Good morning, everyone, and welcome, either those of you here with us in New York this morning or those of us who are joining on the webcast. I'm Barbara Gasper, Head of Mastercard's Investor Relations. On behalf of the entire Mastercard management team, we'd like to thank you for joining us today with what we hope you'll find is a very educational and informative program. Similar to last year's format, we have combined formal presentations in the morning and followed by a lunch and mingle session after this, as well as a product experience that we have downstairs on the lower level this year. We're going to start out this morning with Ajay Banga, our CEO, who will kick off the program with some comments about our progress in executing our strategy.
You'll hear from several members of our management team, beginning with Gary Flood, President of Global Products and Solutions, who will be joined on stage by several of his direct reports: Alfredo Gangotena, our Chief Marketing Officer; Tim Murphy, Chief Product Officer; Kevin Stanton, President of Mastercard Advisors; Ed McLaughlin, Chief Emerging Payments Officer. Gary will provide an overview of our products and services efforts, each of his directs will drill down into an important component of their respective area. Following a mid-morning break, we'll start off the next part of the session with Chris McWilton providing an update on U.S. markets.
Chris will be followed by Ann Cairns, our President of International Markets, who will give an overview of our non-U.S. operations and lead a panel discussion with three of her regional leaders, Michael Miebach, Ling Hai, and Gilberto Caldart, each of whom will talk about some of the opportunities in their respective regions. After that, Martina Hund-Mejean, our CFO, will provide the financial perspective on the business. After our Q&A session, we will quickly preview this afternoon's product experience, Ajay will be back up to close out the program before we adjourn about 12:30 P.M. Copies of the slides that we're using today can be found in your audience handouts and have been publicly filed this morning with the SEC as an 8-K. The slides are also posted on the Investor Relations section of our website for your reference.
In addition, an audio replay of this event will be available on our website for 30 days. Along with our presenters, we have a number of other members of the senior leadership team with us today, including Noah Hanft, our General Counsel; Rob Reeg, President of Mastercard Technologies; Stephanie Boccara, our Chief Human Resources Officer. We also have three of our regional presidents who are not part of the formal agenda: Javier Perez from Europe, Richard Hartzell from Latin America, Betty DeVita from Canada. I also want to acknowledge the other members of Mastercard's IR team: Tina D'Amato, Adam Engelman, and Catherine Murchie, who's the newest member of the team who rotated into Greg Boosin's old spot about two months ago. If you haven't had a chance to meet Catherine, please try to grab her sometime during the day and introduce yourself.
Just a few administrative items to get out of the way before we get started. Please hold your questions until the Q&A session, which we plan to start roughly about 11:30. We do have the ability to take questions from those of you who are on the webcast, and those questions can be submitted by hitting the Ask a Question button on your webcast player. Our agenda calls for a 25-minute break at approximately 9:45. Those of you on the webcast can either stay connected or reconnect, up to you. As a courtesy to our speakers and those around you, I'd like to ask the attendees here in the room to please silence your phones and your BlackBerries. Finally, no investor meeting would be complete without our safe harbor slide. Just a reminder that today's presentation includes some forward-looking statements about our expectations for future performance.
Actual results could differ materially from those suggested by our comments today. Additional information about the risk factors that could affect future results is detailed in our SEC filings, including our forms 10-K, 10-Q and 8-K. With that, I'd now like to turn the program over to Ajay Banga. Ajay?
Good morning, everybody. Thank you for being here. Most importantly, thank you for your interest in our company. Thank you for your support for the company over the last so many years since our IPO. What I'm going to try and do is to quickly set the stage for what you will hear over the course of the rest of today, as well as give you a sense of how I feel about what we're doing in the company and how I feel about how our business is going. In the first slide, you remember back in 2010, we laid out performance objectives for the next three years, and those were the 12% to 14% CAGR on revenue and the 20% plus CAGR on EPS. Then 2011 turned out to be a year that went way past that.
All of you kind of came back and said, "Does that mean that in 2012 and 2013, you're going to come in way lower because you're sticking to your CAGR?" I foolishly gave in and I said, "What the heck? Let's agree that we'll do the same thing for the next two years." Well, the good news is for the first half of this year, we've done well. We've done what we thought we would do. It's 16% on revenue. It's 26% on EPS. It's not an easy time to be doing numbers of that type. The markets are complicated. The world's in a funny kind of circumstance. The U.S. has its own challenges, politics, economics, social. Europe has its own challenges. China is slowing down.
Because of the fact that we have multiple legs to our stool, as you will see here, we think we can keep this business going at an attractive level for the next few years as well. What are those multiple legs of the stool? You've heard me talk about this earlier, the biggest one, the first one, is personal expenditure, consumption expenditure. We think that grows around 5% a year over cycles. You may have a year when it's a little lower in one country, higher than another. You may have a year when the world as a whole is growing at 3% or 4%. If you take it over the course of many years, it tends to grow at that 5% growth rate by putting together the weighted average of all these markets across those years.
The next one is how much of that, how many of those transactions, 85% of them, about 50-odd percent of volume, 85% of transactions go in the form of cash and check versus electronic payments. Clearly, if we can make that move, if we can make a difference to that 85%, there is a real value of growth for our company. That's the secular movement that Martina and everyone talks about. It adds anywhere between four to five percentage points of growth if you can harvest it well. Then there's the final innermost circle, which is those 15% of transactions that are electronic today. What share do we possess on that? There, we are fighting to gain share because that's the beginning point of all the effort.
In a funny kind of way, while there are three legs to the stool, not all three are equal in size, not all three are equal in length, not all three fire at the same time. Not all three react as quickly as each other. The PCE tends to be the one that almost immediately impacts what happens to our revenue. Share in our business takes time to build or lose. When you win a deal, it's already got two years of work going into it, then by the time those cards switch onto you get benefits from those cards in the years to come. Cash and check versus electronic also takes time. You've got three legs. You've got three legs of different lengths, different timings.
What we try and do is to find a way to make these three work for our benefit. That's how we think that even if the world goes through some difficulty, which it has in the first six months, you can see it in U.S. spending figures, the last three months for the U.S. retail economy are different from the previous 9 or 12 months in terms of growth and energy. You see it in different parts of the world. Because we've got multiple legs to the stool, we're able to pull our way through this. We're firm believers that to make this ecosystem work well, those three concentric circles and those legs of the stool work well, we have to be able to work with all the four players in the ecosystem.
Traditionally, when we were owned by the banks, you know that history well, it's always been seen that we worked very closely with the banks. Yes, we did. Yes, we do even today because they are the ones who issue those cards in most countries. In some countries, like parts of Europe, where the Payment Services Directive has taken effect, non-banks can start issuing cards. In the majority of markets, it's all about the banks issuing them. The fact is, they can only issue them, and they'll only get used if a consumer wants to use them. You'll hear a lot today about driving brand preference. In the U.S., the average individual carries seven cards. It's not about getting an eighth card in their wallet, which a couple of our competitors are trying to do with deals they're doing with each other.
It's about making sure that the right card is pulled out at the point of sale. That is part of where the revenue growth comes from. Only part of the revenue comes by issuing a card. A much better, consistent, long-term, predictable revenue stream is utilization. We're very focused on trying to find ways to make those consumers prefer our card, prefer our brand at the right point of time. Now, that doesn't mean we're going to become a card issuer. We are not a B2C company. We are a B2B company with a desire to bring to issuers and merchants and governments, who are all, by the way, getting into some form of issuance somewhere or the other.
We are in a desire to bring to them a more thoughtful way of understanding the end consumer and their segments and trying to find ways to package services and products in a way that can create brand preference for our brand at the point of sale, not just one more card in the wallet. That's not the idea in the developed world. That's a great idea in the emerging markets. It's not a great idea in the developed world with multiple cards in there. That's the consumer angle to it. Can't do that without merchants. There's too much going on at the merchant level. There's too much with new technology that enables merchants to have a much stronger relationship with that consumer, not just the banks.
Therefore, we're very clear and conscious that if this payments ecosystem has to deliver against that 85% of transactions that are cash, then we need to make sure that those merchants feel the fact that we can add value to them, from what we're doing with advisors to what we're doing with data analytics from them. I just had a call with the CEO of a merchant yesterday talking about exactly this idea. Chris and I in the U.S., Ann and I, and her regional team outside make merchant calls as much a part of our business because with them, we can make real value-added opportunities come to the point where the consumer has to choose which card to take out. It's back to that consumer. It all starts from there.
Finally, we recognize clearly that governments and opinion leaders are very important in the growth of this ecosystem in fighting that 85%. They have the ability through how they think about the strategic importance of payments to how they think about the cost of cash, to how they think about the negative effects of that tax avoidance and cross-border illegal activity and all those things that cash enables. They can make the payments ecosystem develop in different pathways. One of the things we're trying to do, as I was talking to somebody outside, is to engage with them. There you are. I was talking to them outside about the idea of engaging on what you can do proactively with governments.
Doesn't mean they'll always listen to us, doesn't mean they should, but at least we get a chance to put our point of view forward, and also try and do business with them so they see the value of our technology and our capability. Over the course of today, you will see lots of conversations about brand preference, government relationships. You will hear about merchants as value-added partners, and of course, you're going to hear a great deal about our banks and issuers. When you get to the product experiences outside, you'll get a chance to see a number of things in all these spaces. Everything for us is driven by technology. Everything for us is driven by data, and everything for us is driven by the people we have. We've added significantly different skill strengths to our people over the last three years.
We have people who've worked in consumer companies, who worked in technology companies, who worked in banks, who worked with merchants, who worked in governments, who worked for the IMF, who worked for different government multilateral institutions. Those people are the fabric of how this thinking is being developed. I'm not going to go a great deal into grow, diversify, build again. I think you're kind of sick of me repeating that, but we're executing on that. That's principally what you'll see again today. Growing our core business, debit, credit, prepaid, and commercial. That's what pays for this auditorium. That's what pays for the lights. It's what pays for all of us to do what we're trying to do.
Also pays for us to invest in all the new technologies and all the new things that we're trying to do as we diversify our business by geography and by type of customer, and as we grow it into new businesses, building new businesses that are in the space of information services, analytics, loyalty, e-commerce, mobile, loyalty delivered through those two channels as well as other channels. There's a whole lot of things going on in this space that, to me, only get afforded if we keep doing well in our core business: credit, debit, prepaid, and commercial. We're very focused on growing that and earning from that the right to be able to diversify and build our new businesses. The challenge, of course, in all these is to make sure that we invest the right amount of money in those new things that are happening.
As I've said to some of you in the past, I'm very keen to be a part of whatever changes happen in this ecosystem. This ecosystem is changing. It will change even more over the next 10 years. I'm not in the camp that thinks that the world is going to change in the next five minutes. Mobile payments aren't going to transform payments. I'm just not there. I'm investing in it a great deal, but I remember that e-commerce took 17 years to get to 8% of retail payments. There's a reason for that. It starts with consumer adoption. There's another reason for that. It starts with infrastructure. There's another reason for that. It starts with standards. There's another reason for that, the sharing of the economics. There's another reason for that. Who's playing what role? I can go on like this for 10 minutes.
When I read articles about how mobile payments are going to transform tomorrow, they will. I'm not sure tomorrow is really tomorrow. That's all I'm saying. I'm investing. I'm determined to be a part of how that ecosystem gets played out. You've seen that in the deals we're announcing in our relationships with everybody from Telefónica to Deutsche Telekom to Everything Everywhere, to the manufacturers, to Google, to hardware players, to the acquisition of Truaxis. Yes, we understand all that. But I have a belief that it will take a little longer, and we're determined to do it the right way, build it the right way so it grows for the next 35 years, not just the next few years. Final slide. We're trying to change the way we're conducting ourselves, and that's what this slide is about.
I'm not going to go through every line because most of you understand what I'm talking about here. I just said a little bit about diversifying our customers, but truly, we're on a journey. That's what this is. This company is on a journey. Its first journey was the IPO. Its second journey is this evolution from what used to be a company focused on large banks in the consumer credit space primarily, which was driving our growth. We had lost share in debit in the U.S. We weren't doing as well as we wanted in the commercial space. Our competitors had grown very solidly into that space. We kind of changed that dial. We've changed the kind of customers, not just big FIs, but also the smaller regional ones, also telecommunication companies, merchants, and governments.
We've made sure that debit and commercial credit and prepaid play a real role in our P&L. We still have to fix consumer credit in the U.S., and Chris knows that if there's one thing this company needs to focus on over the next couple of years, it's that. The good news is we think we can actually do something there, and we actually think, as Chris will tell you, it may be a little easier than we first thought debit would be until a law that we all didn't like came along and changed the playing field a little bit. We'll take advantage of that. We did. We're going to do all that for our core business. At the same time, put money into innovation.
Put money into value-added services, IPS, Access Prepaid Worldwide, Truaxis, the loyalty system we just bought, the whole aspect of advisors and information services, InControl, expert monitoring solution for fraud. All those value-added services really kick in when we see transactions in a country. They kick in less when we don't. They kick in more when we see transactions. A lot of our work is dedicated to getting into that transaction flow domestically as well as in cross-border. You'll see that coming across in different conversations as the day goes by. Most importantly, 3 years ago, all the conversations were about how the telecom operators were going to disintermediate the payments industry. I hope you can see, which I've been saying since then, that they need us and we need them, and the banks need them, and the merchants need them.
The only way the payments ecosystem will develop to fight the 85% is when the people who want to play in that space stop trying to eat one little portion of the Happy Meal that's in the 15% and start focusing on the damn McDonald's, which is the other 85%. That is what we are focused on. We're very focused on not being childish about one portion. Yes, we will win there. Yes, we are winning share. Yes, we will fight. We're also focused on getting at the 85%. That is our future, and that is what you'll hear about today. With that, I'm going to hand it over to Gary Flood to walk you through the next steps. Thank you.
These guys do not follow me around every day. Right? Just making sure everybody understands. You good? All right. There was no toilet paper coming out, that's good. All right. Ajay, thanks for the setup. Okay.
Enjoying your trip.
What?
Enjoying your trip.
Yes. What we're going to do now is kind of take you through how things work and come together on the ground every day. All right. As you work through the agenda, you're going to hear from Ann Cairns and her team and Chris McWilton, and what you'll start to theme together is how everything works and how it comes down on the ground day in and day out around the world, whether that's a developed economy or a developing economy. All right. The folks here, Alfredo Gangotena, CMO, Tim Murphy, Chief Product Officer, Kevin Stanton, in charge of the Mastercard Advisors. Ed McLaughlin's got our emerging payments. The combination and the work that they do day in and day out is what makes a difference. All right. The teams that they have distributed around the world. All right.
How it comes together for the people running the markets is what we zero in on every day. Okay? As I take a step back, I always want to build on grow, diversify, build, because that's our strategy. That's what we're executing off of. We're concentrating. All right. Zeroing in. My job is to make sure we have the right people, the right technology, the right assets, and it works together. All right? Rob Reeg is here. He's our Chief Technology Officer. He and I work hand in glove in making sure we have what we need globally to make this system operate and work, both from a day in and day out, as well as the development perspective going forward. Ajay Banga mentioned people. I went back and reflected a little bit. We had a conversation the other day about people.
About 65% of the people I've hired over the last two years have been outside the industry. Different backgrounds. All right. It's adding dimension to our thought process, but it's also adding another very important dimension, which is connection. Right. We think about our business grow, we're going to make sure that we're pounding it on those things that matter every day, whether it's debit, credit, prepaid, commercial. Tim Murphy drives that for us. Those are the things that pay the bills. When I think about the things that we need to concentrate on in terms of diversification, customers, geographies, you're going to see as you work through and look at the slides, media companies, technology companies, telcos, banks, issuers, merchants, governments. It's a completely different landscape than it was five or six years ago. Making sure you're integrated into that landscape is what's important.
That way, you're going to watch out for your future and you're going to be engaged in the definition of that future. Ajay touched on that. Last point is build. This is an important part of what we do. When we think about merchants, governments, issuers, we want to understand their pain points, and we want to be able to enable them to do business. If we help them make more money, we make more money. It's as simple as that. This is where things like IPS, DataCash, Access Prepaid, Truaxis, and Mastercard Advisors come into effect. There's a couple of things we think about every day. Ajay mentioned the 85%. That is an enormous opportunity for us, and it's extremely realizable, and I'm going to dig into that in a couple of seconds.
The second part is just technology, the consumer, how much that's all changing, how merchants and consumers and the buying experience is evolving and developing. I think about my sons, three of them. They're 26, 25, 24. I think about my wallet, and I think about them. Their jeans are so tight on weekends, they can't fit this in their jeans. It's not happening. They're extremely comfortable with technology. Extremely comfortable with technology. What's that going to look like for us? That's where Ed focuses. I want to leave it. We're steady. We're moving in the right direction. We're zeroing in on what's important in partnership with Chris and Ann. As we take this forward, I want to spend a little bit of time on cash. We always talk about the 85%.
We've made progress in developed markets where cash has declined as a share of payment, and we've also made progress in the emerging market. Still stays around 85% because the emerging markets are developing so quickly. Here, it's important that the partnerships come together, and I want to use just two examples quickly. The Netherlands, a couple of years ago, merchants were trying to figure out what they needed to do for their payment system. It wasn't driven by Mastercard. Merchants initiated a process to understand whether debit cards are better than cash. They did their study. They did it alone, they involved Mastercard, and they involved the issuers. Their conclusion was debit cards are better than cash and more efficient.
We worked collectively together, hardest part of the world, over a two-year period to make sure we put the right infrastructure in place and we developed the right marketing programs. Throughout that period of time, payment transactions, electronic payment transactions grew 28%, three times what was happening in the market. That's merchant-initiated. The next one for me as I was thinking about this, government. If you take a step back and think about the government-initiated benefit programs converting to prepaid cards around the world, there's a reason for that. It's more efficient for them, and it's easier for end benefit recipients. It's consumer friendly. At the end of the day, you're also making sure that beneficiary gets their full benefit. Governments are zeroing in this space. Think about the U.S. Michael is going to talk about South Africa.
Benefit programs, today there are 3 million debit cards out issued. That's going to 10, Michael? 10 million cards. That's benefit-based because it's good for the government and it's good for the consumer. It isn't just Mastercard, merchants, government. Doesn't stop there on the road with cash. When I think about it, we have multiple levers. I outlined acceptance growth, financial inclusion, product penetration, and small tickets. Let me just zero in on acceptance growth. For us, day in and day out in the markets, we're going to drive acceptance. I love the taxi cab example in New York. Most of those people that are using their cards much more frequently in taxi cabs are carrying less cash. It is convenient. In South Africa, the same thing is going to happen. Today we have, I think, 13,000 cabs in New York equipped.
Michael in South Africa is going to have thousands of cabs. Technology here, technology there, consumer experience here, consumer experience there. We're going to continue to work worldwide on developing acceptance. If I think about it, parking meters, garages, gas, drive-through, tollways, there is a tremendous untapped opportunity. The movement to electronic payments is going to enable us to take advantage of that. It is going to take time. I also think about education. We're working with governments around the world to work with merchants to make sure that as credit card or debit card or prepaid card or commercial card acceptance develops, that we're doing it the right way. Specifically, we're working in Nigeria with the government on their cashless initiative. How do you actually implement payments and make it work and make it safe and secure? Last part is just technology. I think about Square, iZettle, Intuit.
We love that. It opens up markets. Ed's going to talk an awful lot about that, or a little bit about it when he covers his area. Financial inclusion, yes. I've talked about the government benefit program, and how prepaid cards work to involve more people in electronic payments and financially in our system. It's what you do with those cards and how you enable those cards. Do you stop at just a prepaid card or do you enable bill payment? The extension of what you do with that will make us all more integrated, make the consumer experience better, and it'll enable more, frankly, product penetration.
