Hi, Jason. Can you hear me?
I can. I can. Thank you very much, Sachin, for doing this.
I'm happy to do this.
Everybody connecting here for this session. This is our second-to-last session of the day, day one of our 2024 Virtual Electronic Payments Symposium, and super excited to have Mastercard with us, Sachin Mehra, CFO, who many of you know, of course. I'm Jason Kupferberg, the payments processor and IT services analyst here at Bank of America. We're going to do a classic fireside chat with Sachin and cover as much ground as we can here in the time allotted. Sachin, I really do appreciate you taking some time with us this afternoon.
Thanks, Jason. Thank you for having me. I'm looking forward to our discussion.
Great. Great. Great. Well, I guess I'll kick off with a little bit of activity in the sector, as always, right? Cap One Discover, there's been a lot of questions and thoughts about what that means for the rest of the space. I mean, what's your perspective on what it potentially means for Mastercard over time, just based on some of what's been discussed by Cap One and Discover?
Sure, Jason. So look, first, what I'm going to say is that it's still early days, right? I mean, things are still evolving. It's been maybe three weeks since the announcement came out, maybe a little bit longer. Things are evolving, and they will continue to evolve, right? All of that being said, I do want to emphasize that we have had a longstanding and a really strong relationship with Capital One for the longest time, and we expect for that relationship to continue on a going forward basis. There will be some changes in the nature of areas of interaction, more specifically. So I think you guys have seen how Capital One has talked about its intent to migrate its debit book of business over to the Discover network. And clearly, we've got debit volumes which run over Mastercard's rails, which are issued today by Capital One.
We expect that that will get impacted. But then the larger set of volumes that we have is on the credit side. And you've also heard Capital One talk about their intent to continue to work with the networks on the credit side. So I continue to believe that given the strength of our relationship, there will continue to be opportunities for us to continue to grow our relationship with Capital One, certainly on the credit side, but across services, across the fact that we've got ubiquitous acceptance across the globe. I see several areas for us to continue to engage. We are very actively engaged with Capital One, even post the announcement. So I feel like stuff is going to happen in the industry.
We've got to stand ready, given our diversified nature, to continue to participate and continue to grow our book of business with the various partners that we have. Furthermore, the last point I'd make is we've always maintained that it's a very competitive environment in the payments industry. This is another sign of what I would call additional competition, and we welcome competition. I think it's important for us to win business on the strength of what we bring and the nature of our assets. That's what we'll continue to do here with Capital One and, broadly speaking, in the competitive environment we're operating.
Yeah, that makes sense. I mean, our views on the credit side in particular, you got to be careful about migrating some of those portfolios and consumer experience, and especially some of those higher-end card portfolios, and thinking about disparities in acceptance, especially when you go outside the U.S., which I know you alluded to. I mean, I guess whatever the volume impacts do end up being over whatever period of time, I mean, would it be fair to assume that the revenue impact would be less than the volume impact? I mean, we're talking about a large issuer here. I mean, just conceptually, is that fair?
Yeah. Look, I mean, we haven't given any guidance as it relates to what the revenue impact or the volume impact is likely to be. I think you guys all know what the extent of volumes is on debit. Like I said, it's too early right now for us to actually get into that. Once we have a better line of sight, I think we'll be in a better position to discuss what the implications of this are, as well as from a timing standpoint, what all of this means. So I guess my best answer to this is let's just stay tuned to see how this all plays out. I don't want to kind of jump the gun here on this one.
Yeah. No, understandable. I mean, who knows if it'll even close, right? So that's a whole nother set of questions. All right. Great. Well, thanks for covering that out of the gate. Let's talk about just the state of play with the consumer right now. Obviously, the macro environment continues to have some moving parts. Q1's kind of interesting. I think you've got a leap year. Easter's a little earlier than it was last year. And what are some of the things we should be thinking about?
