next, we look at whether the target companies provides us with critical capabilities in expanding and strengthening are product and service offering providing us differentiated technology assets allow us to really reach are looking for returns above Mastercard's weighted average cost of capital of about 10%. And that hurdle rate can vary by the type of business that we're looking at and depending in which kind of areas in the world it's operating are in. However, there might also be some properties that are interesting for us to round out our own technology are still set, but they don't necessarily have an immediate return. So, and finally, we obviously look at the risk profile and other considerations, who have a very strong position, including integration and cultural fit. So now let me shift gears and talk about our capital are in the structure. So our guiding principles have not changed as we want to preserve a strong balance sheet, liquidity and our are credit ratings to 1st and foremost make the investments that I just talked it out in order to enable the long term growth are active of our business. Given the strong cash flow capability, cash flow generating capability of our business, early evaluate the dividend level. So let me put this a little bit in context with numbers. Since 2,007, we returned more than $6,000,000,000 to shareholders either through dividends or share repurchases. And in 2012, we returned 1 point have €9,000,000,000 to shareholders, significantly more than in 2011. And then when you see an even stronger have a trajectory this year having returned $1,400,000,000 through the first half of twenty thirteen, including doubling our are confident in February. Now with that, let me move on to the last part of the agenda, are in the world centric circles. And let me just move on to some of the numbers on that. So here in the first part, you can look at PCE Growth on a worldwide basis. And Aje gave you kind of the slices on that in terms of how that can vary by country, by economic times, etcetera. But not much has really changed on an McTynes, etcetera. But not much has really changed on an aggregate basis since we discussed this at last year's investor are meeting. And PCE is still expected to trend around 5% per annum over the 2011 to 2016 2nd, so this is the 2nd concentric circle that you see here in the green bar, the secular trend of cash and check conversion Into electronic forms of payment, that has been trending in the 4% to 6% range over the last 6 years. Again, really no change on what we have talked about before and we continue to assume that kind of range going forward. So taking these two factors together, we still expect volume growth market purchase volume growth to be in the 9% to 11% range. And when you adjust for markets where Mastercard do not compete against domestic schemes, the market opportunity for us remains in the 8% to 10 seek investments. Those are really the strategies, a lot of which you have heard from our panels and from our executives are warning about that allows us to win share and to capture additional value in the market and would bring us to that low to mid teens kind of long term revenue growth target. So now let me put this in perspective For our 20132015 long term financial performance objectives And they really have not changed from what we presented last year. So we remain confident that we can deliver an 11% to 14 represent CAGR over the 2013 period from a net revenue point of view. Assuming the economic environment remains look to where it is today. We now expect that net revenue and EPS growth in the early part of this 3 year are in the area will likely be at the low end of our stated range. And while we said this on our last earnings call, this is slightly are better than what we thought a year ago when we met. And it's really due to what's happening in the economic environment where we're starting to feel a little better in terms of what we're seeing in the world. We kept the 50% operating margin minimum here and I just want to be sure that want to understand that we're not managing to a 50% target. Rather we believe that it's the minimum are margin level that our business can generate even after considering all the right investment have opportunities for growth as well as 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 we're seeing. So we expect an earnings per share CAGR of at least 20% over the 2013, 2015 period. And of course, this assume some level of continued share repurchases. Tax rate is not changing at the 31 exist and they also exclude future merger and acquisition activity. So thank you. And now let me turn the program Back to Barbara and invite my fellow executive committee presenters up on the stage to begin the Q and A session. Thanks, Martina. Can we turn up the house lights a little bit so we can see who's out there. Again, for those of you here in the room, please wait till you have the mic and state your name and affiliation. We still have a quiet group on the webcast. Nobody submitted any have questions. So we're going to start again here. Brian, you want to Chris? Thank you. Chris Brennan with Stifel. I've heard a lot about PayPass today and it sounds like there's been some success. You mentioned Canada and some of the foreign markets. But When I try to use my phone in the U. S, the merchants tend to look at me like I'm crazy trying to tap my phone. But I tried several