When I think about product penetration, I take those prepaid benefit cards, say, "How do I get more money on those cards so those consumers can do more with them?" That they can use them at the point-of-sale, that they can go online and shop, that they can go online and pay their bill. That's where our partnership with Western Union that we announced earlier this week, where we're going to work with them and open up 45,000 more endpoints, I call them, load points in the U.S. Now in the U.S., where we have prepaid cards, our reload network, which is called RePower, is going to be enabled by 100,000 locations. We're going to enable people to get more money on those cards, and then they can take advantage of the wonderful proposition that electronic payments provide. Last point on this one is transactions.
I focus here on small transactions. There are a multitude of transaction pools around the world. They aren't all small. I zeroed in here because this is something that's been on a lot of folks' minds. How do you convert those little transactions and make it meaningful for our franchises? The example I use is Poland, where they took a step back and they assessed the transaction pool, which was low value, and they had issuers and merchants trying to figure it out. Collectively, got together and figured out, okay, how do we make this work? What are the consumer benefits? What are the merchant benefits? Throughput, efficiency on the merchant side, speed, convenience for consumers, security, better than cash. They worked collectively together to make sure they had the right issuer adoption and the right merchant adoption. We put together the right marketing program.
When you look at what's happened with small transaction growth, small value transaction growth in Poland, it's been three times the core business over the last couple of years because of the penetration in those transaction bases. Cash is big. We're realizing opportunities. There's so much more to do. The opportunity is huge. Now I want to take it down to the industry, it's evolving, and what we do every day. Ajay touched on some of these points. From a marketing perspective, we want to make sure that what we're doing on the consumer side, what we're doing on the merchant side is driving preference. It doesn't do us any good to get cards distributed that aren't pulled out of wallets. This is what Alfredo is going to work on and share with you in a couple of minutes.
How our marketing money is being allocated, what we're doing with it, give you some ideas and examples of how it's working for us on the ground. At the end of the day, preference matters. This helps us win distribution decisions, and it also enables you to work very, very effectively with merchants, government, and other parties. Next part is accelerating the core business. Tim runs our products. His job is to make sure that we're pressing hard. We want to grow faster than market. We want to beat all the other guys that are out there. We want to do this in partnership with Chris and with Ann and their agents and their country managers. He concentrates on the core and makes sure that we're pressing.
The key thing there is we're going to grow faster than market, we're going to beat the competition, and they're not going to stop. He's going to touch on prepaid debit commercial in a couple of minutes. Commercial is one of my favorites. I've been here 26 years. I was here when we launched it in the late 1980s. It's been a lot of fun to watch it grow. Much more room for growth. Nascent in Latin America and Asia. Big opportunity. Tim's going to take us through that. Differentiated assets. This one I love, and Kevin's here. He's going to talk about Mastercard Advisors. We started Mastercard Advisors in the late 1990s. We built it slowly and thoughtfully, regionalized it, integrated into Ann and Chris' teams.
We have a staff of people who are hand in glove with the account reps, making sure that we're building our business around the world. All right. This is a huge differentiating asset for us. All right. This isn't the only one. We touched on Access Prepaid, we touched on Integrated Processing Solutions, and Truaxis eventually, and I'll touch on that one in a minute as we think about integrating that. The last one is this drive physical, digital, the convergence, and making sure we're positioned. All right. There's an awful lot of movement. Consumers are buying, not purchasing. They want to be smart about what they're doing. They want it to be convenient. Merchants want to make sure they're not disintermediated. They want to make sure they're part of the process. At the end of the day, we need to take a holistic view.
That's why when I talked earlier about diversifying customers' geographies, the fact that you need to be integrated and embedded with technology companies, media companies, data companies, making sure that we understand exactly where their heads are and what they want to do, so we can complement that and work it and think through it in terms of where we are. Ed's going to spend time on this. All right. He's going to lay out a frame and make sure we're extremely comfortable where we are. We've made investments, as Ajay has touched. We're not going to be behind. We're going to be in the forefront. All right. With that said, I just want to bring it down to the ground for a second. When I think about global products and solutions, our job is to make sure we have the right assets for the corporation.
Having assets and not operating and effectively utilizing those doesn't work. All right. That's where our partnership with Chris and Ann and all those folks on the ground around the world really matter. It could be products and channels. It could be capabilities. All right. I'm just going to give you 2 examples. 1, I think about prepaid. I think about Integrated Processing Solutions and Access Prepaid and our brand. Right. If I can sell Access, Integrated Processing Solutions, and our brand, I make money on each one of those things. All right. If I think about the wins we've had around the world, you're familiar with the debit wins we've had in the U.S., Chris has shared a few times relative to Integrated Processing Solutions. Okay. If I think about prepaid, Tim, India, Hong Kong, U.K., Mexico, Australia. India with Thomas Cook, Australia with National Australia Bank.
Those are examples where we have Access Prepaid as a program manager. Okay. Processing, program management, and brand. That adds up to a very powerful solution for me. Next data point I want to give you in terms of integrated solution. Kevin's group, 800 projects this year around the world integrating products, channels, and data to make our customers more profitable, therefore we become more profitable. Okay. Last example I want to give you is we have a loyalty business. Right. That loyalty business is comprised of a rewards platform and also the provision of benefits and features for our issuers around the world. The loyalty platform has 50 million cards on it, about 17 countries. All right. The features and benefits business is in 80 countries. We provide benefits on 270 million cards. All right.
Now with the advent of Truaxis and the combination of data analytics through Advisors, we have something that is very, very powerful. All right. The data analytics and then the understanding of how to work with merchants and card link offers provides a very, very powerful platform. Not just to have a platform, but to integrate with debit, credit, commercial, and prepaid around the world and to help influence distribution decisions with our customers. Okay. So with that as a frame, what I am going to do is turn it over to Alfredo, right, who is going to take us through our marketing space, our initiatives, and how we are operating. Okay. Alfredo?
Thank you. Thank you. Well done. Thank you, Gary. And good morning, everybody. It is a pleasure to be here. I will be giving you an overview of our Mastercard marketing strategy. We focus entirely on growing the business by tapping in the 85% of cash, both among the existing consumers and the billions of consumers to come. To achieve our goal, we focus on three objectives. First, in the emerging markets, it is very clear that we need to build awareness and in the mature markets to build preference. It varies very much by the development stage in which these economies are. As economies grow, we clearly move towards building brand preference. The second objective is to develop a unique shopping experience. Our objective is to delight consumers over the entire purchase cycle. Before, as they make their search, by providing our Mastercard benefits through advertising.
Then during, at the point of sale or online, by providing offers and rewards that create loyalty. It is important to be present also thereafter. That is, by providing and facilitating the sharing of experiences with friends and families through social networks. Here, it is very clear that new technologies are playing an increasingly important role. Tablets, mobile phones are prevalent everywhere. Actually, we do see a rapid convergence between the physical and digital world, and Ed McLaughlin, who leads our emerging payment, will elaborate on this topic shortly. Our third objective is to bring it all home. We need to bring the cards to a top-of-wallet position. That in turn leads to grow the business and generate a solid ROI. Let me elaborate first on the topic of brand preference. This is central to what I do.
Our marketing programs focus on the consumer to drive engagement and preference. You will recall, for instance, what I shared with you last year at Yankee Stadium. I assume that most of you are fans here. Well, if you go to Yankee Stadium, you are going to be surrounded by benefits provided by Mastercard. Cannot miss you. That goes from offers on meals, offers on concessions, all the way to the very best seats in town, which are the batter's eye view. This campaign has been very successful. We grew our share from 27% to 56%. And the whole point is that we took that card out of the wallet one time out of two. This was done at participating restaurants and concessions, and a very clear example of success. Today, I would like to share a second one.
This is our campaign that we ran in the U.S. during quarter 3 to support Stand Up to Cancer. The idea was very simple. We encouraged people, their families, to dine out, for every $10 that they would be paying with a Mastercard, we gave a precious $0.01 at a time, funds to raise for Stand Up to Cancer. We managed to gather a formidable set of partners, 30 national associations, restaurants, something like 20,000, if you wish, participants, 38 participating banks that distributed $16 million in-store. At the same time, we were able to build a very efficient media plan that delivered over 1 billion impressions.
While we were not necessarily in the game to profit, it is clear that our Mastercard volume in the restaurants category grew by 11%, which is twice as fast as the overall restaurant category over the same period of time. I am happy to report today that we have raised $4 million for Stand Up to Cancer, which we will be donating in the next few days. This all culminated in the telethon that was aired on all television networks in the U.S. I assume most of you saw it. That was on September 7. That raised $80 million. In net, a win-win for all participants. But enhancing the consumer experience is our second most important objective. To cater, for example, here for the mass and the affluent segment that contributes so significantly to our revenues, we have developed an integrated platform. At the bottom, rewards and offers.
In the center, privilege access. Think about pre-sales of sport event seats or guaranteed reservations in restaurants. At the very top, for the premium cardholders, experiences that money can't buy. We call them Priceless experiences. In addition, we are providing for our travelers our global travel and global concierge services, which will be rolled out in 450 airports coming soon. In net, we can provide richer benefits all around the globe, whether at home or away of home. To leverage this opportunity, we developed a unique and powerful program, which we labeled Priceless Cities. We shared with you last year the launch of Priceless New York. That was in July 2011. The original idea was to connect people to their passion. We focused on 8 categories, which were identified through Advisors, the group led by Kevin Stanton.
For this, we partnered with the most iconic merchants in each of the key cities. Think about in New York, Saks Fifth Avenue or FAO Schwarz. In sports, the Yankees, the Jets, in the whole place of entertainment, items such as the Bronx Zoo or the Botanical Garden, which are delights for the families. Based on this early success, we expanded to Toronto, London, Beijing, Sydney, and most recently to Chicago. Today, we are accelerating. We are now pleased to announce the launch of another eight Priceless Cities in quarter 4, which will bring a total of 14 by the year-end. Importantly, all these cities will be connected, so when you travel from New York to London or you travel from New York to Beijing, you will have the ability to benefit from these experiences both at home and away.
We are partnering with multiple issuers and merchants, as you can see here, a sample of them. This way, we are taking the leadership position in this space by creating the first totally integrated platform. The results are compelling. We clearly see Priceless Cities generating brand awareness gains. This grew to 71%, which is five percentage points up. More importantly in brand opinion, where we also gained four percentage points. Our Priceless Cities is increasing spend. In our consumer tracking study, we have seen that those participating in the program have increased spend by 15%. How about merchants? We have partnered with hundreds of them. For example, here in New York, FAO Schwarz, their sales have been growing nicely over the holiday season. Mastercard volume grew by another four percentage points even faster. An example in London would be Harrods.
The managing director is now committed to Priceless Cities, not at home only, but also through the international network. As for issuers, they see very compelling reasons to come in. One, it is a global platform. Two, it combines with their own assets, and they can take advantage of the connecting cities to do marketing programs in places where they're not present. In total, 40 issuers are participating and have distributed 31 million inserts in the top cities that I just mentioned, the first six. At the same time, this is helping us build new business. We will be announcing soon some of the businesses we have won with banks around the world. We're being supported by governments as well, and therefore, seeing this all coming together is truly priceless. Now my final topic, ROI.
The marketing and product initiatives I just shared with you have only one single mind focus: deliver business growth. We also work on efficiencies. As you can see here, we have been able to grow our brand opinion to 73% globally over the past four years. At the same time, maintaining a relatively flat marketing spend that supports the growth of Mastercard's revenue. In other words, we're doing more with less. This reflects the evolution of our marketing, focusing squarely on the consumer, driving preference, driving top of wallet, and the partnerships we have with issuers and merchants. Our exciting journey is going to continue. It will take us to more cities around the world. You will have a preview with a video that we will be playing after the break.
This afternoon, with the Priceless experiences interactive bot, I encourage you to play with it, which is available downstairs in the product experience area. I hope we will have a chance to delight you, whether at home or away in the future. Remember, this only happens when you have a Mastercard. Thank you very much. I'm now pleased to introduce Tim, our core products group officer. Thank you.
Thank you. Thank you, sir. Thank you. Well, good morning, everyone. You've heard Alfredo talk about how Mastercard is working to build richer consumer experiences to drive preference with key consumer segments. I want to talk to you now, shift our topic a little bit, talk about products and how we're working to accelerate growth in our core business. First, a quick update on how we are doing in the first half of 2012. Consumer credit, debit, prepaid commercial. We continue to execute against our plan across our core products and to deliver faster-than-market growth. I think the numbers you see here speak for themselves. Prepaid up 40% on a year-over-year basis in the first half. These are GDV numbers. Debit up 20, commercial up 19%, consumer credit up 13. This is delivering faster-than-market growth across the board, and we're delighted by the results.
Our one area of concern continues to be U.S. consumer credit. You heard Ajay talk about that a bit earlier this morning. We have a very focused plan with Chris and his team in U.S. markets to deliver against that, we'll chat more about that later today. I have spent some time in previous investor meetings talking with you about a number of our different product areas. What I'd like to do today is focus our energy and focus my time talking to you about commercial card. Gary talked to you about being here at the beginning. I wasn't here at the beginning, but I've been here for the last few years, and we are on a great run. Commercial is a great opportunity for Mastercard.
As you can see here, we estimate that frankly, less than 10% of large-market corporate, government, small business spend that is eligible or available to be captured by card is currently on cards today. A big, significant upside opportunity for us around the world spend to be captured. For that reason, we think we're expecting to see in our commercial business solid double-digit growth for the next few years. You need to think about the commercial category as really split between large market and government on the one hand, unique set of needs around control, financial reporting, data analysis, and then small businesses on the other hand. They behave much more like consumers, although they too have some unique needs in terms of driving their business results.
In those two big buckets, spend is generally split between classic T&E or travel entertainment spend, very well penetrated by cards today, actually, although very attractive from a revenue perspective, and B2B or procurement spend. Companies paying for goods and services on card. That is the huge untapped opportunity. In fact, about 95% of that $17 trillion available to be captured globally is in that B2B space. The key lesson here or the key message I want to leave you with is that Mastercard is winning in commercial. We are not, I think you know, the largest network in the commercial space today, but we have aggressive growth plans. We're executing against them. We are increasingly, I believe, a network of choice for financial institutions who want to drive their commercial business. The reason for that is simple. We're investing.
We're investing in people, we're investing in product, we're investing in Advisors. We're leveraging some strong assets that we've built, platforms we've built over the years to strengthen our position. I want to talk to you now for a few minutes about those investments. First, since 2009, Mastercard has doubled the number of people, sales, product experts, implementation and delivery, that we have devoted to the commercial space around the world. We've embedded those experts in the market helping to drive results. What that does for us is deepen our ability, strengthen our ability to grow relationships with issuers, and that's a key driver of our growth. You can see some wins here around the world. We have always had strong relationships with the major U.S. commercial issuers, so we're seeking to expand those relationships. We see big opportunities in Europe.
For example, this year, Lloyds Bank chose us in the U.K. to be the brand for its large market commercial portfolio, both in the U.K. and for multinationals. That is a conversion from a competitor. There are opportunities that we're executing in other markets as well. You know Bradesco, a major player in Brazil, huge player, actually principally aligned on the consumer side with two of our principal network competitors. We've opened a commercial relationship with them, started with supporting U.S. multinationals in Brazil. We're now supporting them for micro and small business programs. A lot of room for us to continue to take share from competitors in this space. In the U.S., not surprisingly, we're seeing mid-market banks, the regionals and so on, entering the commercial space, and we're winning there. Chris talked to you last year about our wins with SunTrust. Those included commercial.
This year, we've clocked wins with Huntington and Bank of the West, continuing our momentum. We can give you many examples about emerging commercial opportunities in the emerging markets. China Everbright Bank is one of my favorites. I mention it because we've launched with them the first frequent traveler business card in China, a card specifically designed for Chinese small businesses who travel outside on business. First of its kind in the market. Wonderful example of how commercial can really help drive a market strategy, because high business in China today is so much about cross-border. Here's a product perfectly geared to do that. When I add all these wins together and many others that we've secured over the last year, once those deals are implemented, fully up and running, they add about $30 billion of annual GDV to our book that wasn't in the portfolio a year ago.
That's how you deliver faster-than-market growth, we're doing it today in commercial. We're doing it with corporations too, right? Almost 40% of the Fortune 500 corporates work with Mastercard. We've taken significant wins in the U.S., Asia, and in other places at the corporate level this year. Okay, people driving wins, also about product driving differentiation. Let me talk a little bit about small business, right? In the small business space, we really divide the markets between emerging and mature. In emerging markets, we see big opportunities providing commercial solutions to micro-entrepreneurs, to micro-businesses, small companies, really just sole entrepreneurs starting out. We have a wonderful relationship with PlaNet Finance. They are a major global microfinance organization.
They're helping us work with issuers in Latin America to understand how to issue credit to micro-businesses, to how to get micro-businesses to start accepting Mastercard cards to advance their growth. Wonderful opportunities there. We've got deals in place with Banco Azteca in Mexico. Te Creemos is a microfinance lender now disbursing its microloans on our cards. Please, when you're in the product experiences room, talk to Paulo Fernandes. He runs our commercial business in Latin America, totally passionate about this space. He'd love to tell you more. In mature markets, in contrast, it's all about delivering value to small businesses. Our Easy Savings program, which we've had in the U.S. since 2007, it is the leading, in my view, automatic savings program for small businesses in the market.
22 highly relevant offers in the U.S. across 40,000 merchant locations allow small business to go in, use their Mastercard card, and automatically get savings on things that are valuable to them. We've taken that program to four other markets. It's launching in Brazil soon. It delivers results for merchants, yes, for issuers, also for Mastercard. For enrolled cardholders in the U.S., of which there are 3 million, 70% faster growth if you're participating in the program for Mastercard as opposed to non-participating members. We'll do more with that. We're doing a lot now building off Easy Savings and launching the Mastercard Business Network here in the U.S. This is a technology portal that allows small businesses to come to a single place, buy, purchase wholesale goods and services using discounted pricing that we negotiate for them at a group level. Allows them to book travel, manage expenses.
Another great product innovation that can drive preference for us. We're very excited about this. Silicon Valley is our launch customer. Ed Glassman, who runs our commercial business globally, in the product experiences room, will be happy to show you what the Mastercard Business Network can do live. It's here in the demo area. Underlining all of this is Kevin's business. The Advisors' teams are nowhere more powerful for us than when they're supporting our commercial business. Think of just this one statistic I think really makes the point. Today, less than 20% of the small businesses that are already banked, already receiving financial services from a bank, have a small business card. A massively under-penetrated segment. At the same time, small businesses are using branches, right? They're in the branch about five times a month in the U.S.
In some branches, they're the only ones in the branch. There is a massive opportunity to cross-sell at the branch level small business cards into existing bank customer base. Advisors has world-class expertise in doing that. They are doing it for us now to help propel our business. Great example of what Advisors can do to accelerate growth in the core. You'll see Gary Kearns in the product experiences room. He'll show you a neat new product called Market Vision Reports coming out of information services. We've embedded that in Easy Savings, we're working really well together. In the large market space, it's all about getting after that B2B procurement opportunity. Here we need to take a vertical by vertical approach, and there's a lot we can do to deepen ourselves and are doing, to deepen ourselves in the value chain and to penetrate cash and checks.
As a Mastercard cardholder, you can use your card at Southwest Airlines to pay for a ticket. Southwest Airlines leveraging InControl is using Mastercard to pay for airport landing fees, the single use account number that we can provide. A great example of what we can do in procurement. eNett, a major partnership in Europe, supports the travel industry. You go to a travel agent, use your Mastercard card to book a trip. That travel agent is paying its suppliers cross-border using virtual account numbers, dramatically using cross-border payments and reconciliation. Our Smart Data platform continues to be the leading solution in the industry for global expense management and reporting. We're investing heavily in it. Issuers are choosing it as their global solution. BNP Paribas and Bank of America this year both selected Smart Data as their global expense management reporting system.