Yeah. So look, I mean, I'm going to just go back to our Q4 earnings call where we talked about our baseline assumption being one of healthy consumer spending. And as I look at the metrics through what we've seen in Q1, that baseline assumption stands good. We continue to see healthy consumer spending. So I'm feeling like what we set ourselves up for in our last earnings call is what seems to be playing out. We had talked about in the last earnings call about how there was a little bit of a weather effect, which took place in the first half of actually, the first three weeks of January. But then we had seen this reversal, which took place in the fourth week of January.
And the reality is, weather aside, really, what we're seeing is, from an overall standpoint, consumer spending to be healthy, very much in line with our expectations. So I feel like we're generally in good shape around that. Here's what I would tell you: what we're seeing from a domestic volumes and a cross-border volumes standpoint, right, overall healthy spending pattern and I'm talking more globally now rather than the US. Healthy spending patterns across both domestic and cross-border. Cross-border continues to normalize. I think it's kind of interesting that we're still talking about normalization coming out of COVID, which happened, I don't know how many years ago. But the reality is, we all know that there was a period of normalization which was expected to take place. You're seeing that happen across cross-border. We still see a few select corridors where there remain opportunities on the cross-border side.
All of that's factored into what we thought about, and we shared with you in the nature of our thoughts for the full year for 2024 as part of our last earnings call. So net-net, the thing which we most closely track, Jason, is what's going on from a macro standpoint. Look, there are positives, and there are negatives. On the positive side, you continue to see strength in terms of where the labor markets are. There are record low unemployment rates. You continue to see in several markets across the globe wage growth running at a rate in excess of inflation. And as we sit back and we think about this, we're saying, "Look, if people are employed and people are experiencing wage growth, they're getting paychecks, and they're spending." And that's what you would expect to take place.
So that's kind of a key metric to kind of keep an eye on, which we certainly keep an eye on. The other thing is the wealth effect. And I bring this up only because, oftentimes, human psychology is such that you tend to actually spend based on how good you're feeling. And how good you're feeling is partially a function of how your equity portfolio is doing. And we all know that the equity markets are doing okay. I kind of view that as one to keep an eye on. I don't necessarily want to sleep well at night because of the wealth effect. I want to sleep well at night because people have jobs, and people are actually getting paychecks, which is what drives consumer spending. But we're certainly tracking all of that. On the watch-out items, I would continue to flag certainly, inflation has come under control.
However, it's appearing to be more sticky than lots of people expected. And so it's one to keep an eye on. And the other piece is, obviously, the geopolitical environment. And we are in a year in which you have several countries across the globe where there are going to elections. And along with that comes a level of volatility in terms of how people are feeling around their economies. So that's certainly something we're keeping an eye on. I put that into the buckets of uncontrollables. But the reality is, we are the beneficiaries, and/or we take the drawbacks of whatever happens in that environment. So that's something we've got to stand ready to actually act on, both to the opportunity side as well as from an expense management standpoint, which is something we're very well prepared to do.
Right. Right. You guys have always demonstrated that flexibility. Just on those cross-border corridors, where you still have room for improvement, are there others outside of China that you would highlight in that bucket, or?
I would say China is primarily the area of kind of potential recovery. Most of the others have generally got into what I would call the normalization phase.
Yeah. Yeah, for sure. So you referenced back to the Q4 call when you guys laid out the outlook for 2024. You talked about the first quarter revenue growth outlook being low end of low double digits. And I think, to use Mastercard's parlance, low double digits - correct me if I'm wrong - means 10%-12%, call it. Full year, I think, calls for the high end of low double digits. So there is a little bit of implied acceleration as we get past the first quarter. So can you just talk about the drivers of that acceleration and just your visibility and comfort with it?