times and I stopped trying because it just feels silly. And now I just carry a credit card A couple of times and I stopped trying because I just feel silly. And now I just carry a credit card in the back of my wallet, a Mastercard of course and swipe that. Instead it's Easier. I just don't understand like can you help us explain what's the difference between some of these foreign markets where you are seeing people tap their phones or tapping Something, not necessarily a phone, versus what we're experiencing in the U. S. I might ask Greg Vosberg out there because he handles the sort of the acquiring side of the business. And he always gets phone calls from Ajay when his PayPass doesn't work. I have the same problem. I've sent him text messages saying shit, Harry, it doesn't work. It doesn't work. CBS on eighth Avenue is not working. Right, get your screwdriver and get out there. You think he's kidding, but he's not. I get those e mails It's those Sunday evenings. Yes, it's an interesting question. I think it just has a lot to do with the structure of the market. We've seen markets where PayPass has really taken off and been very successful where the markets are a little bit more condensed, a little are more concentrated on certainly on the issuing side where we get a nice level of scale Support for issuing PayPass enabled devices and where there are some large merchants who can sort of set the tone in are important categories for installing the technology at the point of sale. The U. S. Is just it's a large, Complicated, fragmented market, not as fragmented on the issuing side, but on the merchant side. We're talking about more than 9,000,000 locations we have in this market that there is a decision to be made about the equipment that's is to encourage not just merchants, but issuers as well to adopt the technology that we believe is most secure and delivers the best experience that that's going to create an incentive for greater uptake in this market. We have continued to grow PayPass acceptance. But as you've experienced, it's Nowhere near where it needs to be. But we have put incentives in place that we think as merchants go through technology upgrade So we'll continue to work at it. It's just been a bit of a longer slog for us in this market than it has been in some of the others. We think it will in that we've part of what we've the question was EMV will help. We think it will In that some of the structure we've put in place around offering financial incentives to merchants In particular, things like account data compromise relief, PCI compliance, audit relief, etcetera. The benefits that they can realize will be greater if they're processing transactions through terminals that are enabled with contactless Technology. Okay. Gene up in the back. I'm sorry, I can't see who that is. I just see a light shirt. Hi. It's Tim Willi with Wells Fargo. I've got a question about marketing. So if you think about the emerging National markets, your customer acquisition is probably coming in a lot different way than it has in North America where you rely upon Banks primarily. So I guess do you think over time where you have maybe a bit more distributed way of acquiring consumers, How does that impact the return on marketing or the approaches you're taking? Would we expect to see a change in marketing versus volume or GDV or Something like that over time as a result of those differences in customer acquisition. So we don't actually acquire very differently. We still acquire Essentially through banks or merchants whoever is the actual card issuer. So in some parts of the world, merchants and non banks can be card issuers. But essentially it's the card issuer who does most of the consumer acquisition. The only thing we are doing differently and we started doing it in U. S. As well as overseas is we've taken our money from spending it on what I call image building Campaigns around priceless to connecting it to priceless experiences for consumers. And that came through the priceless which is not just overseas, but here too. So New York is 1. We've got things going on in Chicago and Miami and it needs a constant rejuvenation, But it actually makes an enormous difference to the way the brand is perceived. The task of marketing is different in some of the emerging markets from what it is in some of the developed better look better penetrated for electronic payments markets, meaning in the emerging markets, it's about getting a card into their wallet and getting them comfortable with that idea. In the United States or in Canada or in Australia, it's about which card do they take out at the point of sale. And so it's 2 slightly different reasons to push at it. But we actually don't approach the acquiring of a consumer But the issuer of the card is the primary engine. Yes. I just think the issuer tactics vary market by market in terms of acquisition. I think if you go more emerging markets, there's a More direct sales, all right, or store based sales than maybe online sales or direct mail channels. And that's a lot of the work Advisors does and does and executes around the world, making sure that the issuers and their methodologies are efficient. And Ajay's point, in developing It's about educating them on what they can do with the card. That's our role, all right? And then as you become more educated, it's driving usage But the pure acquisition of new accounts is pretty much driven by