It means we're powering those institution services to their own customers. Gets us closer to them, helps us drive real preference. We're very excited about that platform. Continue to invest in it. We launched this year, for example, first time on the platform, carbon footprint reporting for travel reports. If a company is managing its overall carbon load associated with travel, we can now associate that in Smart Data. Exciting innovation. Access Prepaid, the program manager we acquired last year, a year and a half ago now, also significantly involved in the commercial space, providing prepaid travel solutions for corporate like employee airline crew per diem cards. Wonderful program with Virgin Atlantic, for example, that has won a number of awards. This is an asset that we continue to drive and engage with our commercial business. Bottom line, these investments very simply are driving significant results.
You can see it here. People, product, and Advisors taken together are driving faster than market growth for Mastercard. In fact, 44% faster than market growth in 2011. We continue to take share this year. We have more than recovered, as you see here, from the recession and are very gratified here. It shows the strategy's right. It shows that we can execute with excellence, and it shows, as Ajay mentioned earlier, that investments in our core products deliver outstanding results that let us then take that value and invest in things like convergence, which Ed will talk to you about in a minute. What I really love about commercial is that it is supercharged for Mastercard from a revenue perspective. You get a double whammy here.
Higher ticket size, higher cross-border mix, greater revenue yield, generated by the fact that in commercial you get heavy corporate travel and you get heavy B2B consumption across a global supply chain. That means these results really drive impact for Mastercard. In the commercial space, we've got some very unique assets. Taken together, they are very hard to replicate, driving great results for us in a very attractive market. Not the biggest yet. Aggressive growth plan. I think we're really on a roll here, and I'd encourage you to think about it in that way. With that, I'm going to turn it over to my friend Kevin, who will talk about Advisors and how it's integrating assets to advance our business.
Thanks, Tim. You make me blush in more ways than one. Good morning, everyone. Alfredo and Tim just spoke to you about how Mastercard pursues its growth agenda by driving differentiated market-tailored products with a specific segment focus. Last year, I talked to you about the proven currency of Mastercard Advisors, anonymous transaction data, and expertise. Today, I want to put those things together and take it to a different level and introduce something else. First, how we convert that proven currency into a force multiplier, and then how that translates into being a game changer for reaching non-traditional customers and traditional customers in non-traditional ways. Just to review, Mastercard Advisors has three lines of business, and they all start with a foundation of anonymous transaction data. Last year I told you that the Mastercard data warehouse stored 1.3 petabytes of the stuff. Today, we're approaching 10 petabytes.
That's big data. That jump primarily comes from more transactions flowing through the system, more data with each transaction, and increased capacity at a dramatically lower cost. No one has anything like it. That unique data advantage powers all three Mastercard Advisors business lines and Mastercard as a whole. Let's go through the business lines. First, we have Information Services, and basically, you'll hear a lot about this from Gary Kearns downstairs in the product experiences room. It's big data. Basically, they convert our data into reports, models, and scores. Market Vision Reports is a good example, as is Mastercard Audiences, just to name two launched this year. Market Vision Reports is a user-friendly benchmarking tool that lets small merchants gauge their performance locally on a near real-time basis. Mastercard Audiences reaches an entirely different group.
It lets advertisers optimize their media spend with specific consumer segments likely to buy their products within a given timeframe. Think boyfriend jewelry two weeks before Christmas, or if we're being realistic, two days before Christmas. It's a very powerful product, and in fact, Alfredo's organization uses it with other Mastercard Advisors Analytics to optimize the return on, for example, Priceless City. We have Consulting Services. Consulting Services can operate on an extremely high strategic level. For example, the work currently underway with the Central Bank of Kenya, where Mastercard Advisors is proposing policy options to that bank around safety, security, and financial inclusion. We can operate on a very proudly tactical level. For example, we do work with Lloyds. Tim mentioned Lloyds just earlier. There, the team's working with Lloyds in the U.K. to develop and launch their combo T&E purchasing card program.
They're also working on an InControl application and a local government prepaid card. Finally, and I would say uniquely, we have Implementation Services. This team essentially executes below-the-line marketing in both the digital and real world, powered by Mastercard's massive data advantage. For that reason, they consistently deliver results that are dramatically above control group results. Here's an example from the physical world. In the U.K., we were hired by John Lewis Partnership, which is a leading high-end retailer there, to improve Mastercard credit card sales with in-store staff. Now, there we executed a cross-sell campaign that involved product and sales training, custom sales techniques, collateral development, and it was all tied together by a sales incentive plan that we designed and implemented. Essentially, we transformed very good haberdashers into top-drawer credit card sales agents. The results were a 45% lift in sales.
That is very typical for us, and I don't think many others can say so. On the digital side of the equation, our results are just as effective. For an example there, I'll give you a major Russian issuer that hired Advisors to improve its performance of activation of new cardholders using text messaging, which is the only real practical medium we have in Russia for that. There, we delivered the full 12-month account activation goal in just two months. You have to keep in mind that all of these results inure to the benefit of Mastercard. Each of the Mastercard Advisors business can operate and deliver standalone value, but more typically, they provide a combination, usually unique combinations, of their combined offerings. I'll give you the example of T-Mobile.
There, Advisors is designing, executing, and implementing a direct mail campaign focused on individuals who are likely to qualify for government funding a cell phone account. It starts with a segment analysis from consulting. It's executed through campaign execution implementation services. We developed a custom Mastercard Audiences to make sure we're targeting the right cardholders correctly. This bundled approach increases the impact of Advisors offerings, and it turns into a proven currency for reaching consumers, merchants, issuers, and government. With that, Mastercard can pursue its own agenda, its own imperatives while meeting customer needs. That's important. That's where the idea of a force multiplier comes in. You see, for years, Advisors has been well understood as an asset, a currency as it were, combined with other Mastercard assets for winning deals. Increasingly, we're taking that force multiplier model to the product market and segment level.
It always starts with a clearly understood Mastercard imperative, convert cash to debit, increase e-commerce revenue, tap into the burgeoning economic power of sub-Saharan Africa. Then we convert it into a customer need. Show me how to hasten my customers' adoption of debit for every day. Help me tap into electronic payments in Nigeria on a plug-and-play basis. Help me manage e-commerce authorizations to maximize legitimate transactions. Then we develop compelling and bundled packages, and finally, we target specific merchants and issuers best positioned to move the needle for Mastercard. I'll give you a couple of examples here. You'll hear from my colleagues about just how important it is for Mastercard to capture more than its fair share of U.S. credit affluent spend. Advisors' contribution to their efforts starts with propensity models used to identify accounts within existing affluent portfolios. Then we execute consumer-directed campaigns designed to bring our cards to the top of wallet with those cardholders.
This is an efficient and directed way of making sure the affluent cards we already have on our network are maximized to us for value while we execute other programs designed to acquire new ones. Another illustration. Ed McLaughlin is going to tell you just how we're winning in mobile payment, and that's why Advisors is in with Deutsche Telekom, playing a central role in their mobile payment deployment. There, we're developing DT's customer value prop and go-to-market plans. We're recruiting and onboarding PayPass merchants, and we're identifying merchants for PayPass acceptance readiness. As Gary said, Advisors will execute and deliver over 800 engagements this year. Every one of them is an opportunity to do what I just talked about in two engagements.
In this way, it operates as a force multiplier for Mastercard. This sample of logos speaks to something else. Advisors is building an increasingly diverse customer base through value propositions that are outside of payment. Sometimes we do that by hiring new expertise in-house, but increasingly we're doing it through new channels and partnerships. Partnerships like the one we have with the California Restaurant Association, which helps us better serve and provide new value, like Market Vision Reports, to very traditional Mastercard merchants on a scaled basis. Through data exchanges like BlueKai and eXelate, which help us sell new products like Mastercard Audiences more efficiently to non-traditional customers like online media buyers. Even through acquisitions like Truaxis, which brings us new capabilities, absolutely, but also importantly, new platforms and new channels.
For its part, Truaxis is going to benefit from what Advisors brings to the table. All in all, Advisors' investments in people, partnerships, and scalable platforms are a real game changer for reaching new and traditional customers. I'm going to close by saying, I hope my passion for our data and this company's passion for its data and its expertise comes through. I hope I've given you some insight into how Advisors can act as a force multiplier for this company and how it puts us in a position to reach new customers and deliver new value to traditional customers. I'll close there. I'll say thank you very much. Speaking of force multipliers and game changers, I'll hand the podium over to Ed McLaughlin. Thank you.
Here you go.
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All right. Well, thank you, Kevin. As we turn now to the emerging payments area, I would like to take a moment to focus on the incredible growth opportunity that we have as a result of the ongoing conversion of the physical and digital worlds. You have already seen this in your own life. We are in the midst of a dramatic global transformation in consumer behavior. In both developed as well as emerging markets, what is changing is nothing less than how consumers interact, how they interact with their families, with their friends, with their communities, and also with merchants. These fundamental changes in how consumers interact will also transform how they transact. As you will see today, Mastercard is leading this transition to digital.
We're moving beyond a simple transaction to create better shopping experiences for consumers, generate more value and increase sales for merchants, and deliver new revenue stream and competitive advantages for Mastercard and our partners. We're also using mobile devices to expand our reach into new customers, introducing Mastercard to more and more unbanked consumers worldwide. These mobile devices not only enable us to reach new consumers but also reach new merchants who previously have not had access to the Mastercard network, eliminating more cash transactions and bringing them all of the benefit of electronic payments. What's driving this conversion of the physical to digital? Well, it's driven in large part by the continued adoption of connected devices, from the simplest mobile handsets to PCs, smartphones, tablets, game systems, even appliances like refrigerators are getting connected. Here's the really interesting thing.
Every one of these connected devices will become a commerce device. It's what people do. This is the essence of the opportunity. To create more secure, easier-to-use, enhanced shopping experiences, both in store and online. At Mastercard, we've already seen a substantial shift in online shopping from traditional PCs to smartphones and now tablets. Consumers have told us they also want to use their smartphones to shop in-store. We had a recent survey where over 60% of consumers between 18 and 34 said they wanted to use their mobile for in-store purchases. Beyond just the payment, we can also now give the consumers richer, enhanced experiences. By delivering on Mastercard assets you've heard about today, like Priceless City, our recent Truaxis acquisition, and Kevin's Advisors Information Services, tailored offers and rewards can be integrated right into the shopping experience.
Finally, when we say every device is a commerce device, it is not only to make payment, but also to receive electronic payment. One great example of this is our payments facilitator program, which was specifically designed to enable partners like Square, iZettle, Intuit, now Groupon, and many others to reach merchants through their mobile devices. In less than two years, we estimate that this program has enabled over 3 million new merchants to join the Mastercard network. Of course, every one of these commerce devices needs a payment gateway. Our DataCash business continues to see strong growth with a 27% increase in retail transactions just this year, and expansion into markets like the U.S., Russia, and China. In China, DataCash recently completed integration with Alipay, one of Asia's largest online payment platforms, servicing over half a million retailers.
The real question is: what do all of these connected digital experiences mean for consumers? Earlier Gary spoke about the significant growth potential for electronic payment, particularly in emerging markets where 93% of the transactions are still in cash. For one example, in Latin America, the majority of the population is unbanked, but mobile penetration is expected to reach 130% by 2015. It's not just about helping consumers make purchases with their mobile. It is just as important to enable these consumers to receive and keep their money electronically. This is the basis of true financial inclusion. We're working with partners like Western Union to make it easier for consumers to remit funds. We're also partnering with governments and NGOs around the world to adopt electronic benefit distribution for their consumers.
Later today, down in the experience area, you'll see an example from South Africa that will enable over 9 million social grant recipients to receive benefits. Just last week, we announced our global partnership with the United Nations World Food Programme to deliver food vouchers via mobile phones or via cards to people without access to regular financial services. Our mobile partnerships are also enabling us to bring these innovations to new consumers. Specifically, we're working with mobile operators like Everything Everywhere, Deutsche Telekom, Turkcell, Etisalat, StarHub, Telenor, Telefónica, and many others. Through working with our telecom partners, Mastercard was recognized this year, for the second year in a row, for mobile money innovation at the Mobile World Congress.
This year, we also extended our joint venture with Telefónica into Brazil, which now allows us to reach over 170 million consumers across Latin America, the vast majority of which are unbanked today. Our MPS mobile payments joint venture will be in production in 8 countries by the end of this year. Through our mobile money partner program, we are working with telecom financial services providers to potentially reach 1 billion consumers, primarily unbanked and primarily in emerging markets. What does all of this mean for these new consumers? Well, it means they can easily pay their bills via their mobile, send money to family and friends, shop online with a virtual card, or pay merchants using the capabilities already available to them on a simple handset. With a companion Mastercard, they can go to ATMs or even shop anywhere Mastercard is accepted.
For consumers in the developed market who already have cards and accounts, which is primarily in the developed markets, our objective is equally clear: to enable the best, most secure experience everywhere, in store, online, all connected through the Mastercard network. How does this all work? In May of this year, we announced the PayPass Wallet Services, our digital platform to support this converged world. We are integrating the PayPass brand and experience. One tap at the register, the touch of a screen, or a click of a mouse, all delivering speed and security everywhere. At the register, we have seen a 46% growth in merchant adoption of PayPass in just the past year to nearly half a million locations worldwide.
We're working across the industry with approximately 70 handsets from manufacturers like Samsung, HTC, Nokia, and others certified by Mastercard as mobile PayPass devices. Terminal manufacturers such as Verifone and Ingenico are including contactless as part of the standard configuration on their new terminals. This tap-and-go in-store experience is now integrated with PayPass Online, a fundamentally better online shopping experience. Consumers will be able to pay with the simple touch of a screen or click of a mouse in the aisle of a store, at a table at a restaurant, at home at a PC, literally anywhere that they are connected. You don't have to enter your shipping details or card information, which is a real benefit from small screens and mobile keyboards. It's available across all of your connected devices with a single secure login. Our wallet is open.
It provides complete consumer choice for any of Tim's card types: debit, credit, prepaid, commercial, as well as to all major brands. This is delivering an optimized digital acceptance network ready for a world moving beyond plastic. Leveraging the PayPass Wallet, merchants can mobilize their online shopping site, reduce abandoned carts, and build preference and loyalty. This is not just for traditional e-commerce. Retailers are also bringing the online shopping experience into their stores, extending the point of sale and eliminating the checkout queue. Sometimes I get the question: which is going to win? Is it mobile or is it plastic? Is it cloud or is it NFC? The answer is, and this is important, the answer is these are not and have never been mutually exclusive technologies.
For example, I can use my Mastercard cloud-based wallet services from my mobile for the PayPass online checkout at a merchant website then use the PayPass NFC services on my mobile to tap and go to get out of a cab. Either way, Mastercard wins. As for when will this happen? It's already starting to happen. As a consumer, I know that Mastercard is ready whenever I am to embrace these different shopping experiences. So how does this happen? Perhaps most importantly, unlike the approaches we have seen from some of our competitors, the PayPass Wallet is designed to enhance, not interfere, with our partners' relationships with their customers, and this approach has had a great reception.
Partners can work with the wallet in two ways: either as a white label on-behalf service for Mastercard, or if they've developed their own wallet, they can use our APIs to connect into the network. The PayPass Wallet Services are now available to our partners in four markets: the U.S., Canada, U.K., and Australia. Working with our partners, we expect to see first consumer availability early next year. A little later today, downstairs in the product experience, you'll have the opportunity to see the wallet services in action for yourself. As you can see, we're working with a wide spectrum of merchants, such as Barnes & Noble or JB Hi-Fi in Australia, and even with companies like Prezzybox in the U.K.
We're also working with technology partners like Intel to enhance the security of the system and financial institutions ranging from Citi to Fifth Third, Commonwealth Bank of Australia, Bank of Montreal, and the Independent Community Bankers of America. With partners such as Swedbank, BBVA, and Intesa Sanpaolo, other global markets will soon follow. Working with our partners, Mastercard is bringing all of this together because what consumers really want, what you really want, is for everything to work together, and that includes the ability to shop conveniently anywhere: online, in-store, physically, and digitally. That is the true opportunity of this convergence for Mastercard. With that, thank you. Gary, I think we're coming back to you.
Before Barb comes up to close, just if I can take a step back. One, executing on a strategy and producing results, day in and day out. Okay. Two, cash, huge opportunity. We're penetrating it. More opportunities around the world. In order to do that, acceptance. This is a situation where size does matter. Acceptance is key. 33 million merchant locations around the world. It's more than twice American Express. We're not going to let up on the global acceptance footprint that we have. Okay? Next, from a consumer perspective, integrated marketing executed the right way on the ground around the world, producing consumer preference, integrating merchants. Delivering the right kind of products and services around the world, integrating technology, and making sure we have the right people. I don't necessarily see you as a force multiplier. I've got to get my head wrapped around that.
As a very differentiated, leverageable asset, really contingent upon skill, competency, and people around the world and anonymized data, a very important component of what we're doing. As Ed just expressed, a complete understanding and grounding in terms of what's going on around us, what we need to do to make sure we play, and how we participate and work with our partners to get that done. All right? With that, I'm going to sit down and turn it back over to Barbara.
Thanks, Gary. I'm going to make an executive decision. We're running about 10 minutes late, we're going to cut the break down to 15-20 minutes to try to stay on schedule. The option is otherwise to cut down on the Q&A period, which I don't think anybody wants to do. At this point in time, we're going to take a break. For those of you here in New York, restrooms are downstairs. Beverage tables have been refreshed. For those of you on the webcast, you can disconnect, reconnect, or just stay on hold. Thanks. We'll see you back here in about 15 minutes.
Great. Welcome back. Thanks again for joining us today, and thanks for your continued support of Mastercard. For those of you who don't know me, I'm Chris McWilton, President of U.S. Markets. U.S. Markets remains the top revenue-producing market in our company. Although my colleagues in international markets are pedaling really fast to catch me, and I appear to be looking over my shoulder more frequently than I did a few years ago. Hopefully, I'm going to make it easy on you this morning. I sat down with Barbara Gasper a couple of weeks ago in preparation for today's event, I asked her, I said, "What are the top questions you're getting from the investment community and others about U.S. Markets?
Tell me what those are, and I'll do my best to get at them and give them as much perspective as I can." What she told me was the most common question is around debit and what does the debit landscape look like post-Durbin. Specifically, is there a pricing war going on to win PIN debit market share? I will get at that question. Second is what's going on the legal and regulatory front. Front and center of that is the recently announced settlement of the merchant class action lawsuit, how we see that progressing, and how we see the market potentially reacting to that going forward. Third is how are we doing in our core products. Tim Murphy mentioned a little bit of that in his session.
Debit, credit, commercial, and prepaid, and particular interest in how our U.S. consumer credit business is doing, which has been soft of late. I'll provide some context around that and share some of our plans to get that trajectory back to where it needs to be. Third being, the EMV migration of this market, the last really major market in the world not to have adopted EMV technology. We laid out a roadmap for that in the spring, how we see that impacting the market, in particular, how we think it might impact market financials for transaction processing. Those are the questions I'm going to get at, and obviously we'll have time at Q&A after that for any other things that are on your mind.
Before I get to those questions, though, just a little bit of backdrop about how I see the U.S. market sort of in total. I don't see a lot of tailwinds propelling us through the last quarter of this year and into 2013. Unemployment is stuck at around 8%. The housing market remains tepid. I don't know if you saw the announcement this morning, Bank of America's letting go of 16,000 employees and closing branches. That's certainly not a good barometer of where the economy and the banking world is headed. There's uncertainty in Washington, which seems to be the standard by which we exist. You add in a presidential election, fiscal cliff, you all read the business press as well as I do. When you have uncertainty in that situation, it tends to pull back consumer confidence.