Sure. So it's exactly like we talked about in the first quarter earnings call. Look, I mean, at the end of the day, there are two primary factors which are influencing that intended acceleration, which is there in our thoughts, right? Number one, I want to remind everybody that last year in Q1, so Q1 2023, was that quarter in which there was the highest level of FX volatility, which was there amongst all quarters of last year. So as you know, high FX volatility translates into potential for additional revenue for the company, which is what we realized last year. It was the highest in the first quarter of last year, and then it started to tail off. It doesn't mean it went to zero. It just started to tail off in the other quarters as the year progressed.
We are operating, as we mentioned in our Q4 earnings call, at very low levels of FX volatility in Q1 of this year. That's pretty much been the case right through this quarter. That is certainly something which bears on from a year-over-year growth rate standpoint. That headwind on a year-over-year basis will decline to the extent that even if volatility remains at current low levels, the fact that we had high volatility in Q1 of last year and that started to come down, you're going to start to see that headwind start to decline as the year progresses. That's point number one. Point number two was, and again, I talked about this on the call, around value-added services and solutions. That part of our product capability set continues to be in very high demand.
We continue to see strong demand across our customers for it. However, what I did mention on our earnings call was that in Q1 of this year, we would expect to see lower growth rate relative to other quarters in this year, primarily driven by tougher comps from Q1 of last year. Last year, we had a really strong Q1 on value-added services and solutions growth.
When I just look at that and I look at how the business is evolving, the year-over-year comp makes for what was reflected in my Q1 guidance, and that makes for how we feel about the rest of the year shaping up from a full-year thought standpoint. So those are the two factors, I would say, primarily are what would explain why we were giving you guidance for Q1 the way we did and then for the full year the way it is, which suggests a step up for the rest of the year.
Yeah. Okay. Right. So if underlying macro and spending kind of stays pretty stable as you guys envision, then the comps, the math sort of takes care of itself to drive that acceleration. Yeah. Okay. I'd like to spend a minute just on the competitive environment. This has obviously been an age-old topic. But are things getting more competitive just as we've already talked about some of the normalization in parts of the business, right? So growth has eased off of sort of the post-COVID highs. And what are the implications from a rebates and an incentives perspective? I mean, obviously, you guys manage the business to net revenue, but there's always a lot of focus, for better or for worse, on that contra revenue item.
Yeah. No, I think it's the right question to ask, right? So, Jason, here's what I'd say. From an overall competitive standpoint, we continue to operate in an environment which remains competitive. I don't see this as necessarily being more competitive or less competitive than what we've historically experienced. So we're in the business of making sure we're serving our customers and winning what I call the right portfolios. We will not win all deals. We don't intend to win all deals. We want to win the deals which make strategic sense for us to win and at economics which make sense for us over the long term, right? So kind of let's start there in terms of what drives the competitive environment.
You might ask the question, "So what qualifies as a strategic deal, or what qualifies as something which makes good financial sense?" The answer on that is a function of what we believe we can do with the customer in question to help drive the growth of the portfolio of the customer, right, utilizing our capabilities from a digital standpoint, our capabilities from a services standpoint. If we believe that after winning a particular portfolio, we can deliver a set of services to drive faster growth, optimize those portfolios in the appropriate manner, and generate revenues from services in order to drive net revenue yield accretion, we're going to go after those portfolios, right? That doesn't mean it will be true for every portfolio. I just want to be sure you understand what defines where we will compete and how aggressively we'll compete.
So we're not going after every single portfolio. We're going after the ones that matter. And we have demonstrated that. We have been very successful in winning portfolios. We talked about at the fourth quarter earnings call about how we won our third regulated US debit flip in the last 18 months. This was the deal we had with BOKF, which we talked about. Prior to that, we had talked about Citizens, where we were flipping the debit book, as well as Webster Bank. So, look, I feel good in the US, for sure. But I also, I mean, you've seen the results come through in terms of what we won in other parts of the globe, right, whether it's NatWest, Santander, the UniCredit deal. There's a whole list. I can go through a litany of deals. The point really is, there were important portfolios to go after.