whether it's merchants or telcos or our issuers traditionally. Thanks. It's Jamie Freeman at Susquehanna. I wanted to ask about the commercial corporate angle because that's becoming larger American Express is such a huge company 80,000 employees. And I wanted Ask about your go to market strategy. Is that too Ajay through the channel partners the issuers? Or is there an enterprise sales force that you're actually Building to go at the corporate client. Yes. So that's a combination of both. You end up having typically the who tend to make the first call. But very often what we do is our sales force either goes along with them because of our knowledge have expertise and depth of comprehension of tools like smart data and the commercial card and what it does for a corporate treasurer We're a corporate CFO in terms of tracking expenses and managing the way that money gets spent. So we tend to send people along, but we do it with We've got kind of lead partners of choice in different regions because of their interest in that region. And that's how it's kind of settled into a pattern over the last I'd Say a couple of years. That's the big picture answer. So I'm going to let both Anne and Chris refer to their kinds of experiences to give you a little more color to that. Yeah. Ajay is right on. We have marketing efforts direct to corporates where we will go out and call on them and showcase our products This is an acceptance advantage. We also work very closely with the big issuing banks and go with them on and provide our products and services sort of on a white label basis to them. But one of the things that I think is going to happen, it's an evolution We watch take place in the co brand space, the retail co brand space, but I think is also going to happen in the commercial space. Retail co brands used to be That the issuing bank determined made the network decision. And they were the retailers realized over time with the help A lot of consultants to split the decision between issuer and network. I think what's going to happen in the commercial space as well for big commercial deals. You're going to see consultants employed and they are then going to split issuer decision and network So that will change a little bit of the dynamics and maybe a little bit more of the importance of us having direct mature markets like the U. K, like Australia, very classically like the North American model that we've got dual approach through our issuers and also direct. But also one of the things I would say is Chris sort of said he was very proud of his commercial growth and that we are too all over the world. In some places, we're are growing over 30%, over 40% in some markets. So it's a very, very good area for us. The thing that we're are focusing on in the international markets. It's not just the big issuers where you would go with that kind of sales force, but also starting to produce solutions for the small to medium sized businesses because that's where the real growth is going to come from in my markets. And remember that 80% of small to medium businesses are underbanked. And downstairs, what you're going to see is Simplify Commerce, which as RJ mentioned or maybe it was Gary, I can't remember, is a way of small businesses are actually bringing themselves up in a matter of minutes on the Internet and being able to accept cards. Well, when you look at the opportunity for that across the International world is absolutely huge. So you're going to see even more growth in the commercial sector going forward. I think also just the go to market approach is one thing, the package of tools. We've talked about smart data. We've talked about in control. And there's another element which advisors focus on, which helping our customers actually penetrate small business, all right? So they have developed expertise leveraging acquisition channels, which are different for small business Consumers with these banks in all the different types of countries we have around the world. So it's a complete kind of picture that is It's one of those things to scale further. The other thing I'd say about in control, though you've heard that used in the context of commercial products, in my markets, We're using that to actually manage fraud. And we've rolled out a complete fraud shield, for example, across the of Germany by getting all of the banks to adopt it. And we're also putting it in the clearing system in Taiwan. So some of these products that who are developed in one space can be used to actually strengthen our franchise in a completely different way, which is the great thing about Okay. Greg? Yes. Greg Smith with Stern AG. Two questions for Martina. Just the first, how should We think about buybacks going forward relative to the stock price with your stock up, the valuation up, how much should we consider that in trying to forecast your buybacks? Second question is just is there an opportunity on the tax rate to lower that? I know you said use 31% next couple of years. But as we look over the next 5 years or so, Should that come down naturally maybe as you grow faster in lower tax jurisdictions? Yes. So first of all on the share repurchases, I mean as We have said before, we're going to run the program into our last $2,000,000,000 program. And really our philosophy is picking up on the dips. So that's what we have been doing very successfully. I mean it Probably similar to what most of them