There is a wildcard, though, that I think many of us underestimate, that is the impact of the drought in this country. We all tend to live in the high-density urban corridors on the East Coast and West Coast, and maybe Chicago. The Midwest is in a real mess. We underestimate the impact of and the influence of corn production on the U.S. economy. It goes into ethanol production. It helps balance our trade with emerging markets. It goes into the feed that feeds cattle and poultry and are going to end up in higher food prices at the supermarket for the U.S. consumer. We're not taking our eye off it. I think it's too difficult to predict where it's going to go. It is a wildcard out there that I don't think gets enough visibility.
Second thing about the U.S. landscape is this is sort of the epicenter of this physical to digital convergence that Ed and Gary talked about. It's happening here. If you want a good seat in terms of how this is going to play out in the real world, I think the U.S. is a place where you want to be and you'll want to watch. You saw yesterday Groupon has decided to get into the payments business. Starbucks is getting into the payments business. You've got Google. You've got iTunes. Everybody's making a play to get into payments in one fashion or another. We're at the center of it, and I spend a lot of my time working with Gary and Ed and his teams. You saw Ed flash up all the different partners we're dealing with.
I'm involved heavily in those, making sure that we have the right irons in the fire, we're aligning with the right partners, and we're making sure we've got a lot of flexibility when this market develops. It will take time to develop because as you mentioned, this isn't going to happen overnight. Let me get to the questions that I mentioned to start. Debit in the post-Durbin world. I'm a little proud of this. I think we navigated the Durbin experience just about as best as we possibly could. We went from a far second position in debit in the U.S. to now being enabled either on a signature basis or a PIN basis with over half the debit cards in the United States. That's pretty impressive. Our growth has come at the expense of Visa and the regional networks.
There was an interesting factoid in the Nielsen report a couple of editions before. It said for the first time in the history of U.S. payments, in the second quarter, transactions on Mastercard debit cards exceeded transactions on Visa credit cards. I like the ring of that. I'm going to say it again. Transactions on Mastercard debit cards exceeded transactions on Visa credit cards. Just a reminder that I got from Barbara and Martina, you see that transaction growth in PIN in our transaction numbers, not in our volume numbers because we don't count PIN volume as Mastercard-branded volume. Keep that in mind. If you have any questions on how to interpret that, Barbara or Catherine can help you navigate that space.
I think the important part to remember about the PIN debit space is we have done this, made a major shift in debit in the U.S. without providing significant incremental routing incentives. I know our competitor on the West Coast has said that they were trying to regain share by paying for routing incentives. My view is this. We're going to be thoughtful about this. We're going to be surgical about this. We're going to watch where the market goes. There were a lot of parties out there when Durbin was first announced with their tin cup out looking for routing incentives for Mastercard.
We held the line. If Visa has to pay incentives to get routing for transactions they previously didn't have to pay for before, that's actually a good thing for us, because that means they have less money to spend on innovation, on advertising, on new acquisitions, technology, whatever the case might be. Despite the fact they may be out spending money on this, we're doing really well in this space. We'll watch it, we'll monitor it, we're prepared to act if we have to, but we're not going to run out willy-nilly and pay for transactions because these transactions, the revenue yield on a PIN debit transaction is very thin. I think Martina and Ajay have covered this many times in the earnings calls. That's on the PIN front. I think on the signature front, we're doing very well.
It's not just a PIN story, it's a signature story. The portfolios we flipped from Visa in the past couple of years, Huntington, SunTrust, Sovereign, Capital One, et cetera, they're all doing very well. I think we're in a good position from debit, and I'm very positive about the debit landscape going forward. Second question was about the legal and regulatory landscape, and particularly the merchant class action lawsuit, which was the settlement was recently announced. That process is unfolding. The class is working through to approval of the settlement. We're glad this is behind us. Obviously, this has been a seven-year drag and just a little bit of a distraction, particularly for Noah. He'd like to do other things besides settle lawsuits. We are thankful for a couple things.
One is that it has allowed the world to see that disputes between commercial parties can and should be settled through the court system, not through the politics of Washington and last-minute deals as giant financial reform packages pass through the halls of Congress. We're very happy about that. Even Barney Frank has mentioned that this was a favorable way to resolve a settlement. The other thing we're happy about is even though we provided a significant concession to the merchants by allowing surcharging, we've done it in a way which provides a level playing field for all card networks. American Express, PayPal, whoever is not advantaged over us. Most importantly, that surcharging, if it does take hold, is going to be transparent to the consumer. American consumers tend to talk with their feet.
If there's a merchant on the left side of the street that's selling a product or service and they surcharge for the transaction if they use their Mastercard, and a merchant on the right side of the street provides the same product or service and does not surcharge, we know where they're headed. Over time, we don't think there'll be a big traction with surcharging in the U.S. yet to be played out. There's a little bit of a petri dish in this in Australia, where we've had the ability to surcharge for some period of time. We haven't seen broad-based surcharging, at least in the physical world. Let me talk about our core businesses. Hang on a second here. Catch that up. One more. There we go. Sorry about that. In our core businesses, I think we're doing very well in the commercial space, commercial credit space.
As Tim mentioned there, we have Mastercard as the commercial card at over 40% of the Fortune 500 companies. We have great product features and functionality, Smart Data, our InControl technology, which we've talked about before. We have great acceptance. Acceptance matters. The Achilles heel of the biggest commercial player, American Express, is their acceptance. We have twice the worldwide acceptance as American Express. For some time, we have been a little bit shy to point that out, but we're not going to be shy anymore. You're going to see enhanced advertising with my friend Alfredo about the advantages of Mastercard global acceptance.
You put yourself in the shoes of Martina as the CFO of a global company whose people are traveling all over the world with their American Express corporate cards, and they come back to their office and they go to fill out their expense report, and they have to report to Martina that they couldn't use their card. They had to pay for cash or pay for it on their Mastercard, and then they have to reconcile the account. It's a mess. I know how Martina loves it when we don't comply with T&E policies. In any event, you're going to see more. You're going to see things in airport advertising, in television advertising. There was an ad on last night that tagged our acceptance advantage over American Express. Prepaid, we're doing really well, particularly in the government space.
I'm going to talk about a little bit that in a few minutes about our expanding government relationships and using prepaid programs to help governments understand we're something other than a cost to them, that we can actually drive efficiencies in their budget-constrained positions. We're enhancing the ability of financial inclusion. Gary mentioned the agreement we just reached with Western Union, 45,000 rePower locations in the U.S. to help people that are unbanked today move into the banking world. I view prepaid as nothing other than banking without a branch. You can do anything at a prepaid card today that you can do with a checking account except write a check. You can withdraw cash. You can have your paycheck deposited to it. You can have your Social Security benefits deposited to it.
You can buy something at the point of sale with either a signature or a PIN transaction. If you think about what happened this morning with Bank of America closing branches, 16,000 people being let go, this space, general purpose reloadable for the unbanked, is a really interesting growth area. Consumer credit, as Ajay noted, oops, sorry about that, is an area where we need to focus. We don't see credit in general in the U.S. being an easy road to hoe going forward, given the economy and the pressure on consumers. We are not where we need to be relative to our competition in this space. We fully acknowledge that. Let me provide some reasons about why I think that is. Why I know that is, actually. First off, looking back, I think we historically underinvested in affluent co-brand portfolios.
The airline portfolios, the hotel portfolios, which have been most resilient through the recession and have snapped back faster than other portfolios as we slowly come out of the recession. The co-brands that we do have unfortunately been with sponsor organizations, sponsor companies that have been through a fair amount of financial distress. By that, I mean everything from full-scale bankruptcy to wholesale business model changes. It's really difficult if you're those sponsors or Mastercard or the issuing bank in those cases to get consumers to spend on those cards when there's doubt that the loyalty points they accumulate are going to survive the bankruptcy or the company's going to be in existence six to nine months. That is what it is. We can't change that. We're not going to shy away from it. We have to deal with it.
We have to get more focused on affluent co-brands when they come up for renewal, and we will be doing this. The other reason we have lagged the market in consumer credit growth is a simple math equation on our customer mix. Ajay mentioned we're a B2B company with aspirations to provide benefits to the C of our issuers. If you're a B2B company and the B you're selling into is having a bad hair day, you're going to have a little bit of a bad hair day. If they're having a good hair day, you're going to have a good hair day. You can do the math. You pretty much know who our big issuers are. You know how the mix of the U.S. market is balanced between Mastercard and Visa, and you can see every quarter which institutions are outperforming the other.
We're working through that, and we've talked about diversifying our portfolio into smaller financial institutions, independent banks and credit unions, the 14,000 of them in the country, to provide more of a stabilizing pattern because there are good days and there are bad days with any major financial institution. With all that said, I'm very confident that we will have as much, if not better success in repositioning our consumer credit portfolio than we have in debit. The one reason I believe that is that if you are trying to flip a debit portfolio in the U.S., you have to hit a home run. You have to basically convince a bank to take their entire debit portfolio and flip it from Visa to Mastercard because banks in the U.S. are exclusive, predominantly exclusive, on their debit portfolios.
They don't issue, generally speaking, you might get some things with some sponsorships or whatever, but they generally issue just Mastercard or just Visa. To convince a bank to flip, they have to flip their entire portfolio. They have to disrupt their entire customer base. It is a big deal from technology standpoint. There's trepidation over disrupting customer relationships and deposit relationships. Now we've been successful at it. We did it with Huntington and SunTrust and Sovereign and so on and so forth, and you see those in our debit results. It's hard. Credit is not as hard because you don't have to hit the home run. You can hit some doubles, you can hit some triples, you can bunt, you can get some singles. You can go after a bank's portfolio either from a new product rollout they may have.
They may be coming out with a cash rewards program. They may be coming out with a new student card. They could be coming out with a new product launch in a certain geography. You can win that geography. You can win a certain segment. You can win a new co-brand they're going after. You can do a lot of different things. That doesn't mean that the opportunity for home runs don't come up, they don't come up that frequently. We're not counting on those things to get back in the space. I'm very confident that we're going to be able to get back in a better position on consumer credit. EMV. We announced the roadmap to EMV migration in the spring. Carolyn Balfany, who leads this for me, is going to be down in the experience room.
She's really top-notch in this area, I hope you get a little bit of time to spend with her. We were not the first ones to announce the roadmap. That was by design. We wanted to make sure we consulted with as many participants in the payments ecosystem as we could to make sure that we were thoughtful about this. We considered all the ramifications, the implications, et cetera. We wanted to come out with an approach that did not mandate EMV migration. It incented for it, and that's what we produced today. I think there's a little misconception that EMV migration is all about fraud and reducing fraud levels in the U.S. or reducing, I call it immigrant fraud, coming from other countries into the U.S. because we're the only island that has old magstripe technology, which isn't as secure as EMV.
Really it's much more than a fraud proposition. It's about moving payments from the analog world to the digital world. If you think about this, a little bit like the music industry, 20 years ago, 30 years ago, there were eight-track tape players, right? They were big things, you sort of plugged the tape in the side, it worked. It played songs, those songs stayed the same, you listened to them over and over and over again. It wasn't dynamic. You couldn't share songs. You couldn't add playlists. You couldn't download songs from the internet. Chip technology is really an iPod. You can do lots of things with that chip. You can download loyalty programs, reward programs, coupons, do all kinds of functions on a chip that you can't do with magstripe.
Not to say that magstripe hasn't done a wonderful job and will be around for some time, but the technology of EMV gives you a lot more functionality. We're actually seeing campus cards being issued where it's a closed-loop prepaid card for a student to buy books at the bookstore or go down to the cafeteria or pay for tickets to the football game. The chip on that card also gives them access to their dorm rooms so they can have one card. That's the kind of flexibility you have with EMV that you don't have with magstripe. I'm really sensitive to this. I grew up in Rochester, N.Y., which is the home of Eastman Kodak Company.
Eastman Kodak Company is now historic and will go down in infamy for putting their head in the sand and trying to hang on to technology that was past its prime. They hung on to traditional silver halide film they made a lot of money at. Meanwhile, the rest of the world was moving to digital. We're not going to do that in the U.S. with magstripe. We're going to embrace EMV technology because we believe the best companies embrace the best technology and figure out how to work with it. The last point I want to make on EMV is I've heard through Barbara and Martina, there is some concern that the migration of the U.S. market from magstripe to EMV will result in a reduction of our transaction economics down to U.S. PIN debit levels. That is not the case.
Clearly not the case. The thing you have to remember here is that EMV is a card authentication methodology. All EMV does is prove that when a card is inserted in the terminal, through the dynamic encryption on the chip, when the lights flash and the whirring sounds are made, that that is a real card. It hasn't been counterfeited. It hasn't been compromised. What happens after that is the message format and the routing protocol. That drives, in addition to the strength of our brand, the economics of the transaction. We've seen in many markets where EMV technology has been migrated to, that there's been no diminution of market economics, that single message transactions did not take over the world.
One of the reasons for that is that there are many kinds of transactions, not only in the U.S. but around the world, that simply don't work on SMS format. Those are transactions where the final amount of the transaction is not determinable at the time the transaction is authorized. Think of going into a restaurant. You get your bill, it comes to you add on the tip, it goes back. You don't know until the end of the transaction what the value is. Same thing for a hotel, same thing for a rental car company. It is a big distinction between card authentication technology of EMV and the message format and routing protocols that you need to focus on. We are not seeing a diminution in our economics here. Okay.
Ajay's talked, I talked last year about the increasing emphasis we're putting on merchant relationships from an organizational standpoint. We've really added resources in this area, not only from the payments world, but from outside the payments world. Much of the legal and regulatory situation we've been through over the past 10 to 15 years has really been a result of the merchants' pent-up frustration about not having a say and trying to rebalance the scales in the payment system.
We want to make sure we got good people out there aligned against specific verticals, whether it be fuel or airlines or hotels, that understand their industry, can help them drive the top-line growth of their company to work with Kevin's team on how to get the best customers into their locations, how to get repeat customers, where they put their stores, how they get people in and out of fast food restaurants quickly. Those are the kind of things we can help merchants with. Greg Boosin, who you probably remember from IR days, Barbara mentioned him this morning, I believe. He's one of the people that we brought into this merchant and market development group because his background prior to Mastercard and prior to spending time in IR was with a consumer products company. He sort of understands how they think.
We've got him decked against a number of merchants in a number of verticals. Hopefully you'll have some time to spend with Kevin's team on the Market Vision Reports down in the experience room. I think they're great. We're really making traction with getting merchants to think of us other than as a source of cost. Public sector space, I mentioned we're doing really well in this space. Great growth. As you all know, the biggest spender in the U.S. is the federal government, and they do the vast majority of their spend with check. We have an opportunity to help them reduce their costs and improve efficiency. Our flagship program here is the Direct Express program with the U.S. Treasury for Social Security benefits.
Starting next year, 2013, if you're a Social Security recipient, you don't have a checking account, you won't be getting a check in the mail. You will be getting a direct deposit onto a Mastercard prepaid card. That expands financial inclusion. It gives people the opportunity to buy things online and really brings an entire swath of the population into the digital age. Not just Social Security, it's unemployment, it's child support, it's disaster recovering, it's fleet programs, et cetera. We've won a number of the large public sector programs. We got 12 of the largest state programs in the country, and we have a majority of the federal government prepaid space. Great volume growth, about 35% in the first half of the year. Let me wrap up before I go to the fast-growing international market section of the program.
This is an incredible industry. We have a great business model. It's a fun place to be. I have a lot of fun with it. I say to my colleagues sometimes it's like a three-dimensional chess game going on. You've got competition, you've got regulators, you've got new technology, you've got convergence. There's a lot of moving parts, but it still remains a very resilient business. Even though the U.S. is a more developed market, I see a tremendous amount of upside in what we're doing. The next major dimension of the chess game, the fourth dimension, is going to be the convergence, as I said, of the physical and digital world. We're in the wallet mania mode right now. Everybody's got a wallet. Everybody wants a wallet. We'll see how that plays out.
I think we're well-positioned and going at this in an open architecture approach to try to benefit all parties, not just Mastercard, in this space. I'm continuing to spend a lot of my time in that world, in addition to focusing on issuers. We keep busy, but I'm confident that the U.S. is going to stay a top revenue generator for the company, and look forward to chatting with you all after the session is over. Thank you. I'm going to welcome Ann.
Well, thanks so much, Chris. I think it's a very exciting market here in the U.S. As Chris says, we're kind of looking over his shoulder, growing very quickly, and I'm delighted to be here with you today. I've been in Mastercard just one year myself, a little over one year, so at the opposite end of the spectrum from Gary. Very interesting for me to hear everyone talking this morning. At no expense spared, I've actually flown in some Presidents from our geographic markets around the world to really give you a flavor of our international business. I have Michael Miebach here, who is the President of Middle East and Africa, who's flown in from Dubai. I have Ling Hai, who's flown in from Beijing, a priceless city. He's the President of Greater China.
I have Gilberto Caldart, who's come up from São Paulo, who is the President of Brazil and Southern Latin America. I think it'll be a very interesting session for you this morning. Myself, obviously, I come from London. You can probably hear that from my accent, which is another priceless city. London is actually the world's number one destination on our Destination Cities Index. The reason for that is that something like 16.9 million people travel to London every year, rain or shine, and it's usually rain, which is one of the reasons why we look at London as a priceless city. Which dovetails very nicely with some of the things that Alfredo talked to you about this morning. Let's just move on and talk a little bit about the international markets.
The international markets actually account for 60% of Mastercard's revenue right now and growing. They're growing very rapidly, as Chris mentioned. Here you see from this slide that Europe is the biggest block. It actually has been growing at a GDV of 17% in the first half of the year, which some of you may find surprising given the economic conditions across Europe. I'm going to talk a bit about that in my next slide. Following on the heels of Europe very quickly is Asia Pacific and Middle East and Africa, which is actually, obviously, as you'd expect, growing even faster than Europe because you've got the powerhouses of economies like China, Southeast Asia, and also the African economies are actually growing very quickly as well, as you'll hear from Michael. Across in Latin America, we're still having a lot of growth in Latin America.
It's small in terms of its percentage in the world, in terms of volume, but in terms of its growth rate, it's growing very rapidly, 21%. Gilberto will talk about what's happening down there in Latin America and specifically about Brazil as an innovation engine. Also in the portfolio, because it's everything outside the U.S., we have Canada. Betty DeVita 's here with us today, who is our president of Canada. Canada has grown quite nicely for us. Obviously, it's a mature geography, but it has a lot of innovation, which is a very exciting thing. I think some of the things that you're seeing that Chris mentioned here about the confluence of change occurring, you're seeing that happening north of the border in Canada. What's really happening out there in the markets? Well, the markets are very dynamic.
You heard from Gary and his whole team this morning about what's going on. Ajay talked about the increase of personal consumption expenditure growing at about 5% on average around the world. The governmental driving financial inclusion. You heard about urbanization. It's occurring across a lot of our big geographies in the international markets. Our populations are very young. I was just in Turkey last week, and the average age of the Turkish population is 27. What does that mean? That means that they're going for much faster consumer adoption. They're not the guys who ever remember having those tapes that Chris just talked about right now. This means that in some of our geographies, mobile penetration's moving very fast. Mobile penetration's going to move fast because in places like Africa, you don't have the landline infrastructure. The geographies just simply leapfrog into the mobile space.
All of these things are fantastic opportunities for Mastercard and all the great products that we've been developing that you've heard about this morning. Of course, it's a very challenging economic environment, not just here in the U.S., but also around the world, and perhaps no more so than Europe. Obviously, I have a view on Europe. I'm British, so it may be a bit of a skeptical view on Europe. Just to share with you what's going on from a European perspective, the sovereign debt crisis is far from settled in Europe. It's interesting because last week, you saw the euro sort of rally to $1.31 to the dollar. I think it's $1.29 today. The truth is, there still isn't a solution there yet. Restructuring would be very painful for the German and the French banks.
There's a lot of political discussion. We're probably going to see more and more fiscal integration occurring across Europe. Why is it then, with that happening, that Mastercard's volumes are growing at 17% across Europe? Does that make sense? The truth of it is that there's a couple of things that are happening there. The first thing is, despite the sovereign debt situation, that is not translating on a one-to-one basis into the consumer world. People are still going out there buying groceries, putting gas in their car, and doing all the things, all those everyday things that our products are used for.