We felt it was important. We felt we could deliver services, and we could drive real value there to our customers. We went and won those. There are implications from a rebates and incentives standpoint. By definition, you don't win deals. You incentivize your customers in order to win those portfolios. All of that shows up in our rebates and incentives line. I know people are hyper-focused, as they should be, because I am too, on what rebates and incentives looks like as a percentage of our payment network assessments. The reality is, if you're going to win deals, you're going to give rebates and incentives.
The most important thing is what you do after you win those deals, which is how you help those grow at a faster pace, how you optimize them to drive higher cross-border volumes, how you optimize them in certain markets across international markets where you drive more switching, and then, in other instances, deliver more services and drive services revenue around that. Our approach on this has been very much of a solution-selling approach in this competitive environment. By that, I mean, it is not about going in necessarily talking about saying, "Hey, here's the reason why you should do business with Mastercard and convert your portfolio over to Mastercard." Because remember, from an issuer standpoint, a dollar of volume in a competing network and a dollar of volume on Mastercard's network doesn't generate additional revenue for them.
If I'm going to give them the same dollar they're getting with the competing network, it doesn't really help them, correct? If we can do that in a manner where we flip it over and we can make that dollar to be $1.50 of volume on Mastercard's network by leveraging our services, this is where we bring our solution-selling approach, which is, "How can we help you optimize your portfolio to grow at a faster rate? How can we help you manage your fraud costs?" It's a big-line item. And while we're doing all of that, yes, we're going to be competitive in terms of what we're offering you in terms of switching costs. But that's kind of the whole spiel in terms of how we're engaging with our customers. And in fact, the deals which I cited and every deal is different.
Not every customer needs the same set of services. Let's be clear about that. But all of that factors into how we're competing in the marketplace. I actually feel pretty good about not only what we've done but what the path forward is from a competitive standpoint in terms of the set of assets we've got in order to allow us to continue to play an important role in winning portfolios on a going forward basis.
Yeah. So I wanted to drill in a little bit on services. And I guess it was about a year ago you started to give us actual segment-level reporting there, which has been very helpful. Maybe just walk us through the different subcomponents of that segment, some of the key drivers of growth for the different pieces. I mean, it's any given quarter, it's 35%-40% of your revenue now, obviously, faster than the core.
Yeah. So first thing I'll say is, it's not a segment. It's a disaggregation of our revenues. And I'm just being a little pedantic out here, but I think it's important to actually just talk about this in the context of the fact that we have broken up our revenues into payment networks and value-added services and solutions, right? Let's step back for two minutes and just explain why we do what we do from a services standpoint, right? The reason we go down the path of services, this is value-added services and solutions, is because we believe it can help us differentiate our payments proposition. This is really, really important because just trying to compete on price is not going to get the job done. It's back to the point I was just making. How do we compete, right? You got to differentiate.
And services helps us differentiate. Number two, it diversifies our revenue streams. And number three, it helps us grow our revenues because we charge for the services we've got. Number four, which is oftentimes not discussed but is important, is what we do in the nature of hiring people in our services organization is a tremendous source of talent for the broader company. So these are the basic pillars of why we're doing value-added services and solutions. Now, you're asking the question, "What comprises value-added services and solutions?" I think, broadly speaking, if I were to break it up, I would tell you that there's our cyber and intelligence capabilities. This is our cyber solutions, our fraud management capabilities, things which we have spoken about in the past, things like Decision Intelligence, SafetyNet, RiskRecon, so on and so forth, right?
The second big bucket is our data and services, which is data insights and analytics, our payments consulting practice, our marketing services, our loyalty platforms. And then we've got some amount which comes from our processing and our gateway assets, which is also included in this. And then there's the third or the last bucket, which is what we call solutions or other solutions, which is our real-time ACH, our cross-border counterparty payments, our digital identity solutions, things of that sort. So that's kind of, broadly speaking, what sits in that. It's pretty widespread. And it's by design pretty widespread. And the reason it is is because not every customer needs the same solution or the same service.