do. Yes, absolutely. We'll do what most of them do. Yes absolutely. What they're trying to do I think. We could do a combined thing if you like. But Really the philosophy hasn't changed. I mean, when you look at the growth opportunities that we have for a very, very long time, that is the way that you really have to look at your model, you're going to continue to see that kind of cadence for us doing. But trying to pick up on the dip so that we are running are in accretive programs. And I'm proud to say, I mean, up to now, we have been really running accretive programs. Just so you know, that idea of picking up on the dips is not something that Gina started talking about this year or last year. It's from the year I came in, we were talking about shareholder buybacks and she's been pursuing this picking up on the dip strategy, Which is the only way you would want us to buy shares. It's the way you do them. And so that's kind of what we do. Okay. 2nd on the tax rate. Yes, I'm saying for all of you guys use the 30 are 1% for modeling purposes. But I think you guys know that we have quite effective tax strategies that we put in place in terms of are realizing what we did with our European footprint as well as with our Asia Pacific, Middle East, Africa footprint. And this is all out very much in the public We have to do 10 ks and disclosures about that. But we optimized our footprint in such a way that we basically put our tax structure there where we're actually generating our business. So for example, in Singapore, we have a 1% are tax rate for anything that we really generate out of the Asia Pacific region. Singapore is a major business hub for us. We have have a lot of people there working. We're doing a lot of development there. And so it's really for us are in a good location. Now when you do these kind of structures, they're usually transition periods over time and you don't get the advantage of have that kind of tax rate right on day 1. You're going to grow into that over a 5, 7, 10 year period. So over time, you should be seeing some benefits of That's coming through in our taxes. And we're continuing to look at that. And it's always really hooked to where we have Our business. So where we have our big business hubs, where we do the development of our products, where we run our business from that's where you will see us migrating to from a tax point of view. So I would think over time, this is not something you're going to get in 6 months or in 9 So in 12 months, but over time, you should be seeing a gradual decline in the tax rate. This sounds like our budgeting conversation. We We won't give this in 6 months, 9 months. Okay. Tien Tsin? Thanks. Tien Tsin Huang from JPMorgan. Just a couple of questions. 1st, coming back to Chris' comment about the pinned debit share that you picked up on the back of Durbin. I think I've heard you and Barbara say that you didn't discount price to achieve that. And I'm curious if that's a good case study that we can use if signature debit opens up for non exclusivity? Yes. I think just to Tien Tsin's point, we have been very disciplined about not discounting in debit just to win every transaction that's in the marketplace. And Craig Vossberg is my gatekeeper On that, every Friday afternoon, I get a list of every major retailer, where Maestro is our pinned debit product stands in the routing tables up or down against other regional networks. And we have a pact that we are not Overall financial objectives for the year. We need to course correct. We see within a band of reasonableness our market share moving up Down, we might add a little bit of incentive, but certainly nothing wholesale. If you flip that to the Signature debit scenario, are Mario. I think the thing you have to remember if signature exclusivity goes away, in the pin arena, Issuers and merchants, we're picking from I think there are 9 pin debit works in the United States, right? If you go into the Signature space, there's really only 2 players. The third being Discover are not quite sure what their staying power is in the signature debit space is. So I would suggest that there is probably even less Pricing compression, if we go to signature debit non clusivity than in the pin space. It's you go to a dance as a guy and there's 9 ladies to ask dancing, right? The prices are different, I You've got to answer you, right? It's going so late. The price goes up. So, Craig? I think I should rewind that. All right. I'll You get my point, Inger, right? I do. 9 versus 2. Let him also hook, Inger. So here's the 2 things I'd add to that. One is I don't know if Senator Durban would like to hear this being said on the back of Durban, but I'll let that go. Yes. And the second one is actually a real number. We I've said this in some meetings in the Plus we where we were in terms of pin debit transactions, we were processing through our network before April of last year and now is there at 4 times And we've kind of stuck to that number give or take a little bit up or down. As he and Craig look at those Friday sheets, We'll go up a little, we'll go down a little. We kind of stick around that time. Curious how many Dan's comments will be on the sell side notes tomorrow. So A question for Martina, I guess the second one and maybe Ajay. Just on the M and A front, it sounds like a little bit more interest there. Any size Restriction or level of dilution you'd be willing to take. I'm especially