On top of that, you may have heard Javier Perez, who's here with us today, our European president, talk to you about the fact that Mastercard's own portfolios are very heavily weighted into the northern parts of Europe, which are still strong economies. We're talking Germany, we're talking the Nordic regions, we're talking Holland. Apart from that, we also have incredibly successful businesses in Eastern Europe. The Eastern Bloc is still growing very strong. Poland, Russia, which is a huge economy and very strong because it's an oil and gas-based economy. You have a number of things that explain what's really going on in Europe as far as Mastercard's concerned relative to the economic backdrop. In addition to the economic backdrop in Europe, I'm sure you're all aware that currently the EC is looking at a Green Paper about the whole payments landscape.
They started years ago in the high-value space to create a single European payments environment called SEPA. They're now looking at how to do that in the card space. The good news for us is we are a single European payment platform across Europe. In fact, we're a single integrated business around the world, unlike Visa, for example, which has a European business, which is still in the old model of being owned by the banks, the association model versus the rest of the world. In Mastercard, we changed all of that and are one single integrated business. We love the idea of having a level playing field across Europe. As Chris mentioned, we want that level playing field to include everyone. That includes Amex. That includes PayPal.
We have given our views to the European Commission, and I'm sure you may have questions on this, and maybe that's something that we can talk about later. Competitive landscape around the world is also slowing in other areas outside Europe. China has slowed a bit, we're really talking about slowing from 10% to 8% to 9%. Still, it's softening. Brazil has slowed earlier this year, although Gilberto will probably tell you later that we're expecting that Brazil will turn the corner. There are challenges out there. There are things that will just affect the overall growth that are beyond our control. We're really thinking about our business and managing our business to make ourselves more successful as this is happening. Let's think about our strategy. What are we really basing our strategy on around the world?
Well, the first thing that we're doing is obviously we're investing in the emerging markets, and we're also investing in our mature markets. In the emerging markets, it's often about financial inclusion, opening up in new countries. We recently opened up in Kenya, in Kazakhstan, in Bulgaria, in Serbia. You'll see us open in Bangladesh. I'm going across to Qatar to open our office there in a couple of weeks. Expansion across the emerging markets. In the mature markets, it's all about gaining share. The share gain is coming through those fabulous products that you heard about this morning.
All that innovation that's actually occurring in our core products about rewards, about focusing on the affluent, about travel corridors, about Priceless experiences, and actually delivering the power of the consultants and the analytics and the data that we have inside Mastercard Advisors to really be superior in these markets and to cause big share shifts through, as Chris talked about, major splits from our competitors. Another aspect that's really important to us and is important to us everywhere in the world is driving acceptance. I'm going to talk about that in the next slide, I'll move on from that right now. Also the diversification with non-traditional partners, very important to us. Originally, we were owned by the banks. The banks remain really important partners, we are a B2B2C business.
That B2B part means that we must develop those partnerships with the merchants, with the telcos, with the airlines, with the technology companies that will get us to the future. We are really diversifying strongly on this around the world. No more so, by the way, than with governments, because governments, as we know here in the U.S., are very influential in any economy. They can actually be incredibly influential in other places like, for example, Russia, Africa. They can just determine the whole payments landscape and how everything works. We're thinking about thought leadership as well as governments as clients. The final part is building those global and local strategic partnerships that will make us successful.
I say local here because quite often there aren't global companies that have capabilities such as Mastercard that can do everything that we need to do in the 200 odd countries that we are in around the world. Local partnerships become very important. Now let's just talk a little bit about acceptance. Acceptance, as I mentioned, is a core part of our strategy, and the thing that I'm going to dwell on here is just talking about the fact that in the small to medium-sized businesses, there are such a huge area out there in the world. Something 95% of these businesses are unbanked today. That's an enormous focus for us. You're going to see a product downstairs, which is something that we've developed in Mexico to really work with entrepreneurs across Mexico, the 10 million to 15 million entrepreneurs.
We've developed a toolkit so that they can actually start accessing our products. We're rolling that out in conjunction with Office Depot, 250 places now that you can actually go and buy this kit. Already thousands of them sold into the market. In the mobile space, you heard about Ed talking about mobile acceptance. We also heard Gary talking about Square and iZettle, the dongle enablers. There are lots of these around the world. Very important for us because they give us access to a whole new market. The interesting thing for us was really bringing Maestro online. When we switched Maestro online acceptance in Europe, we enabled Amazon, we enabled Groupon, we enabled easyJet, and it all happened extremely quickly. E-commerce is growing fantastically quickly in our markets around the world.
In the acceptance space, we're looking at the newer categories, and you'll hear about some of them from our guys here, but things like transit, like tuition, like everyday spend. On the government side, Michael's going to give you a real view of this across Africa, so I'm not going to dwell too much on this slide, but the whole thing about our government relationship starts with the thought leadership. How much is it actually costing them to have so much cash in their economy? The direct costs are something like 0.5 to 1.5 of GDP. It's a huge number, but that's just the direct cost. What about the cost of not being able to collect tax properly? What about the cost of having a gray economy and so on? We're talking to governments about getting to a world beyond cash.
We're talking about financial inclusion, working with the Indian government in the Punjab about trying to get grain farmers their payments directly into their hands using electronic means. Working on social benefit programs, all the things that Chris talked to you about. Obviously, in our part of the world, the whole idea of moving to biometric identification is hugely important to reduce fraud, to be able to see who's actually receiving the social benefits, et cetera. We are working with governments all around the world. This is a fantastically growing area, very important to us to create a world beyond cash. Finally, on the mobile side, our mobile strategy is also very important to us, and we're partnering with top players. Ed already told you about this, but we've just won big deals with Everything Everywhere in the U.K., 50% market share of the U.K. market.
We've won a huge deal with Deutsche Telekom, 93 million consumers across 12 countries. With Turkcell, we saw the CEO of Turkcell in Turkey last week. We've been working with them for a couple of years now, enabling the Turkish banks to actually have mobile capability. It's not just the telcos that bring innovation into those partnerships. It's us too. We did a JV with a company in the Philippines called Smart, and it's our technology that can actually link a payment transaction to a telephone number. I think that's an important thing to recognize about Mastercard. We're not just the safe, secure payment company that know how to move money around the world. We're the innovation driver as well.
What I'd like to do now is I'd like to sort of hand over to my guys who can give you much more information about their specific geography. Michael's going to talk to you about partnering with governments. Ling's going to talk to you about partnering with local players, which is great because he has China UnionPay in his geography. As I mentioned earlier, Gilberto is going to talk about the innovative growth engine that we know as Brazil. Thanks a lot.
Thank you, Ann. For a second, I was tempted to comment on my British boss' view on Europe and add my German perspective I'm not going to do that. I'll talk about Africa. I'll talk about Africa with a specific view. It is taking a look at how central the role of government is with regard to the expansion of our business on the continent. If you look at Africa over the last 10 years, it's been a decade of growth, unprecedented growth, and it's expected to be the fastest-growing continent of all over the next 5 years. Now, I've been involved with growing businesses in Africa over the last 5 years. If I remember my first trip to Lagos in Nigeria in 2007 and what I see today when I go there, it's a complete change.
It's a world of change, exciting times in Africa. Governments are at the center of it. There's a range of other growth drivers that we should take a quick look at. One sits actually right there. China. Here's Ling Hai, not him personally, but China being the largest investor on the continent, $10 billion in 2010 has been invested on the continent. Clearly the continent is benefiting. One growth driver that's of particular importance to Mastercard is urbanization. Ann referred to it earlier. There are 300 million people in Africa that live in urban communities today, and there is one thing very unique about them. It is rising discretionary income. If you roll 20 years back, rural subsistence, that was the basic model in Africa. Today we have a growing consumer market.
It is not what we see in China or what we see in Brazil in terms of a large-scale middle class, but it's a growing consumer market. A very tangible opportunity for us. Governments are at the center. They realize they need to continue to focus on governance and closing that infrastructure gap. As of late, the finance sector has really moved into focus. This is where we come in. This is where we come in to drive a dialogue with the government in those leading nations on the continent to promote the idea of the role of electronic payment systems. Electronic payment systems is the cornerstone of a sound financial services sector. When we engage in these discussions, it is very obvious to the government there are benefits about electronic payments, cost, security, transparency, better movement of capital.
When we come to the point of financial inclusion, this is when the dialogue truly accelerates. 23% of the population in Africa hold a bank account. That's actually heavily skewed by South Africa. In some countries, it's 95% of the people are not financially included. As we engage with government and we lay out that electronic payment solutions can be the way to effectively and efficiently reach the unbanked, that's when we have open ears. They understand that branch-based banking won't do what it hasn't done in the last 10 years. Here's clearly an opportunity for Mastercard. We engage with them, and we explain what we can do. We can come in as a partner, we can inform, we can advise, and we can partner with them on the execution of programs that truly promote the use of electronic payment.
Taking a step back, looking at the opportunity that we're staring at. Here is a growth continent. Discretionary rising income and government that realize the importance of electronic payment, massive opportunity. Enormous potential for Mastercard. We've realized that, and two years ago, we stepped up our investment quite significantly. We invested in technology infrastructure. My partner, Rob Reeg from technology, he's right there. We rolled out satellite connections, you name it. We invested in marketing. Alfredo talked earlier about raising brand awareness. That's exactly what we did in Africa. It was all about people and offices. Today we have five offices across the continent. We were the first international payment technology company to open in Lagos. Did that in 2010. In Kenya, the latest addition was October last year. Again, the first international payment company to open an office there.
There's one thing that I'm particularly happy about, that in both places we have managed to hire top-notch local teams, Nigerians running Nigeria and Kenyans running Kenya. I think that was at the center of us building an effective dialogue with governance because we understand. We embedded ourselves in the market. We're not just some foreign company flying in and flying out. We are part of the local fabric. That was very critical for us. Bringing to life now how everything that you've heard this morning from the product group and the fact that we've engaged in this dialogue with government, how is this all coming together and how is it making a difference for us in our growth in the continent? I'll give you two examples. You see it on the slide here, Nigeria.
We've chosen, as we accelerated our growth in Africa, to focus on Nigeria. There's two reasons for that. First of all, it's the regional hub for West Africa, secondly, it is the seventh most populous country in the world. There's 169 million Nigerians. The reason we focus on Nigeria and not a small-scale country like Rwanda or some of the other smaller leading nations, we focused on a large-scale market because we felt if we solve for low-value payment solutions in Nigeria, we solve for the continent because we have scalable solutions that we can then export. In 2010, when we opened the office, started to intensify our dialogue with the government. It was all about setting a national payment agenda. There was no such thing as a national payment agenda. The government wanted to have that, and we partnered with them.
It was about setting goals. It was about educating, informing, sharing global best practices. Solutions that Ed talked about, mobile-based payment solutions. We shared those. It was about setting up merchant infrastructure, et cetera. Today, cashless Nigeria is rolled out, and we have extended our partnerships from only working with the government to other market stakeholders, merchants, the FIs obviously, and telecommunication companies. If I take one statistical point to illustrate how far this country has come with the help of government and the involvement of Mastercard in just two years, the POS terminals. In 2010, there were under 10,000 terminals. By the end of this year, you see it on the slide, they expect 200,000 terminals, and the government has set a firm goal that by the end of 2015, there will be 600,000 terminals.
My colleague Gilberto in Brazil, that's a pretty advanced market, has been focusing on electronic payments for a while. They have 1.8 million terminals. You can see how rapidly Africa is catching up. If I look at it from a Mastercard business perspective, Mastercard Nigeria is today, from a Middle East Africa perspective, our fastest-growing business, from virtually nothing in 2010. If I take a look at South Africa, the largest economy on the continent, again, for that very same reason, a focus market for us. We've had a business in South Africa for many years, a sound business that was essentially focused on the large South African banks. We felt the need to diversify, improve our earnings quality. We went out and we partnered with the government, exactly the same story as in Nigeria, broadening the dialogue, and it all came together last year.
We partnered with a local bank, Grindrod, and a technology company, Net1, to provide a solution to distribute Social grants. 10 million South Africans, that's 20% of the population. They're now holding a debit card, and it has a biometric chip on it. You'll actually see it later on in the afternoon. I think it's a very cool thing. It will authenticate each and every grant recipient every time they collect the money. The benefit for the government is reduced operational costs, but much more importantly, reduced fraud. What it also does is, here is a largely under-penetrated, unbanked segment of the population that will now hold a debit card, and this is their entry point in the financial system. This is 20% of the population of South Africa, the largest economy on the continent, walking around with a Mastercard, and they didn't have one before.
That's very powerful. I think for us, it illustrates that governments, out of one partner, the one market stakeholder out there, if you partner with them effectively, they can truly accelerate the growth of our business by setting behavior-changing policy in the market. Early reads on that South Africa example is that number of transactions and volumes from this under-penetrated segment has increased dramatically. We right now have 3.584 million cards in the market as of last night, and the South African authorities are adding 1 million per month. We'll be reaching the 10 million about springtime next year. We've extended that partnership with the government into transit. This is another kind of daily use type of use case differentiator that makes people make changes to their habits.
Again, we see 15 million South Africans using mass transit every day, and our programs will have contactless cards in their hands. Dramatic acceleration by partnering with governments. If I had to sum it up, I think government holds the key to reaching that 1 billion potential consumers on the continent. I think that's our experience. That's what we're doing in Africa. Thank you very much.
Thanks, Michael. I'd like for Ling Hai to get up and tell us a little bit about China. I went to see Ling Hai a couple of months ago, and he took me up to the wall. Definitely a Priceless experience. One to do when you go over there with Mastercard, of course.
That's right. We were very glad to have you there. Well, thank you very much, Michael. Thank you for pointing at me when you talk about the Chinese investment in Africa. I will consider investing another $10 billion of my personal wealth in Africa as well. It's such a strategic continent for all of us. Now China. We have a slide here, but you know the impressive growth story of China, I don't need to repeat the numbers to you. With the rising economic tide, there's income disparity, but I think one of the things that we need to keep in mind is this has actually created a very sizable middle class in China. By the definition we're showing on the slide, 300 million middle-class people. I mean, that's already the entire size of the U.S., so it's very significant.
All this newfound wealth is enabling these people not only to spend their money on just sort of basic necessities, rice and vegetables. They're actually spending money on overseas travel, sending their kids to school in the U.K. and the U.S., and talked about tuition payment. Actually, the Chinese cardholders are already doing that. More importantly, people are also spending their money on luxury goods, both physically by traveling to Hong Kong and Paris, but also over the internet. E-commerce, cross-border e-commerce is also a very, very significant trend. You heard many of my colleagues talk about urbanization. It's a huge trend for China. When you think about China is a country with major megacities like Shanghai and Beijing. I'm from Shanghai, live in Beijing now. 20 million people, right? Beijing has 6 million cars.
You also have these urban centers popping up in the traditionally more rural areas, which is small in Chinese definition, but the population size is still anywhere between 1 million to 2 million. All this concentration of commerce and merchants is actually creating much better economics for acceptance, right? If you put these things together, the spending power, but also better acceptance, this bodes really well for our business, for Mastercard's business in China in terms of card payments and electronic payments. Success in China, though, does require three things in my mind, and I summarize this in three Ps. The first P is patience. You really need that. The second one is partnership, and the third one is preference. Let me talk about each of these.
Patience, I think the best way to talk about Mastercard's patience is we were the first international payment brand to enter China in 1988. We've been in China for many, many years, and we've been very committed to this market ever since. In terms of partnerships, you have to have partners in China in order to succeed. That's just the nature of this market. That's the reality of this market. In China, we have always been able to work with a wide range of players in this market. You've heard many of my colleagues talk about this as well. Financial institutions, and today, non-financial institutions that specialize in payments such as Alipay, Tenpay. We work with banks who do both issuing and acquiring. We also work with merchants, developing compelling merchant value propositions that really make our cards top of wallet .
For example, we work with China Eastern Airlines, where if you travel business class, it's buy one, get one free. Very compelling for a business traveler. We work with Starwood. Stay two nights in a Starwood hotel, such as the W Hotel, the St. Regis, two nights, you get another one for free. A very compelling value proposition. We work with merchants very diligently to do that. Also, we work with merchants for acceptance reasons as well. Government, we work very closely with the regulator. Ajay comes to China often. We have regular dialogues with the People's Bank of China, which is the central bank, which is our regulator, very often. We also have very visible thought leadership in China. Our CEO, Ajay, actually attends this event in China on an annual basis now. It's called the China Development Forum.
This is an event where business leaders and government officials come together. They come together to debate policy issues and make thoughtful recommendations. We have become the only international brand where our presence is visible, and we have our CEO attending every year. We also, with the help of our Mastercard Advisors colleagues, we publish white papers on various topics. We've done a paper on cashless society. When Ajay was in the China Development Forum, we published a paper on why an open and competitive payment system is actually better for China. Ajay delivered that speech in a very passionate way. Afterwards, when a McKinsey partner comes up to us and said, "Oh, I learned so much from you guys," I think that is very big.
In terms of regulator, PBOC, the fact that they actually call us, call me, when they're thinking about a piece of legislation or regulation, and they want us to conduct a workshop with them, that itself is testament to our engagement with the regulator. With our colleagues' help from GPNS Public Policy, we conduct workshops in China all the time about chip interoperability, security, e-commerce, mobile payment. We're very front and center in China, and our brand is very visible. Clearly, our most important partnership in China is with China UnionPay. I brought a credit card. I don't know if all of you can see this, but this is how we execute our issuing in China. Right now, it's a dual-branded play. We call these co-branded dual currency cards. We issue these cards in collaboration with China UnionPay.
This is an area where we work very closely on. We also work on other issues. For example, we have just assisted them with their efforts to entering EMVCo. Chip interoperability, in our minds, that's a very important issue. We're also working with them on cross-border e-commerce initiatives to enable their cards for acceptance in e-commerce. What are the benefits of this partnership? It's paying huge dividends. If you look at all these co-branded programs issued in China, in the past two, three years, we have won a majority of these programs, thanks to our partnership with China UnionPay. We're seeing a steady increase of our market share in China. We're very proud of that. Now, as you all know, with the domestic opportunity, the biggest surprise now becoming available, China's looking to open its domestic market to us.
This market has become even more interesting to us. We are very confident that we have the right capabilities and the right people on the ground to capture this opportunity when it becomes available. I think patience is still required, perseverance is still required, but we do think we're working on the right things. We're working with the right partners to make this happen. We're very proud of that. Now let me come to my final point on preference, the third P. As you all know, when China opens up, it's never a level playing field for all. China always has its most favored multinational company as far as international companies are concerned. I can think of in retail banking, it's HSBC and Citi. In insurance, it's AIG. In auto, it's GM and Volkswagen.
We are very confident that when the market opens up, Mastercard is well-positioned to become the most preferred company in payment. You've heard from many of my colleagues talk about promoting Mastercard's brand preference. We have on this slide three beautiful characters. That's the Chinese name for Mastercard, 万事达. "万事达" in Chinese actually means everything is attainable. It's a beautiful name. It's a beautiful brand, where our biggest competitor's name in Chinese means nothing. Why have nothing when you can have everything? There's absolutely no reason why an average Chinese consumer would not want a Mastercard because of our brand name. We're very superstitious people, good fortune, good luck, good feng shui is very important to us. We're leveraging that in a very big way, hitting on our brand.
The best example I can give you in terms of promoting our brand preference is the Mastercard Center. We have this naming sponsorship or naming rights to the 2008 Olympic basketball stadium, which now is called the Mastercard Center. For many more years, our brand will be associated with this tremendous world-class venue where top-rated performances, concerts, and sporting events happen. We are able to use this asset to provide priceless experiences to our cardholders that money cannot buy, and it is actually becoming a cornerstone of our Priceless Beijing program. In addition to the Great Wall and the Forbidden City, this has now becoming a major asset in this program. Very iconic. All in all, I think this is a very exciting time for all of us.