And so we've curated this portfolio based on feedback we've got from customers as to what's most important for them based on their strategic imperatives, which helps us actually build our M&A pipeline or our organic build pipeline as part of the future, right? In terms of how we're growing in services and where we see runway in this, first, I'm going to at the highest level, I'd say, we continue to see tremendous runway in value-added services and solutions, not only in the near term, but I'm going to extend this out to near, medium, and long term. There are several elements of growth for value-added services and solutions. First, a fair amount of our services are delivered and are a function of transaction growth.
So if we are believers that payments transactions will continue to grow, which we certainly at Mastercard are, that we've got tremendous runway in terms of growth of payment transactions, you've got the ability to get the natural tailwind that as transactions grow, you get to grow your services revenue. That's kind of bucket number one, which helps grow our services. Bucket number two is around causing for deeper penetration of our existing services with our existing customers. There's still a lot of room to go there, right? Number three is around tapping with our existing services into new customer types. And what do I mean by new customer types?
We are broadening our set of services to move into beyond the issuer and acquirer community, down to the merchant community, down to governments, down to several other even corporates, right, because we feel like there is the potential to go after that. So that's kind of the next leg of the stool. Then when I kind of further click into that, it's not like we're sitting on our existing services and we're saying, "We're done." We're not. We're actually building out new capabilities organically and/or acquiring stuff which will help us keep growing our services portfolio. So that's kind of bucket number four in terms of how we are going to drive growth in services.
And then, excuse me, the fifth piece, which oftentimes we don't spend a lot of time on, but we certainly, within Mastercard, spend a lot of time on, in other words, we don't talk about this externally a lot, is around how we're taking our existing services and delivering them on both non-branded Mastercard transactions as well as non-card-based payment flows. We talked about launching what we just recently did, which is Mastercard Access. Mastercard Access is basically a capability to be able to deliver our services across not only Mastercard-branded transactions but then those which we don't switch, which are Mastercard-branded, as well as non-Mastercard-branded transactions, and then alternative payment rails. So I continue to remain very positive and optimistic about the potential for services. I think there's lots of building blocks.
And I would also hazard a guess and tell you that this is what I'm telling you today, but we will learn as we interact with our customers, and we will pivot and evolve our services strategy to meet the needs of our customers. So there might be another leg to the stool which might jump in at a later point in time. But the idea is to remain nimble and continue to drive differentiation for our payment stream, which is what we're trying to do here.
Yeah. Yeah. Lots of runway, like you said. Well, let's move over to the regulatory environment. I wanted to spend a little bit of time there. It came up in one of our sessions earlier today in the conference. And I'll just start with Reg. II. Obviously, it went into effect last summer. How has it affected Mastercard, if at all, so far and any types of risk mitigation strategies you guys are employing on Reg. II?
Yeah. So a couple of thoughts on that. One, as we mentioned in the fourth quarter earnings call, right, we've seen no material impact is what we said at the fourth quarter earnings call on the impact of Reg. II. But broadly speaking, if I had to step back and think about what this means for us, we view this both as a risk and an opportunity. And on the risk side of the equation, there's always going to be the risk that there will be alternative networks, competing networks, who will seek to actually win some of this volume and transactions. Obviously, the decision-makers who are trying to decide whether to work with the Mastercard network or to work with the competing network have to take into consideration the total cost of ownership. It's not just what the cost of what they pay for switching is.
It's also the cost of what the experience from a fraud standpoint is. And so we feel pretty good about our ability to compete in that environment given all the investments we've done from a fraud standpoint. But nonetheless, that remains a risk. It's one we are not. It's not lost on us. We will continue to focus on that. And we'll make sure that we're explaining our value prop sufficiently to the merchant community to make sure that they understand what they get when they get Mastercard to switch their transactions. On the opportunity side, right, I mean, it's no secret that we're not the largest debit network in the U.S., which means that we've got the opportunity to also compete for transactions, which we today or historically have not gotten to see.