curious to hear if there's any sort of big or chunky deals that you might be looking at. Thanks. Well, look, I mean most of the Yes, that we have done at this point in time. We're anywhere in the zip code between $50,000,000 $500,000,000 right? I mean that's the zip code and we kind of think that there are lots of very, very good properties out there that are in this zip code that would actually benefit us from a business point continue to have. So of course, from a size point of view, when you just look at our financial wherewithal, we would be able to go up Valuations that are deserved at much higher numbers in the kind of industry we operate in. So we in addition to full out We've been putting money into investments and JVs in a number of locations, although we watch those very carefully because management JVs Always complicated. Investments are not a bad way to go in some cases. So we've had investments in something called ECS in India, which is a processing shop that gave us Actually, I think it was in Kathy's screen when Kathy had her screen up there. It's one of the inputs we're using to drive beyond the 50 Listen of transactions that we see today. We were at 40 some time ago. We're at 50 today. We want to get past that. And that's why this LADI is focused on that aspect. We've got investments in things like Mu Sigma in India, where we're going to put money in to go and get The chance to build out our data processing capability for the analytics business that Kevin Stanton is developing. We've put money into a provider in Thailand, which is one of the leaders in the e commerce space that's connecting merchants, banks and payment systems together and so on and so So there's money being invested that goes past the outright acquisition of a True Access, a Data Cash, yes, access prepaid worldwide into these smaller deals where we may put some money in and then later on increase the share like we did in Trevika, are. We've owned a portion and now we own 100. So there's kind of a there's 2 or 3 strategies being played out. There's another piece, Which is we've invested with a couple of very early stage angel investors in the payments technology space. That's the way I'm trying to develop a osmosis When it comes in through these people, it makes us more aware and makes us more, I think, clued in. It adds that little jump to the innovation That Mr. Flood refuses to do it in public. I'll jump not dance. Yes. Jean, Jean, do we have any questions up there? Okay. Did you you've already asked a question, Craig. Come on. It's Julio. Ryan, right over here. Thanks. Julio Quinteros from Goldman Sachs. One of the things you guys talked a lot about today was this shift to analytics and trying to use analytics Way to sort of add more value. A question I guess as I'm thinking about this shift to integrated payments at the point of sale seeing more of these tablet based POS Systems even the digital wallet guys everybody talks about adding value in analytics. And as I think and as I hear kind of what you guys Clearly, there's going to be a lot of value generated in using those analytics. But do you think that you need to own a bigger part of the POS itself, maybe some Cloud based POS system of some sort to actually get you closer to that data to be able to have that value? Or can you do it from where you guys sit at the network So why don't I get Kevin to answer for a second and then I'll ask Kevin. Is he there? Yes. So as I said before, The data we have through our Transcend Action Network is spectacular stuff. But we are constantly adding to the data pool that we can draw from. That's with our customers on a case by case basis. It's purchase sources. But we're always looking at how do we enhance our data on On a permanent basis. What you've described is one of the things we've investigated. I think you could as easily have directed The question to Ed, because we work very closely with Ed in making sure as we enjoy the convergence of digital and physical that we're looking at the Data angle there. The thing I'll add is, I there are 2 areas that I don't want to go. 1 is, I don't want I know your name as far as possible in the data sheet that I get, because I do not want to be involved in marketing to you personally. It's not what my role is. I'm a B2B player with a desire to be B2B2C sensitive. I when the consumer signed up For electronic payment or card account with you, the issuer, you the merchant, they signed up with you the issuer Are you the merchant on me Mastercard? I recognize my place in that space and I know I want to cross that line, because I believe that As the privacy debate becomes stronger and it will, this will be an important position to protect and defend. I don't need to prove I have a Chinese wall in company, I don't get the data. I don't get your name. So that to me is an important part of what I'm trying to protect and build. And I think that's Key to everything that Ed and Kevin do or that Chris and Anne do in the transactions we do. The second part is, would I like to get More granular information. Would I like to get to SKUs and not just merchant code and dollar value And point of time, absolutely. And those can come through many ways through working with the cash of a point of sale register, We're also working in partnership with merchant associations and other institutions that we're already doing that business with. So there's many ways to skin that Cat, if