My boss really wants me to say this, I think this is probably a good time for me to say it. In case you haven't noticed, I am Chinese. I am not from Hong Kong, I am not from Taiwan. I am mainland Chinese. Yes, I spent a little bit of time in the U.S. too. It is a privilege for me to be back in my birthplace, helping Mastercard succeed, running an American company for Greater China. I think my only regret is our China business is still behind Brazil. We have 1.4 billion people, this is not right. We have got to change that, right? I am so jealous that Brazil is such a poster child of our company's international markets. My goal is very soon our China business will beat Brazil.
With that, I am going to turn the podium to my archrivalry and dear colleague, Gilberto Caldart. Thank you very much.
Thank you, Ling Hai.
Hi.
He's growing for us. He's a real threat, Gilberto. Maybe not playing soccer, but definitely from a business perspective.
It's a health competition, right? We'll do our best to keep ahead of China. It's a pleasure to be here to talk a little bit about Brazil. Brazil is a story of growth, innovation, and opportunity for Mastercard. The way I want to do that, I'm going to talk a little bit about the country, what's going on in the country. Just a bit about our payments industry and then how is Mastercard kind of paving the way for brand preference in Brazil, and we've been doing quite well there. You all know that Brazil is big, right? It's not as big as China, but we have 200 million people. We are the fifth largest population in the world. We have a strong GDP, the sixth largest GDP in the world. We've been stable for a couple of years.
We have had our ups and downs, Ann alluded that we had a down, it's coming back in terms of GDP growth in the second half of this year and the expectation for 2013. What I want to focus on is really what is happening as a consequence of all this stability and this low unemployment rate and this growth that Brazil has experienced over the last couple of years. I want to emphasize two things. One, the first is the emergence of the so-called C class. Brazil, over the last eight years, has migrated 25 million people out of poverty. 40 million people joined. It's not 300 million, that's China, we'll get there eventually. 40 million people joined the middle class in Brazil, which now accounts for 54% of the Brazilian population. What does this mean for us, for our business?
This is higher disposable income, it's higher access to credit, it is, of course, more formalization of the economy, formal jobs, which all provide a great thrust to our business. The second thing that I want to emphasize is the demographic bonus that Brazil is enjoying over the last couple of years and will enjoy going forward. You know that we have a young population, that Brazil is aging. Over this period of time in the next couple of years, 66% of the Brazilian population will be on the peak productive age range between 15 and 64 years old. This is what is happening over the next couple of years. All of that provides a great growth to our business through the social upward mobility that Brazil has been presenting to its population, household formation, and the things that I've mentioned before.
Brazil is going through a very good thing that has been propelling our industry, which leads me to talk a little bit about the payments industry in Brazil that most of you know quite well. We have a wide acceptance, as Michael mentioned before, between 1.8 million to 2 million merchants accepting cards in Brazil. More competition into the acquiring business, driving more players to come in and actually increasing acceptance, which is tremendously good for us. There is about 700 million plastics in Brazil. We are a developed, let's say, society in terms of number of plastics to a lot of usage to happen and more frequency of usage to happen. Our industry, according to the Cards Association in Brazil, this year is going to process around 9.7 billion transactions and around BRL 800 billion in volume.
The expectation of the industry is that over the next two years, we will reach the iconic number for us, which is BRL 1 trillion. We will become a BRL 1 trillion industry, which is $500 billion. It gives you the sheer size of what is going on in Brazil. What is better about that is you think about it is growing, has been growing very fast, but we are still a maturing industry. Only 26%-27% of the private consumption expenditure in Brazil go through card. We are halfway to the developed market, so there is more to happen. Let me move into how is Mastercard kind of paving the way and expanding our participation into the value chain in Brazil, and then talk about the things that Gary and my colleagues mentioned before.
Let me start by saying a couple of things that have been important for us. One, we have been able to have and manage very stable partnerships with every relevant issuer in the marketplace in Brazil. Second, we have been growing at a very fast pace in Brazil over the last four years with a CAGR above 23%, which is very good. Third, and very important, yes, we have been gaining market share in all categories in Brazil that you might be reading through some news. We have been very proud that over the last couple of years, we became the number 1 market for Mastercard outside of the U.S. As important as that, managed to process 100% of our transactions. In Brazil, we are in the domestic and the offshore flow.
We see 100% of our transactions, which provide a big opportunity for us to leverage and expand ourselves into the value chain. Brazil is not only a growth engine for Mastercard, but is also leading in terms of innovation and development for Mastercard. Let me give you a couple of examples. Gary mentioned one of those, IPS. We brought the prepaid processing platform down to Brazil, signed a deal with Citi and Credicard, implemented, customized the platform to Brazil. We will win 2 million prepaid plastics GPR in the next five years. As important as that is actually we now have this platform to process prepaid in Brazil and offer to every single issuer there that wants to do it. Second example, Access Prepaid. We brought Access Prepaid, our end-to-end solution for travel prepaid to Brazil.
Allowed us to get into the marketplace that we were not present before and cut deals with the most important travel prepaid sellers such as Fitta and more recently with Citi, Banrisul, just to mention some of those, but we have virtually a lot of deals with every player in Brazil. InControl, Gary and a lot of our product colleagues mentioned we have InControl implemented with two banks and expanding in Brazil as well very quick. You might not recognize ourselves on loyalty, but again, referring to the products team. We have the MRS platform running in Brazil handling 14 million consumers with large contracts with banks just to give an example of one something in there. Also handling our loyalty platform that has over 3 million customers. I could go on and on.
We are expanding on our processing capabilities, engaging local brands to process through Mastercard, which provides us a great opportunity. Mobile, working with Ed's team. We have a pilot with a Caixa to work on government disbursement programs, which is working well. We extended the joint venture with Telefónica to Brazil to be able to work for the 65 million consumers that Vivo has in Brazil. We will be in the market by the end of this year, beginning of next year with mobile money solutions. We've been also working with our issuers and acquirers partners to expand NFC capabilities in the market.
We expect to have near 1 million NFC POS capable by the end of 2014. Then be able to deploy and redeploy our strategies around PayPass, mobile PayPass wallet, which is going to be working with Ed's team and will dramatically help us to get to the next billion consumers, the world cash, the underserved, and the consumer segments in Brazil. All those are examples on the way we are driving growth, innovation, and kind of leveraging the opportunity that Brazil has presented to ourselves. To finalize, this is all along with our strategy with "Meu Brasil não tem preço" or the "Priceless Brazil" along with Alfredo's market team.
I'm very proud to announce that we recently got. You always, when you talk about Brazil, you probably think about soccer as well. You've been asking yourselves what Brazil Mastercard will do about soccer. We are very proud to, for the next seven and a half years, became the proud sponsor of the national soccer team of Brazil, which will allow us to provide a lot of experiences to our consumers, cardholders, issuers, acquirers, throughout now until the year 2020. We're very excited about what's going on in Brazil and the opportunity and actually embodying everything that Mastercard has developed around the world and bringing it to Brazil and making ourselves to win there. Thanks a lot. I'll give it back to Ann.
Thanks, Gilberto. Having been with Gilberto at the final match of the Olympics where unfortunately Mexico won.
A little better.
I wish him well for the future. I hope that you've actually enjoyed this little tour of international markets. As you can see, we have some of the best and the brightest leaders in international markets around the world. Chris is right to be looking over his shoulder. We want to really power our growth across these markets, and we look forward to answering your questions about them later. Right now, I'd like to invite Martina up here on stage who's going to take us through our financial objectives. Thank you, Martina.
Thank you, Ann, and hello, everyone. Thank you for joining us here today in New York or listening in to the webcast. Hopefully you have found this morning's sessions with our senior management team valuable, and now I'd like to pull it all together from a business driver and a financial perspective. Let's go to the agenda. This is what I would like to cover. First of all, let's take a look at what we're seeing for 2012 in terms of our outlook for business drivers as well as financial performance. I will talk about our approach to hedging foreign exchange. I will lay out the guiding principles of our capital structure, thereafter, I will talk about Mastercard's long-term growth opportunity and how that translates into our future financial performance expectations.
I have already seen all these emails floating around. I have to tell you, Sanjay from KBW wins the first prize for getting the first analyst note out. Listen carefully to make sure that everybody got everything right here. With that, let's go to 2012, our business drivers, and let's discuss the data that we see in July and August. Here on this chart, you see worldwide volumes. The quarterly volumes are our normal Mastercard growth dollar volumes that we discuss every quarterly earnings call. The growth numbers that you see for July and August are our intra-quarter processed volume proxy for the quarterly. Over the last four quarters, volume growth was in the mid to high teens, really due to the positive impact of our U.S. business wins and the underlying strength of our business in each of the regions.
The processed volume proxy for July and August is 11% on a local currency basis. It's just a bit lower than the comparable number of 12% in the second quarter, and you can see that in the black box. It was in part impacted by a more uncertain economic environment in the U.S. and overseas. These are still good numbers. You also need to keep in mind that when you look at our third quarter volumes that we will be printing soon, we had some very, very tough comps versus the third quarter of 2011, where our volume growth was actually the highest in four years. We outperformed all of our competitors by a significant margin in that quarter. Let me split that data further into U.S. and the rest of the world.
In the U.S., we mentioned on the second quarter earnings call a reduction in volume growth from the first quarter to the second quarter, which is primarily due to the lapping of a U.S. debit win. The July-August period, in the July-August period, U.S. processed volume proxy is actually 1% lower than in the second quarter, all due to the U.S. credit performance. Let me go into that a little bit deeper. When you look at U.S. credit growth, it was 4% growth in the second quarter. It's 3% growth in the July and August period, mainly due to consumer credit. U.S. debit growth is continuing in the mid-teens. There's really no change from the second quarter.
Also remember, as Chris already said to you, any of our U.S. PIN debit wins are not reflected here in the volume metric. You are seeing them showing up in the processed transaction numbers. Let's go to the rest of the world. Two-thirds of our GDV comes from outside of the United States. Over the last four quarters, the volume growth was in the mid to upper teens. The highest growth is actually in Latin America, followed by Asia, Pacific, Middle East, Africa. When you look at the emerging economies like Brazil, Russia, and China, they're contributing strongly to this growth. In July and August, process growth rates are lower than the second quarter as growth moderated in each region. Let's turn to process transactions. Here we continue to see a very positive trend.
When you compare to the previous four quarters, you can see that July and August is about in the 25% growth rate, all regions. Double-digit growth in process transactions. The U.S. continues to see high growth, around 30%, driven by our U.S. PIN debit wins and the Huntington debit portfolio flip. Outside of the U.S., process transactions are growing close to 19% in the July-August period, and that's lower than the previous quarters as the lapping of the Netherlands SEPA win takes effect. Lastly, our cross-border volume growth. Over the last four quarters, you saw in the mid-to-high teens, and that trend pretty much continues in the July to August period. In Europe, which is more than half of our cross-border volume, growth remains in the mid-teens, despite the concerns about the economic situation there.
Outside of Europe, the impact of the Ramadan timing and the stronger dollar, both of which we talked about on our second quarter earnings call, continued to moderate the growth of cross-border in July and August. With the business drivers as background, let me update you on our expectations for the full year 2012 relative to what we said on our August earnings call. We expect that the second half net revenue growth will be lower than the 13% growth we saw in the second quarter. This is due to tougher comps since in the same period last year, we have experienced some exceptional net revenue growth.
In fact, the rate was 24% in the third quarter and 18% in the fourth quarter, as well as our outlook on the current global economic uncertainty, which could temper both business and consumer spend for the balance of the year. In addition, the timing of new and renewed deals will likely have a greater impact to the third quarter than previously expected. We have no change to our target of a minimum 50% annual operating margin, and we continue to expect only a small operating margin expansion in 2012 relative to 2011. Our total advertising and marketing spend will be lower versus 2011, both on a constant currency basis as well as on a U.S. dollar basis. The quarterly distribution of A&M expense will be similar to what you're seeing in 2011. 2012 full-year tax rate is expected to be lower.
We're still working our way through it, but for now, you can assume a number slightly less than 31% due to one-time benefits we saw in the second quarter effective tax rate, as well as the ongoing contribution from some tax planning initiatives. Lastly, on FX, if the EUR and the BRL rates as of August 31 hold for the balance of the year, we would expect that a full-year net headwind of about four to five percentage points is applied to revenues, net income, and EPS. On the chart, you see the quarterly impact. Now let me switch gears and talk about Mastercard's foreign exchange exposure, as we are getting a lot of questions on that given the foreign exchange environment and given that we are a U.S. dollar-based company.
We process, as you know, for more than 210 countries and territories and in more than 150 currencies. Like most global organizations, our FX risks include both transaction and translation exposure. We manage a fair portion of that with a FX hedging program. I will first discuss the transaction exposure and then the translation exposure. The goal of our foreign exchange hedging program is to protect the economic value of cash flow exposures against the functional currency of the entity in which they are generated. These are the exposures that we're calling transaction exposures. We hedge the more significant transaction exposures primarily by entering forward contracts on a net basis. What that means is we're taking net revenues, deduct from it the net expenses, and we hedge on a net basis.
Typically, we target a hedging ratio of about 50%-75% on a 12-month rolling basis for that net exposure. I can give you maybe a little bit of a number in terms of what our notional net exposure on an annual basis is. It's about $1.3 billion. That's where our hedging program is. Currently, the major transaction exposure to Mastercard are in CAD, in EUR, and in the GBP. The one other thing of note, we do not get hedge accounting treatment for this activity. This has to be all mark-to-market through the P&L. That means the forward contracts are getting mark-to-market through the P&L, so you see that from time to time on a quarterly basis. Mastercard's P&L, as you know, is also impacted by translation exposures.
These foreign exchange exposures arise due to the translation of revenues and expenses in EUR, BRL, and GBP entities back to the U.S. dollar. We don't hedge those exposures as there's no accompanying cash flows. We basically deem the earnings made in these entities permanently reinvested. Therefore, we call out for you every quarter the impact on these translation exposures on our P&L, as I just did in the prior chart. Turning to our capital structure, our guiding principles are to preserve a strong balance sheet, credit rating, and liquidity to first and foremost enable the long-term growth of our business, and thereafter, to the extent that we have excess cash to return. As we have said before, we plan to execute our growth strategy through a combination of organic investments and M&A transactions.
Finally, given the strong cash flow-generating capability of our business, we may still have excess cash after pursuit of our growth strategy. In such instances, we would target to return excess cash to shareholders, and at this point, our bias is towards share repurchases as it provides more flexibility for the business overall. Let me move to the next slide, because here you can see the actions dating back to 2007. Over the term, we returned $3.8 billion to shareholders, including an increase in the quarterly dividend per share earlier this year. When you exclude the 2009-2010 period when the world really faced a significant financial and economic crisis, we returned generally more than 50% of our annual cash flow to shareholders.
Actually, when you look at the first half of 2012, this number is significantly higher with our $1 billion worth of share repurchases that we did. Through September 14, we repurchased another roughly $190 million worth of shares, thus leaving about $1.2 billion on our latest share repurchase authorization. One word about liquidity and excess cash. Working from left to right on this chart, you will see that as of June 30th, 2012, we have about $8 billion of liquidity, and that consists of $5 billion of cash and other liquid investments and a $2.75 billion fully committed, fully available credit facility. When determining excess cash, we look at our largest potential use of cash, which may arise due to the technical failure of a settlement position by our largest customer. When I take that together with some working capital needs, we get to about $3 billion.
Other potential uses of cash include the $1.4 billion remaining share repurchase authorization. Remember, this chart is as of June 30th of this year, so you don't see that extra $190 million that we just did. In addition to that, we had the $790 million that we reserved for the settlement of the merchant class litigation. When you subtract all of that, you arrive at approximately $2.6 billion of excess liquidity, of which $2 billion is held in foreign entities. Also remember that on an annual basis, our cash flow generation potential is actually close to what we produce in net income. Let me transition to the last part of the agenda. That is our long-term growth potential and financial objectives. I will ground us first in our historical performance.
Here you can see that we have done pretty well on our business and financial objectives over the last five to six years, despite a very significant global financial and economic crisis in 2009 and 2010. While we grew the top line at around 14% and EPS at about 40% on a constant currency basis over those last five years, you can see in the black boxes on the bottom of the columns that each year's growth rate shows significant variations depending on the economic and geopolitical environment. As we're discussing our long-term financial targets, I'd like you to keep this in mind that this annual variation will continue. When determining our long-term financial objectives, we analyzed the three areas of growth as depicted by the concentric circles, which Ajay has already covered.
The three areas are personal consumption expenditure growth, the secular trend of cash to electronic payments, and then the market share of electronic payments. I'm going to take each in turn. First, let's talk about nominal personal consumption expenditure growth on a worldwide basis. Remember Ajay's comments that our biggest opportunity comes from the 85% of global retail transactions that are cash-based. When we actually translate that to a dollar value, we see that about 52% of PCE is cash and check. That's a phenomenal opportunity of $22 trillion open for conversion to electronic forms of payments. This does not even include any of the government and business spending that Tim referenced in his presentation, which is about a $17 trillion conversion opportunity for us.
When we look at the historical period, 2006 to 2011, the first two columns on this chart, PCE grew actually 5% per annum, and you have to take it on a constant currency basis. Of course, the annual numbers can vary widely by country or by the economic environment. Looking into the future for 2011, from 2011 to 2016, we believe that PCE growth will probably remain on the 5% per annum track. However, given today's more sluggish economic environment, we believe that this growth will probably lower over the next 12-18 months, and over time, return to more normal growth rates. Second, regarding the secular trend of cash and check conversion to electronic payments, it was at around the 4%-6% range over the last five years, and we still assume the same range going forward.
Together with the PCE growth of 5%, the secular trend of 4%-6%, you get to go to this card volume growth that you see here on the chart in the 9%-11% range. Here we put it all together. Including all three areas of growth, you see PCE growth of 5%, you see the secular trend of 4%-6%, total opportunity of 9-11, adjusting for Mastercard's mix down to a base opportunity of us of 8%-10%. On top of it, the strategic initiatives, which many of my colleagues have talked about, gets you over the long term to a low- to mid-teens net revenue growth rate. This chart has really no real change from what you have seen before, apart that we tightened a bit the PCE growth number.
The chart last year had 6% on it. It has 5% on it, as we expect over the next 12-18 months among more uncertain economic environment. Let's go with that as a background, and let me take you through our new performance objectives for 2013-2015. Let me just be clear, given that I saw some of these emails floating around. These replace our existing financial objectives. These are new financial objectives for a new period. Based on the weakening global economic environment impacting our PCE estimates and including what I said about the secular growth assumptions and our strategic investments, we expect to achieve a net revenue CAGR in the 11%-14% range over the 2013-2015 period.
Remember that our prior CAGR was in that 12%-14% range, and all we did here, given the more uncertain economic environment, we widened the range by one percentage point. While this is a three-year CAGR, in any given year, the actual net revenue growth can be above or below this range, similar to what you saw on the slide when I showed you the historical performance, and that really depends on the economic environment that we will be in. Based on our current expectations on the economic environment, net revenue growth in the early part of the period might be slightly below the range. In later years, we believe net revenue growth can be at the higher end of the range as the world returns to a more stable environment.
Our assumptions do not contemplate, at this point, a more pronounced deterioration in the U.S. economy or more significant problems within the Eurozone than what we are already seeing. We left the operating margin minimum in here at 50% in order to make sure that you understand that we are managing our expenses very carefully, targeting the right investment opportunities. We expect an earnings per share CAGR of at least 20% over the 2013 and 2015 period. Of course, this assumes that we will continue some level of share repurchases. However, should revenues be slightly lower than our range in the first part of the period, it will also impact EPS growth in that particular period. While we continue to be prudent on expense management, we will still endeavor to make the right investments for the long term.