What I like about that is we've got the ability, and we made the investments, to address the same fraud risk which I just talked about. So we don't stand deficient from a value prop standpoint to be able to compete there. So look, I mean, on balance, I would tell you, early days, both a risk and an opportunity. And like we said at the first quarter not first, fourth quarter earnings call, we've not seen any material impact on that.
Okay. The Credit Card Competition Act, Senator Durbin and some others are still banging the drum on that and trying to find a legislative home for it, I guess, to some extent, figure out how to try and push it through. But I mean, I guess just the way Mastercard sees it, do you feel like there is a legitimate possibility that it finds its way into law? And then hypothetically, if it does, it seems like implementation would potentially be a mess. But what's your perspective?
Yeah. Look, I mean, I wouldn't be very smart to say that theoretically, it couldn't pass into law. Of course, it could. I mean, there's no question about it, right? It's our job to make sure we're staying on top of educating the lawmakers on the value we bring to the payments ecosystem and what the implications of CCCA is going to be on the consumer environment as well as in the small business community environment. And that's what we're actively doing. It's important for us to do that, the value we bring.
And we feel like, ultimately, if this law were to pass, it's going to cause for an impact at the consumer level and the small business owner level. And we will continue to do what we need to do to educate the lawmakers on that. So can it pass? Sure. In theory, it can. But we have to do everything possible to make sure people understand what the implications of passage of such a law are.
Right. Right. Okay. And the debit interchange caps, the regulated caps, obviously, the Fed has proposed, call it, a 25%-30% cut there. I think we're still in comment period now, so.
That's right.
Sounds like, from everything we're hearing, it's probably going to happen. Maybe the exact magnitude of the cut is still up for debate. But recognizing that, obviously, this is direct revenue for the issuers, not for Mastercard or other networks, how are you thinking about the prospect for this to take place and any possible implications for Mastercard?
So you're right. I think it's still in the comment period. I think the comment period was originally supposed to end in February. It was extended out to May. And so I think that process is still ongoing. Look, our view on this is no different than what I just shared on CCCA. At the end of the day, right, it's our job to make sure people understand the value we deliver, not only at the Mastercard level but across the entire payments ecosystem to both the consumers and to the merchant community, and what is appropriate compensation for that. And that's the journey we're on right now. Jason, I'm not going to speculate as to what the outcome is going to be because it's just hard to do that.
We have to continue to do what we're doing, which is make sure we're educating people on the implications of reducing interchange rates by law, right, and what that does to the value prop. Because at the end of the day, there is no when you start kind of taking away economics for the value which is being delivered, the natural reaction is, "Well, then I'm going to start to both sides of the ecosystem." So that's our job, make sure we keep kind of talking about what the value we're delivering is and stand ready to actually support that, which is what we're doing right now. We'll see where it goes. It's tough to say where it's going to end up.
Yeah. Yeah. And then, of course, we've got an election year, and who knows how all that factors into all this stuff too. Okay. So let's zoom out more to the structural and secular side of the equation for Mastercard. And just thinking about traditional point of sale, consumer-to-business payments, penetration rates, obviously, over time have increased. And those rates, obviously, vary quite a bit by country. But when Mastercard thinks about the three-, five-, seven-, 10-year forward outlook, how do you kind of frame that remaining runway? I mean, there's still a lot of cash out there, right? How do you frame that for investors to kind of keep people comfortable with a longer-term growth algorithm in your core business?
Yeah. So that is a very important component of our growth algorithm and will continue to be an important component of our growth algorithm for not only the near term but the near term, medium term, and long term. And let me just delve a little bit into why we feel that way, right? The good news is we have been incredibly successful in tapping into the cash opportunity over the past decade. Which is the reason why we're having this discussion is because there's more electronification of flows which is taking place. That being said, I'm going to first talk about, just from a volume standpoint, how we continue to see and the reason I'm doing that is because we think about this across multiple dimensions, across volumes, transactions, and how we see consumer behaviors changing and new business models evolving. But let's talk about volumes first.