it could be called that and that's kind of what Kevin and Ed are working on. Okay. Jim, you want to pass that down? I'm sorry, I can't see who it is. Thank you. This is James Foster of Pacific Crest. I wanted to ask a question And then second, now that you've had more time to evaluate the proposals, where you feel like you are both on the questions Dinner change as well as network ownerships. Thanks. All right. So, Javier? Yes. Absolutely. Well, I'll start and then I'll pass over to Javier, my Head of Europe, who's here and the guru on the subject. We did give the investor community an update at the Beginning of the summer and to be honest not much has happened since then because in Europe we like to have long summer recesses. But there's three points won't. The other is the impact on the consumers of the changes. And the third is the separation of the processing and the are skiing. But I'd like to hand over to Javier who I think will address those questions very well. Thanks, Anne. Thanks very much and thanks for the Question. As San said, we like to go on holidays and that and it's good because people use their Mastercards and that's It's a good thing. So the only thing that I can tell you is that I woke up to an interesting piece of news yesterday. I don't know if you saw that whereby the French government decided and said. And I say decided because it was a pretty official statement. I don't know if you saw it. But they don't feel that A single interchange across Europe is a good thing. You got to remember that the French 6 months ago decided and reached an agreement With all the players I. E. Retailers, bankers and the government on a different thing, which has nothing to do With what Brussels is trying to drive. So, hey, welcome to Europe, right? So, I guess, my point is that you should not Yes. And indeed in this there will be a lot of risks and opportunities to Mastercard that we I think we're really Well prepared to take advantage of. You know that some of the things that were worrying you for example, I get a lot of times questions about The fees, what about your fees? You know that that our fees are not I repeat are not included in any CERN is the separation of scheme and brand brand and processing or scheme and processing. We do not bundle brand and processing. As a matter of fact, 50% of our transactions are done by somebody else. So we don't do that. But some domestic schemes do. So that could hopefully if indeed it does go through Open up an opportunity for Mastercard to process some more. But come to my table at lunch and we can talk about it some more. It'll be wine served. The are here. Thank you. It's time for one more question. Sanjay, I saw you flailing your hands several times. Thank you. Sanjay Sakhrani, KBW. KBW. I guess you guys mentioned IPS several times. And I was just wondering where we are with its penetration and How satisfied you are in terms of that? And then maybe Chris you could talk about how important it is when you win debit deals that you have IPS? Thanks. Kathy, you want to talk about first part? She's just putting away a pint of goodness and then getting Actually, I'm putting away my almonds because I'm sure like you all, we're starving in this quarter here. But I have snacks in my bag. I think that I could say on behalf of all of us at Wirtzgerald with the performance with IPS, we've increased just over The last 12 months, we've doubled the capacity on the platform itself inside U. S. Markets. And I know I'll leave Chris to eulogize about what it's done for his business in U. S. Markets. And I think the investments that we're are working now to explode the platform out across the rest of the world, very targeted, I have to say, where the need is well defined And the capability and functionality that we have is appropriate for what we're trying to do in the market. So we're now in Brazil, the Netherlands, in Switzerland. And then the third area is really the processor of choice for our access prepaid, which is really what It's exploded out, IPS across so many more different countries and has really increased the prepaid dimension rather than the debit dimension. So prepaid growing in the U. S. Markets, but also growing globally. So because we're going to Yes, I would say it's great for Salesforce to be able to go out to a customer in a one stop shop. You get brand and you get processing at the same time. It's something we didn't have in Our toolkit and our competition did. So particularly in the independent bank and credit union space, we're an area that our competition We could offer both. Now we can as well. And then it's sort of the after sale stickiness. Again, if you get Your system embedded with issuers big and small. It makes your brand stickier, makes who Renewal is a little bit easier conversation, because we'd be ripping out the processing perhaps and switching brands etcetera. It gets pretty messy. So, it's great we have it. We have great testimonials now. Kathy has done a great job in getting that, platform stood up and credible in the marketplace. It is state of the art. People realize it's state of the art. And we're seeing some real traction with what she's been able to do. I think Kathy's comment about being The platform for Access Prepaid. Access Prepaid is in like 26 countries right now. So that's 26 international markets That multi currency processing is available. And that's fantastic because actually