Having said that, we feel comfortable that we can deliver on the three-year CAGR of at least 20% EPS growth. On another note, we are assuming a 32% tax rate as a starting point, which takes out the beneficial impact of some one-time discrete items in 2012, which are likely not to repeat. All of these objectives are on a constant currency basis and exclude future M&A. You can see that we did very well over the last few years, despite a difficult financial and economic environment. We believe we have plans in place to continue to deliver a healthy financial performance over time.
In closing, as you have seen from our presentations this morning, there is no shortage of opportunities to invest and grow in this business, be it in our core business in credit and debit, in commercial and in prepaid, be it in diversifying our geographies and types of customers, as well as building new businesses and new revenue streams. With that, I'm handing over to Barbara to start our Q&A session. Thank you.
Let's put Ian on the far end. Okay, we're now ready to begin the Q&A session. I'm going to ask the members of the Executive Committee who spoke this morning to come up and join me on stage. We also have, as I said earlier, several members of senior management here in the audience who will also probably participate in the Q&A. For those of you here in the room, we ask that you please wait until you have a microphone before you ask your question. Also for the benefit of our team up here, it's really helpful for them if you would introduce yourself, your name, and your firm. For those of you listening in, we do have the ability to accept questions over the internet, and I will intersperse those questions through the ones in the room.
We want to get through as many questions as we can. We're running late, but we're going to do everything we can to keep the Q&A going as long as we can. As a result, we ask that you keep your questions brief. Please limit yourself to one question and one very brief follow-up question. Okay. With that, we're going to start here in the audience. Tien-Tsin Huang?
Thanks, Barbara. Appreciate everything. Maybe just to ask on the long-term performance objectives, I'm curious if there's any caveat around the Green Paper and some of the things that are spinning out there. I guess I've been getting a lot of questions about the Green Paper in general. Some of the changes that might happen, like co-badging and breaking up network and processing. I'm curious if you could just comment on that and how meaningful that might be, and how that might detract from the objectives.
Look, when we have to look at our financial performance objectives and put something out for the next three years, obviously we have to look at the entire environment and what happens in each of our markets where we operate. We do not believe that the trajectory that we are on in our European business will be materially changing from what we have seen in our prior years. As you have seen us in a number of other countries, even when the regulatory environment changes, we have a way to work with the partners in the market to be addressing those issues and to continue to grow the business. It's not explicitly in there, but we obviously have to look at all of those forces.
Ann?
I think about some of the things that you've raised, Tien-Tsin Huang, about the breakups, say, of processing. Well, we never actually bundled those things together. That would be much more impactful on some of the domestic players, in which case, that would be potentially favorable for us. There's swings and roundabouts in the Green Paper, but as Martina says, we don't see it as a major problem.
just maybe one quick follow-up, just on rebates and incentives. I know that it was a little bit higher than expected last quarter, you mentioned. Within the long-term objectives, can you give us some guidelines to think about what that line might look like?
look, we are looking at it from a net revenue growth point of view, right? We have said that before. We are not going to split apart gross revenue and the rebates and incentives because quite frankly, every time that we look at an agreement, what's really important for us is to get that net revenue growth. That's what you're going after, and you want to make sure that you have a really profitable agreement. That is all baked in, and I would suggest that you're really looking at that in this way.
Jason?
Thanks. Jason Kupferberg from Jefferies. Just a financial question to start here for Martina, I suppose. If we're looking at the long-term objectives again here, and think about the percentage of your EPS growth, that 20% plus through 2015, the percentage of that that may come from items like share buyback and tax rate relative to the percentage that have come from those items over the last few years, it would seem like the math might suggest the percentage from these items would have to be higher over the next few years. Is that a fair assumption as we're just thinking about building longer-term models? Because it sounds like the margin forecast, while sort of open-ended, is somewhat flattish.
Jason, we have obviously a number of levers, right? one is the net revenue growth, and it really depends where net revenue growth is coming in in any particular year. That will dictate in terms of us where we will be on the operating margin because obviously we have plans in place. We have a strategic plan on which we are executing, which dictates how much expenses we have, expenses as well as capital expenditures we have to put into the business. In terms of what's happening, I absolutely agree with you. Tax rates and share repurchases are other parts of the lever, but as you can appreciate on the tax rate, it's not something that you can just pull from today to tomorrow. We know many other international companies have been at this for 50 or 75 years.
We have started doing that too, but it will take a long time, but at some point in time, there will be some impact, and we will be benefiting from that, as we have done already over the last few years. Share repurchases is something that we have kicked up. Over the last year or so, and you should expect that as long as the economic environment is holding this by, that we will be doing some of that. That's baked into this guidance.
The only thing I'd add is that the objective really is not to grow operating margin any further.
Yeah.
We are at a relatively high operating margin as a company. I think in a company which has the opportunity to hit out at 85% of cash and grow share and look at what's going on around the world, is growing my operating margin from whatever it was last quarter, 55% plus to 60%. Is that really a valuable opportunity for this company? Or is it a better value in growing the revenue, so for the next 25 years, this company has a great path? I think at this point of time in its growth, that makes more sense. Now, it could change if the world goes to hell in a hand basket and we start having to protect margins because that's the right thing for our company and for your money. Then it'll change.
Right now, we think the world is a pretty bad place in many ways, and we're hoping it doesn't go to hell in a hand basket. That's kind of how we built this plan. That's how I think about it. I think about not trying to squeeze the margin further. I think about growing revenue through all the things we are doing and putting money back into the company, and then finding money that we've got spare to go buy new businesses that add value to what we're doing, or else give it back to you through all these processes that we keep talking about, share repurchase and the like.
Just as a follow-up on Brazil, some of our research suggests there's a ton of debit cards that have been issued in Brazil, but it seems like part of the issue is getting consumers to use those cards at the point of sale instead of at the ATM. Wanted to know from your perspective, how much of that is an actual terminalization issue versus a consumer education issue?
I'm going to do one little thing which goes well beyond Brazil as well. I'm going to hand it over to Gilberto. In a number of our markets, this is absolutely the case, that in the emerging markets, whether in India, tons of debit cards out there, most of them are used to go to a shop or a bank right outside the shopping center, take out cash and go shop. By the way, that's true of Japan. It's not really a developing versus developed country thing. It's also got culture wrapped up inside it. Brazil itself, let's talk about that.
Just you know, there's a lot of cards, you're right, 270 million. I think it's about the consumer behavior, we have been having a lot of success with the help of Advisors with the 5-step model, with some of our clients to step up the usage. It is improving dramatically as you see the growth of usage. There's still some segments that are learning the behavior of it's usage that is going to go up in the future.
Acceptance is a good starting point. You're going to get acceptance. If you don't have it, that's not going to work. Brazil has acceptance. India does not. Japan has acceptance. There it's a cultural consumer adaptation issue.
So.
Thanks. Darrin Peller from Barclays. There's been a lot of new entrants. I just would love to hear your thoughts on some of these new entrants in the sense of their attempts at aggregating transactions at the point of sale. We've seen a lot of merchants rolling up with the providers such as Square or others. What does that mean for pricing in the industry? Does that in any way commoditize what other traditional networks do? Maybe just talk a little bit about what they're doing on data analytics versus really what you guys can do. Are you really at the integral part of all of that? Is it a risk or an opportunity?
I'll start and I'm going to hand it over to Chris and Gary because they're the ones facing it. Principally, I think of most of these opportunities like Square as a way to grow the acceptance network that takes electronic payments. With all opportunities, there comes challenges. One of the challenges that everybody, let's say, worries about, because you got to have something to worry about, right, all the time. One of those things you worry about is what happens at the end of this pipe. Will they be able to get ahead of every transaction, in which case the banks and us will become the second layer and not the first layer that a consumer thinks of. I got to tell you, that would be a very high-quality problem to have because right now there's so much cash out there.
Even in the United States, 50% of the transactions in the U.S. are cash. The value of what you can get from that is a great amount of growth. The second part of it is, I believe if you do the right things with analytics and value and some of the things we are doing with innovation, actually brands don't get submerged. They're very visible. For example, there are certain kinds of checkout processes that are being driven right now using iPads, different from Square, but other people are doing that, where the brand actually is chosen by hand. If you think of how an iPad is used, it's the instinctive scrolling that it's used for. Brands can come back in there. There's a lot of ways that brands can pay back. I don't think that you should see these as either/or.
I think you should see them in the context of the opportunity.
Yeah. I'd agree with Ajay. I think some of these new models, these new acceptance models, the aggregators, whatever you want to call them, are a big weapon in the war on cash. I share a story with some of my colleagues on vacation. Back in August, my wife dragged me to one of these arts and crafts shows where they're selling pots and quilts and things, every one of the vendors at that show had a Square terminal on the end of their iPad, and they swiped it. There was a quote from one of the guys, I was asking him how he liked it. He says, with a big smile on his face, "I'll swipe for $2 now. I would never swipe before." Getting cash out of the system, these aggregators are major players in.
One of the things I think you have to remember is you have to go to the consumer at the end of the day who gets a statement from their bank that has aggregated transactions on it. They are seeing from these different models, different wallet models that have aggregated a lump sum, perhaps with not the right merchant identification code on it. Issuers' call centers are getting lit up with questions from their customers about, "What was this? I bought something on PayPal. It says it's code 8999, but I don't know what that is." You're starting to see the issuers now start to push back on this because their call centers are getting backed up. There's going to be some tension and some dynamics are going to have to play out in the industry until we sort that out.
Yeah. I think just on the product side, what Ed covered today in terms of PayPal's wallet services and providing functionality that is better than anything that's out there is step 1, making sure that you're integrated and you're providing solutions. On the data side, we have tons of data. Kevin kind of laid out before how much that's grown over the last two years and our ability to utilize that data, which is anonymized to do the right things with it in terms of predictive capability and all the wonderful things that go with that. I think on the product side, we have to make sure we provide the right solutions to enhance our proposition, which we're doing. I think on the data side, we have a lot. All right? We use it extremely well today. On the data, I'm not that threatened, honestly.
Okay, just one quick follow-up, and then I'll turn. The slide that showed the long-term growth had strategic initiatives bridging the gap between the 8%-10% and the low to mid-teens. Just if you can give us a sense, which are the early initiatives that are generating revenue today versus those. I know, Martina, we've talked about this in the past, so there's like a one-year, two-year, four-year, five-year kind of-
Yep. Yeah.
Can you give us a sense of a couple of examples?
What you're referencing is my little buckets, right? The short-term bucket, the medium-term bucket, and the long-term bucket when we look at investment opportunities and how we actually look about where we want to place our money. When you look at the more shorter-term opportunity, clearly what Chris was saying and Gary was saying, and some of his guys, when you look at the commercial opportunity and the way that you can actually put feet on the street and really garner that's a more shorter-term opportunity. What we did in prepaid. That is a more shorter-term opportunity. When you go to Kevin's area with Mastercard Advisors and you look actually at information services and all the things that we could be doing in that area for a number of corporations and companies in the world, that is more medium-term opportunity.
When you look at the long-term opportunity, which is really clearly, I hope you heard this from all of us, is more the mobile, the digital conversion opportunity. That's how we're thinking about it.
I'd add a little bit to that in terms of you go around the world, affluent credit and what that means to us and what an opportunity that creates. I think we talk about Asia Pacific and the high-net worth individuals out there. Our ability to provide the right kind of products and services, that for me is short-term as well. Gilberto referenced we have a model on debit, which is 5 steps, which is the issue about cards out there. Are they being utilized? I can remember Mexico four, five, six years ago, single-digit point-of-sale utilization. Now high teens. Right? You have to do that in combination with merchants. Like I talked about in the Netherlands, their example. They figured out that cards were better than cash. Collectively we got together and got the job done. Right?
I think that is another avenue that's more shorter term right in. Real important, I think it was Gilberto also hit on, he sees every transaction. Doing that in markets where we see transactions and can drive processing our way helps us out more. One other point is the way I kind of look at this. Gilberto's chart had our services on it. You had IPS, you had IPS access, prepaid, a variety of things. We kind of look at markets and take a 360 view. If I do the same thing for Australia, it looks the same way as that. Right? If I have commercial products, Access Prepaid, IPS, DataCash, Advisors, affluent youth, we start to get the right kind of revenue generation we want.
We are an interesting kind of company. We're boring, and we're sexy. The boring part is credit, debit, prepaid, commercial. The cool part is all this mobile jazz that everybody gets excited about. I got to keep telling you, the money comes out of credit, debit, prepaid, and commercial. We are investing to make sure that we will help define where that mobile goes and where the next fingerprint payment system goes. Our initiatives deliver in that kind of context.
Okay. Up in the back, do we have a question? I'm trying to move it around here.
Sanjay Sakhrani from KBW.
The prize winner.
Yeah, that's right.
Prize?
Maybe on that mobile.
First row.
Yeah. On the mobile note, on your discussion on mobile, I was just wondering what the revenue opportunities there are. Is it just volumes, or are there advisory fees that you guys could earn?
Oh, no. That's different. Okay. The kind of revenue.
Yeah.
Okay. The amount of revenue is I'll put my finger up, and you can figure out which one it is. I don't know.
I tried.
I chose the correct finger.
Here we go.
I chose the correct finger. You got to get it away from me.
No, I want that.
The kind of revenue, that's a great question. I actually think that there are two If you ask that question, one part of the revenue is traditional, what you get out of the fact that the card gets used or a mobile phone gets used in which an account is buried, right? That's the traditional what people call swipe fees, which I hate as a term for that. The second angle is all the data and analytics and advisory stuff that we can do on value-added services, be it promotions, be it consumer attraction, be it usage, be it incentive, be it InControl, all those wrap up in that together. I'll give you a small example that opened my eyes to what InControl can become. We were traveling in Europe, Javier and I, the other day, and we were talking about Germany.
Germany had this issue with fraud on cards that were not being used with PIN and chip in the U.S. Among other things we did there, aside from the liability shift, was the whole idea of getting InControl put as a new product called Fraud Shield on all the cards in Germany. 90% of the cards we issue in Germany are $100 million by the end of this year. That to me is value added. It's not traditional. Use my card, and I'll make a little bit of money from the dollars that you spend. I think that's very important. I think as this digital-physical convergence proceeds, we're going to get a lot of opportunities to help look at alternative revenue streams, which are fee-based, not just volume-based.
The other two I'd just add to that would be DataCash. These devices are going to need gateways, and then they're going to need fraud-related services. Those two are just added to what Ajay said.
Just one follow-up, if I might.
Sure.
Just Chris, could you just talk about how the appetite is for U.S. issuers to grow in this environment?
I think it's certainly stronger than it was, Sanjay, two or three years ago when they were all cutting back on credit lines and working through write-off rates in excess of 10%. The dust is settling a little bit. They're starting to get back into the game. You're seeing lines starting to be expanded. You're seeing new product introductions. I think cash rewards programs are getting a lot of attention these days as sort of a simple way for a consumer who's trying to make ends meet to save a couple of dollars on gas or groceries, the essentials of life. I think they are much more on their front foot than they were a few years ago. I think they are all still struggling with a lot of legal and regulatory issues, that is consuming a lot of their time.
I talked to some of the heads of card businesses around the country, they are just swamped with regulation, trying to pay attention to growing their business sometimes has to be put on the back burner as they work through these issues with the regulators. I'd say it's better than where it was. It's not where it was in the mid-2000s before the bubble burst. One thing we are seeing, which I think is interesting, is independent banks and credit unions, which had basically ceded the credit card market to the major players, sort of the top five in the country, are sitting on a lot of deposits. You know the margin compression is going on in that business today.
They are now getting into the credit space and trying to fill that void that perhaps there's some disgruntled customers or some broken glass from the way the big customers have treated their place. We're actually seeing great growth in credit in our IBCU space that we didn't see two or three years ago.
Craig.
Hi, Craig Moore, CLSA. Two questions. First, around the Starbucks Square deal. Obviously, Starbucks chose a partner to help aggregate its data, deploy target offers, things like that. Our best analysis is Square doesn't make any money until they can prove they can do that in that equation. Where I struggle is why would Starbucks choose a limited data set versus working with Mastercard Advisors directly, where they could use an enormous data set to go beyond their own borders in their transactions?
I think the first thing is I don't think it's either/or, and that's what you've got to always remember in this time. I think I'm not quite sure for all of Starbucks' reasons to go as far out as they did with this. They've done investments. Howard Schultz is out there talking about it. He's obviously he's a very bright guy. He's done really well. He's got his own thinking on that front. I think it's not an either/or. Merchants, like any other business today, are feeling the pressure of margins and revenues. They're all trying to find ways to monetize this thing that everybody's talked about called big data, it's become a fashionable thing to do. I think we're talking to everyone. We get a lot of conversations going, so do a ton of others. I don't think it's either/or.
It's a question of what value you bring at what point of time.
Okay, quick follow-up. Your four-party system works great for expanding rapidly through many issuers, so on and so forth. At the same time, you're also beholden to those issuers.
Yes.
In the U.S., just quite simply, are the big banks innovative enough to take your products forward versus some of the competitors that are cropping up because they just seem stale?
Well, you should be asking the big banks that. From my perspective, I would tell you that there are exactly what Chris said. There are some banks that are far more creative and innovative. There's some that are less so. That's always been the case. That's not a new thing. It's not just big, it's also the regional and the small-sized banks. There is enough appetite out there and enough awareness in the banking industry that technology can be a big enabler and a big threat. I think you'll find a lot of engagement. We find, at least, a great deal of engagement in the conversation with them. What they are always careful to think about is what's the revenue model and what's the business model.
Yes
as compared to just running out and launching something. I think if you were a big bank with 6,000 initiatives going on, of which 3,942 are regulatory, you would be careful about how you build your business model. I don't find any absence of energy at the other end these days. Two years ago, yes, I think they were in the grip of a vortex. I think there's much more encouraging discussions. He and I and Jerry were out with a very big bank a little while ago. Before that, Chris and I were with another one. We've been with small banks and large banks in the last six months, maybe seven, eight calls together. I don't find any absence of energy.
I think on the international side, the banks are pretty energized around this because if you think about payments businesses, they're somewhat recession-proof. What we've actually seen in the banks around the world is that our conversations have gone up a level. Now we're talking to the COO or the CEO of-
The banks that we're dealing with rather than the cards head or the payments heads of these banks. The whole business has become a strategic driver inside banks around the world.
It's a capital-friendly business. Right now with Basel looming, that's another thing.
Yes.
We've got many things going for it that have become relevant at this stage of life.
Okay-
Coming in the middle of it
I'm going to take one-
Go ahead, Susie
I'm going to take one from the webcast participants. We've got about 10 questions that have come in. Ann, this is for you and I think for Michael. In emerging economies where they do not necessarily need a landline network, is the Mastercard business model different? Is your primary role as a network different? Are the sources of your economics different?
I think Michael's got some geographies that are exactly like this, and they refer to the fact that Rob Reeg's team have actually been building satellite technology, haven't you, Rob, to link up parts of Africa to our network. I'd like to hand over to Michael Miebach to answer the economic questions.
On two aspects I want to answer that. First of all, fundamentally, our role is not different. We're going to be the network that we are. We're the network to telecom companies, as we are the network to banks. It is as Ajay Banga was saying earlier, we are partnering with them. Fundamentally the role isn't changing. On the economics, a couple things to say about these emerging economies. The first thing I would say is that it is important to see where transactions are coming from. There are profit pools in different parts of these emerging economies. Some of them very, very traditional, and you have a very good risk-return margin there. Then you have the low-value payment type of transactions emerging where the pricing power is different of course.
At the same time the cost infrastructure that is running these kind of transactions is also very different. I'll give you one example, POS terminals. What we're playing around with in Kenya is a POS terminal that is running around $15 or so vis-à-vis a $200 terminal. In terms of protecting the margin and keeping the economics intact for these emerging economies, I think there's enough levers that we can play with. That would be my answer.
I think the only thing I'd add to that is that if you think about landlines not being available, that's true for many countries overseas. Typically the cell phone, which is far more widely distributed, is providing a way for people to think about acceptance. Whether it's the fingerprint system in India, which they're tinkering around with, which they're doing some progress with, or whether it be the Square and Revel and iZettle of the world who are connecting onto cell phones. That's kind of the way that this could grow. I don't think it changes what we do as much as the kind of partners we try and work with. In that process, we can create POS terminals that are way cheaper than the traditional terminals.
The traditional terminals have a great role to play still, because one of the things that people discount in the traditional terminals is when they're all rolling out, they're all rolling out now contactless enabled. Remember that. All the new terminals. In the U.S., four to five years from now, when every terminal has been changed, it will have contactless on it. This is not us trying to convince merchants to install a separate terminal for PayPass. Four years, five years from now, EMV enabled contactless terminals will be in shops. That will be a big game changer in the way that cards can be used.
Right over here.
Hey, thanks. Smittipon Srethapramote with Cowen. Going back to Alfredo's comments earlier this morning, he mentioned a couple of recent wins for Mastercard. Can we get some more color on that, maybe?
Not at all. Not at all. They're not announced yet, so sorry.
Is it credit, debit, maybe by region?
You'll have to ask Alfredo, and I'll put him in an orange jumpsuit when he tells you.
All right. Just as a follow-up.
I can't tell you. I can't tell you. I can't tell you to this public.
As a follow-up on that, this is for Martina. Can we talk a bit about contract renewals with some large clients, maybe about timing, this year, next year, et cetera? Thanks.
Yeah, we said in prior calls, we basically said that we had one big renewal in 2012, one in 2013, and one in 2014. We are extremely close. I think I delegated my authority to Javier for the 2012 renewal. That should be in the bag. Obviously 2013 and 2014, there's still work to do. You start typically six to nine months before a year renewal.
Thanks. Rob?
Yeah, Rob Bourgeois here with Bernstein. Sorry to ask another question about the sexy side of your business. I wanted to ask about your PayPass digital wallet. Are you actually building a new brand in the form of PayPass at the checkout process, both online and at the physical point of sale as you build your PayPass offering?
The fact is that PayPass has already been some years, some countries have invested a fair amount of money in building that as a contactless checkout. What we were trying to do was that instead of introducing an online wallet, which then had yet another name attached to it, M.U compared to some of my competitors. I could think of those names, but it's just another name. I don't want to do that. It makes no sense to me. What I'm trying to do here is to see if I can leverage this seamless convergence one day of physical and digital, and think about having the same brand apply across contactless and the wallet because the wallet could be used contactless, it could be used to pay with punching a password.
We're just trying to sort this out as we go along. Remember, our first focus in the wallet is not really launching our own wallet. It is actually to be the network of wallets. We want to be what we are today, which is the brand on the bottom right-hand side of a card. Various people issue their cards. When a merchant sees the card, they know if they see that brand, that it's going to go through the regular system. I'm trying to create the same level of assurance, guarantee, security, getting my money, that feeling in the case of the PayPass wallet. That is really what we're trying to build as compared to some new individual brand, which is like a new consumer brand standing out there by itself.
All right. The follow-up to that, consistent with that strategy, you need to pursue an open wallet strategy. Are you going to allow private label cards or ACH-based payments in that open wallet, or is it not fully open in that respect?
We have no plans to work on the ACH payment side. That's pretty clear. In fact, I believe that the whole ACH system needs a very careful thought by the banks. I was talking to a bunch of people in the break, but we don't have any plans right now to do that.
Is there anybody up? I'm just trying to bounce around the room. Is there anybody up in the back? If not, Paul, did you have a question?
Yes. Thank you. Just following up, can you just give us some thoughts on P2P-type payments? Is that an opportunity for you? We see things in the U.K. like Pingit from Barclays, Popmoney here. How would you be a part of those flows? How would you convince the banks that they should ride on your rails rather than ACH?
Tim, you want to go?
Look, I think we have a huge opportunity in P2P payments worldwide. We've got a lot of investments in the space. I think the issue is not just building up our own network connectivity, but working with the right partners in markets around the world to make it happen. We're doing it. We've got, I think, a very good relationship with Western Union that will help in this space. Gary mentioned continued investment in that Western Union relationship. It's really about connecting the endpoints and finding the right partners, both domestically and cross-border, to do that. I think the Mastercard network, in terms of same-day settlement, rich information flow, offers a lot of advantages. I think the challenge to make P2P happen on our network is really about building those endpoint connections. Anything else, Ed?
Tim, go ahead.
Yeah.
Yeah, just to follow on with Tim, because it's not really account to account. It's person to person. Making sure we have the breadth of the network to bridge across from it. Perhaps not so much if you look at consumer behavior that I want a separate independent device for person-to-person payment. It's more how I want my accounts to work better. To enable prepaid cards to receive money easily, to be able to send or receive it from the various Mastercard products they have or get it to other people who aren't on the network. That's really what we're doing with MoneySend and supporting the products we have and also bridging to other people for that. You'll continue to see us build that out.
The only thing I'd add is I think that P2P is going to be the toughest one to actually get to in this whole space. There's a lot of other opportunities before that. We've got energy in the company and Garry Lyons as well being devoted with Ed and Tim to try and think about P2P, but it's the toughest model to crack because right now what all the banks are offering even now is mostly account to account in the same bank. You kind of realize that only after you get into it, that it doesn't work when you go outside that bank. That's pretty limited in its own way. To build all the right connectivity, they've got plans in place to build it, to help make it move. It's again a bank account to a bank account.
Where the real P2P utilization will burst through is when you can go out for lunch and share the money at the end easily. That's a very different model from this bank account to bank account angle. I think it's the toughest one to crack, in truth. A lot of energy going into it. I don't think they have all the answers yet.
Okay. Orenbuch, did I see your hand up? Okay.
You had talked a little bit about the resurgence of small banks in the credit card market. Are there things that you're doing to kind of be the provider of choice there? It's something we've talked about this before. Is it something that we can.
Sure. That's a market where you have to sell in one to many. We can't have an individual account representative decked against 7,000 community banks and another 7,000 credit unions in this country. Martina might have some problem with the headcount growth if we did that. What we have to do is we have to sell through processors and sponsors of those banks and credit unions into our network. We've developed products that we call Card in a Box, which is basically being able to go out with a prepackaged set of collateral material, sales material, card design, marketing material, teller training, et cetera, to go into these banks and to sell those products.
Tim, you might have some added things, but we're very much focused on how you do that one to many model and to make sure that we make it very easy as a bank is considering getting back into credit, so they don't have to reinvent the wheel or stumble with a, "Well, I can never get scale here." You rely on our scale, and you can make it happen.
A quick follow-up.
That is on commercial front. Just maybe talk a little bit what the single biggest gating factor there and how you're moving towards conquering that, because that seems to be one of the real big opportunities.
Yeah. I'm going to let Tim do that. Tim?
Sure. Look, I think the main gating item on commercial is frankly working with issuers to get into the space, right? Our business scales when we have rich issuer relationships. Commercial is a different market segment. It requires some pretty specific expertise. I think that we will see continued growth in the commercial business as we work to translate what we know well, what my advisors, colleagues on Kevin's team know really well, and help other issuers get into the space. It's why I talked about in my presentation the importance of building out those issuer relationships, particularly in the emerging markets where you've got banks very much focused on the consumer side perhaps not so deeply on commercial. We really see that as a major opportunity.
The other major opportunity is, it's a little bit of the same question you had before on selling through others. How do we work with those financial institutions to reach the corporate decision-makers, certainly in the large market space, to swing the brand decision over to Mastercard. So getting to the end-to-end corporate as well. The products are there. The expertise is absolutely in-house. The products solve real problems. It's really getting those issuer relationships up and the expertise out on the issuance side, in my view.
I think one of the big expertise areas, we were with Michael Miebach out in his territory talking to banks and what they were trying to work through from an underwriting perspective. What data sources do they have to decision things? It's different. All right. But there's enough proxies to actually get it done. But I'd say that's one thing that Tim specifically is trying to deal with as well.
I just want to come back to your prior question, Moshe, because it's very interesting. You remember Mastercard five or six years ago when we really did work with a lot of the very large financial institutions around the world, not only in the U.S. but in many countries around the world. You have hundreds and hundreds of banks. Exactly what Chris's team actually did over the last two years in order to craft a way how we can actually go to the smaller banks in a very efficient manner and win their business. There are a number of our other countries, like Italy, for instance, who have basically shamelessly copied from Chris' team.
All right.
have been doing exactly the same thing. You can remember, Italy, Spain, there are many banks in there, and we have never served them. They have a thirst for going into electronic payments and offering these kind of products to their consumers, to their bank customers, basically. It's how we take this all around the world and really take advantage of that.
Okay. In the middle, David.
Thank you. David Togut at Evercore ISI. One question and one follow-up. Chris, if I could ask you, in your presentation, you highlighted really two key drivers to improve your market share in U.S. credit.
Yep.
I think it was affluent co-branding and diversification of the base to small financial institutions.
Yeah.
My question is, can you really move the needle on U.S. credit without flipping some of these big financial institutions? If you are going to go after the big FIs, how will you gain share versus your big West Coast competitor?
Sure. Good question. You're absolutely right. You have to get a lot of independent banks and credit unions signing up for credit and winning those deals to move the needle in credit. Like I said, you can go after this and score runs with singles and doubles, et cetera. A big flip of a major FI's entire credit portfolio, I think is not out of the realm of possibility. I don't view it as something that necessarily comes along every day. It's requiring you to hit the home run. I think we have the ability, if we get a home run pitch, to hit it out of the park. We're not discounting that in any way, shape, or form. We're not pretending that that'll never happen.
I think we can do a lot in segments of the business with co-brands, if we get that home run pitch, we'll hit it, and we'll have two runs instead of one. I think we can get there. I'm pretty confident. Like I said, please don't take this lightly. When I stood up on the stage at SUNY Purchase four years ago, we had just lost because of their failure, Washington Mutual, which was our biggest debit customer, I said I was confident we would get back in the game. We're back in the game in a very big way. I am more confident today in credit than I was four years ago in debit.
Just a quick follow-up, if I could, for Martina. Verisk Analytics just acquired Argus Information & Advisory Services, which provides proprietary analytics to credit card issuers. That seems like it would've been a natural fit with Mastercard Advisors. Is that something that you looked at? Is that the type of acquisition you would consider?
Look, we're not going to comment on specific projects that we're looking at. The type of areas that we're looking at is really in the domestic processing space, in the technology space, in the digital space, as well as in Kevin's business in the information services space, right? It spans a number of areas where we look at. At any one point in time, we look at many activities, and sometimes we like them, and sometimes we don't like them. Whenever we like them, like what we just did last week with 2X, you're going to see us announce a deal. I just don't want to comment on the specific items.
Thank you.
David, you want to pass the mic just to your left there?
Good afternoon. Chris, I was hoping you could.
Could you introduce yourself, please?
Bill Carcache with Nomura. Chris, I was hoping you could expand on the point that you made about your confidence in credit. In particular, if we look at the ratio of revolving credit card balances outstanding relative to personal income, it's down around 250 basis points kind of in a post-crisis environment. I was hoping that you could just share your perspective on to what extent that marked decline is something that is reflective of a mindset in the change of the U.S. consumer is thinking about credit, and is something that's going to persist, or is that something that you see-
Yeah. That's a great question. Consumers' mindsets have changed, and I think they've changed permanently from the go-go sort of reckless spend. You buy five plasma televisions for your home on a weekend. We went through the worst economic crisis since the Great Depression. It has lasting impacts on people, and we're seeing 8% unemployment as a constant reminder of what happens when you binge spend, right, as a country and individual consumers. That's why we're feeling really good about debit in this country because it's a place where consumers can spend and not overextend themselves. We're feeling very good about prepaid in this country, where it's sort of a contained pool or pot of money that consumers can spend on.
Even though consumer appetite and desire to sort of max out their credit cards and take out multiple cards and banks' willingness to allow a consumer to get into that situation to start with because their underwriting standards have changed, there are different payment products that we can play with. Since we're much stronger in debit than we were four years ago, we're actually in a pretty good position to navigate that change. I don't think the consumer is going to go back in the next three or four years and start spending at the rate they were spending in 2005.
I think in other markets around the world, they're practically pure debit markets. If you look at some of the northern European markets, we still have extremely profitable businesses there. I think the diversity comes through the strength of having the broad product set.
One more follow-up, if I may.
Oh, sorry.
On the topic of EMV, some of our conversations with some merchant acquirers suggest that there may be, despite the liability transfer date, that there may be some pushback in willingness to kind of move towards EMV, and in particular, in cases where restaurants and hotels, where the timing between when the good or service is consumed and when it's paid for is not very far. Therefore, they might see less value from the fraud protection that EMV offers. I wonder if you've kind of seen any of that, if you can comment broadly on that. Thank you.
Yeah. That's a great question. If you look back at the roadmap we laid out, the only mandate that is in that roadmap is that an acquirer must be able to process an EMV transaction by the deadline, October of 2014. Anything on the issuing side or anything on the merchant acceptance side is entirely up to them. They can do part of their terminal EMV. They can issue part of their card EMV. They can go full tilt both ways. They can ignore it either way. If there is going to be any pushback, it's going to come from the acquirers who have to sort of retool and work their way through it. I haven't personally heard a lot of the acquirers push back and say, "We can't do this." They're ready for it. They've known it's been coming for some period of time.
Now, the restaurant in your example, the restaurant doesn't have to adopt EMV. They don't have to terminalize. They can stay magstripe all they want. They will then have to wrestle with the consequences from a liability shift, a fraud shift, and that's an individual decision, and that's why we believe this is a great design. I haven't heard much from the acquirers. Merchants, if they are concerned about it's their decision, and they'll figure it out.
I think you'll also find in all these things that there are varied levels of adoption in the beginning. It's happened that way overseas as well. It picks up steam as it's like a rolling stone. It picks up steam, and finally, you'll get to a majority of people with it. What will also facilitate that will be value-added services that may only be deliverable with an EMV chip on the card. That's also coming. Eventually you'll feel left out if you're not part of that game. I think somewhere over these five, six years, that will settle down. It's not going to be a big bang move over like a switch being turned on.
Okay, we've got time for one more question with no follow-up.
We heard about a lot of parts of the world today. We didn't hear very much about India. Could you please tell us a little bit about your Indian business?
Yeah. We're doing pretty well. We've got a business that's growing despite all the, let's say, news you read in the paper these days. Part of the reason it's doing well is because the Indian economy still has two-thirds of its economic power coming from domestic consumption. We're kind of growing with that. We've got a very strong base of both debit and credit card issuance. Our biggest issuer of Maestro cards worldwide is the State Bank of India, which is the largest single unit in India that has branches. I'd say on the issuance side, it's in decent shape. The Reserve Bank of India is a relatively activist central bank. They have done some actually pretty good policies on driving electronification, including mandating different kinds of rates for different kinds of products, which in many ways have turned out to be useful for that economy.
The big challenge is there will be this grandiose plan of getting 600 million people into payments who don't currently participate actively. Will that happen through this new unique identifier project that's out there with fingerprinting? It's technically capable, but 24 million-25 million people have signed up. Our entire global board is going to India in February next year. We were in Turkey a few days ago. We do two a year overseas. Next year is India. We're going to meet with the gentleman who runs that authority as one of the ways of assessing where this is going. That's a wild card. Of course, the bigger wild card eventually is the whole economic circumstances and will they be able to maintain their reform agenda. Depends on what happens to us there.
We are in relatively good shape locally as well as with good cross-border spend from traveling Indians. It's a good business, I'm happy with it. I wish it to grow even faster because I really want them to beat the crap out of Ling Hai.
Okay. With that, just bear with us for another couple of minutes. Before I bring Ed McLaughlin back up here to just quickly talk about the product experience this afternoon.
Can we go?
You can go.
There we go. Okay.
You are all going to go out and mingle and have lunch. After Ajay's got some closing comments, we invite you to go outside, grab a boxed lunch. Management will be out there wandering around also. You can go down to the product demo. My last piece of advertisement is we also have an EMV 101 session scheduled for 2:00 P.M. Chris McWilton mentioned that earlier. We've got a product expert down there, and she can get into all the technical issues around EMV. Ed?
Thank you. I believe the operative word on this is quickly, right? All right. We're about to get to my absolute favorite part of the day, and that's the product experience. What we've assembled downstairs is a way for you to actually see a lot of what we've been talking about in action. You'll see the products, the services, the innovations that we're bringing to market. Perhaps even more importantly, we wanted to give all of you the opportunity to talk to a lot of the leadership at Mastercard who's actually putting all of this into action. The other thing I'll say, for those of you who've been with us for the last couple of years, we did something a little bit different this year.
What we try to do is organize around the themes we've been talking about to really bring this strategy to life. We have one zone where we're talking about how we're leveraging the power of technology, how we're using the Mastercard network to drive advisory services, to prevent fraud, to make the system safer and more secure. We've also talked a lot, particularly Alfredo talked about, a lot of the experiences that we're trying to bring beyond payment. I can't do justice to everything we have, but a way of seeing the travel services and the awesome benefits and other things that we have around the Priceless Cities.
We have another big theme area on a lot of the things we're doing to expand our reach, to reach new customers, ways we can bring the network out to reach new merchants, and really see those technologies we're using. The last one, which I talked a lot about, is the convergence, how we're transforming the shopping experience. Again, quickly, I do want to highlight a couple of the things we've talked about. Again, seeing Priceless Cities in action, you'll actually have the ability to sign up for this South African social benefit card, and that's using the EM chip advanced EMV technology. I don't know if you qualify, but we can sign you up. It's extended with biometrics, so you can actually see how we're bringing these people into the financial system safely and securely.
We also have a lot of great stuff from Mastercard Labs. Just two I'm going to highlight. We have one called Shoppable and another one called Screen2. These are ways we can actually change the dynamic between digital advertisers and content providers and how they do businesses with consumers. It's really cool stuff to check out. Then the last bit, just to echo what Barbara just said, I know there's been a lot of questions about EMV. We really have a whole session set up so you can ask about what it is, how it works, what it means for the U.S. market. We really have time to dive into that because I know there's a lot of interest on that one. I'm looking forward to it.
I really think this is a way that you can see how we're taking the innovation, putting it in market, and using all that to drive growth. With that, I think Ajay wants to come up.
A quick wrap-up, and I realize it's me between you and your lunch and the next stuff. There we go. Okay. What I was trying to do this morning, all of us together, was to give you a sense of how we think that this business has legs for years to come, how we think that we can grow through those three concentric circles, that they provide us with different ways of growing in different circumstances, in different economic times, that we think that getting against those concentric circles requires us to stay focused on the Grow, Diversify, and Build Roadmap, make sure that we're winning in that core product space of credit, debit, prepaid, and commercial. Use those winnings to try and ensure that we can diversify our business as well as build out these new businesses and invest in innovation to drive that build-out.
I don't know when you will get the direct results of that, hence all the joking with the finger and the numbers. The truth is, we will help drive that ecosystem. We're not going to stand outside and watch while somebody else does it. That I assure you. That's how you can see all the partnerships that we're signing up around the world fit into that space. We're very focused on delivering on our commitments with navigating our way through somewhat choppy waters in the world over the last couple of years. It seems that that will continue for another year to come. We kind of think that there's enough legs in those stool, that three-legged stool that I drew out for you, that I think we can make our business and our numbers still look attractive for our employees and our shareholders.
With that, thank you very much for your interest. Thank you for your support. You have no idea how much we all work to get this done well, but we also enjoy the process. Part of it is the chance to talk to people like you, who ask us questions that sometimes make you think about why you're doing something in a certain way. We value your presence and your support for us more than you probably realize. Thank you very much, guys. Thank you.