in our markets, the prepaid business, I think it's grown something like 100% over the last 5 years. So it's fantastic growth rates and the fact that we have this platform just Makes it even better. Okay. So before I turn the podium back to Ajay, who's got just a few quick closing comments, I've got 2 quick administrative things. First of all, we've got lunch 1st of all, we've got lunch available. As you leave the room, boxed lunches, please grab 1. And head downstairs where you'll find the lunch and discussion on tables. Javier, I'm not sure if you're serving wine at your table. It was not in my budget, but if you want to pay for it fine. And then into the product experience You've heard all of our speakers today talk about the different things that are down there. In the back of your binders, you'll find a sheet that looks like missed. It's in a pocket in the very back. If you open it up, there's a map. It describes all 20 stations that we have this year staff with experts that we hope you'll take the opportunity to talk to. So with that, Ajay? So I'm going to keep my closing comments very brief as we're all hungry. And most importantly, I do really want the most of you who can stay on to go see this product showcase. We're trying to bring it all together, so you can touch and feel rather than just listen to us quack It makes it easier for you to identify with it. So what I hope you got today was a thought the first one consistently over a period of time, we believe there is this enormous opportunity on the 85%. And it requires a very careful way of thinking about it. It's very easy to fall into the trap of chasing the 15%. You have to do that because that pays for us to have events like this and for Javier to buy somebody wine at lunch. But the fact is our future will depend on the 85%. And that is what we will evaluate consistently over the next few years. The second one is we recognize increasing competition not just from the Traditional players who are also aggressive in many of the same areas that we're talking to you about, but also from new players. Right now, there's probably some 2 kids sitting in a garage in Silicon Valley trying to Some 2 kids sitting in a garage in Silicon Valley trying to dream up a way to disintermediate the banks and the networks And find a way to tap into this nice big profit pool. I think we recognize that. We want to engage with them because we believe we bring a lot of good assets to the party that aren't easy to replicate at an economic sense and in a sensible point of time. And we think we can leverage that in the fight against 85 as against worrying only about the 15. This company has changed substantially in these 4 years. You would not have had a dialogue about physical digital convergence with the passion of all the team you're listening to and what you'll see downstairs 4 years ago and what you're seeing is only a portion of what our dialogues are like inside the company. So that's just one example. I gave you the example of the millennials. It's the truth of having to deal with them and using their energy and their way of Thinking about our business in a way that's different from the way that I would have thought about it even myself 4, 5 years ago. It's an important part of We are. It reflects in the way we deal with merchants and governments. You've heard us talk a lot about it, but you're going to see examples down And our people from around the world are living those examples as we speak. The Nigerian example, the South African example, the World Food Programme The PayPass example from Australia, from Poland, you've heard about it from Canada and Turkey in the past. All these are a part of what we're trying to do differently today from the past. We believe that we're well positioned. We've got a today from the past. We believe that we're well positioned. We've got a lot of work to do. Much can go wrong, but we're well positioned. And we're going to keep investing in making that happen. That legislative environment is a key part of what we worry about and think about. That's why we're engaging with governments Not just as a business point, but also you will ask any business manager who you spend time with today, anybody from the regions or the divisions, And they will tell you they own the situation on the ground of building the right capability as well as the right conversations with the governments. It is not the job of Noah and his capable team to be available in 2 10 countries to try and change that conversation with a bunch of lobbyists. That is not what we are doing. We're doing it ourselves. Chris was in D. C. Yesterday meeting Cordray. I've Been in DC 7, 8 times a year. I consider that to be a business of mine. I need to get there. I'm out traveling. I was in the week before last in Jakarta, in Seoul and in Singapore, all three with Vicky. We met the senior most policymakers And opinion leaders in those countries. I'm going in a few days to Eastern Europe with the Iron Lady and hopefully she will allow me to do a little bit of the work want to do there and so on. It's just it's a key part of what we do. It is front and center of our future. And we're going to keep driving change in all these Things in technology and innovation and culture that's what we're committed to. That's what this gang is signed up for. So with that, thank you very much. I'm looking

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