Still remains a sizable opportunity on volumes in several markets across the globe, including the US. I know there has been the conventional wisdom has been that the US has been more electronified, and there's no question about it. It has. But there's still a decent amount of cash to go after in the US and in several markets across the globe. I have just come back from Asia. I spent some time in Japan. And I got to tell you, there is a ton of opportunity. I picked Japan only because it's top of mind for me, having just come back from there last week, a lot of opportunity in markets like Japan, in markets like Germany, in markets like Mexico, China, right? And we just got a license to operate in China.
So we continue to believe that there is significant opportunity at the volume level, which remains from a secular shift standpoint, i.e., conversion from cash and check to electronic forms of payment. The second vector, which is around transactions, provides an even greater opportunity. Based on all the work we've done, the level of penetration of volumes is higher than the level of penetration of transactions. In other words, more dollars have been converted to electronic forms of payment out of PCE than have the number of transactions. You're very familiar, as our investors, with our revenue model. We make money on both the basis points in volume and cents per transaction. So we remain very focused on driving more transactions across the network.
That more transactions across the network is that secular opportunity which is coming through by expanding our acceptance footprint, by driving contactless payments, by doing things like Tap on Phone. There's a whole host of initiatives which are underway to drive that. That's kind of vector number-2 . Vector number 3 is what I alluded to when I talked about new business models and changing consumer behaviors. The reality is, historically, we used to think about the secular opportunity as being PCE and what component of PCE sits in cash and check, correct? Well, the reality is PCE is the first dollar of spend which takes place by the consumer with a business.
But as the gig economy has come around, as transit has changed its profile, as things have happened from a delivery service standpoint, there are all these new business models which have come around, "Buy now, pay later," right, where a single dollar of PCE in a single transaction is now very often manifesting itself in multiple transactions and more volume. And that shouldn't be lost on anybody. Now, is Mastercard necessarily driving those business model changes? I would say Mastercard doesn't create the new business model. Mastercard stands at the inflection point of supporting the payments to enable commerce of those new business models, right? And so long as we continue to do what we're doing there, which is staying relevant and making sure we are building and investing in our digital capabilities, I think there's a tremendous opportunity which exists across that third vector as well.
So if I were to bring all this together in P2M payments, right, lots of opportunity on volumes, more opportunity further on transactions, and then as these new business models evolve, right, for us to be at that point to be able to deliver our payments capabilities, to have the multiplier effect of converting what is a dollar of payments with one transaction to multiple dollars of payment with multiple transactions and I can give you examples, but I think you're quite familiar with them, the likes of Uber Eats and the likes of what happens in the transit vertical, right, that creates new opportunities for us from a secular opportunity standpoint.
Yeah. Yeah. Lots of small-ticket transactions out there still done in cash and multiplier effects in some of these different use cases you mentioned. What about new payment flows? I know that's kind of your third pillar because we talked about Core, but we talked about services. What's the latest in new payment flows strategy? I guess, what are the primary opportunities there? How have your views evolved?
I think about new payment flows. I'm going to actually narrow the focus on new payment flows across two big areas. One is around what we call commercial payments, and the other is what we call disbursements and remittances. That's not to say there are no other new payment flow opportunities which are there, but let's just talk about these because these are more tangible. These happen to be running over card rails. In some instances, disbursements and remittances run beyond card rails. But let's just talk about these. First, let's take commercial. Commercial is everything which goes from a small business proposition to, that's our SME cards to our T&E proposition, fleet cards, purchasing cards, and virtual cards. That is serving that B2B universe which we call commercial. We are seeing really good demand for our products there. We are seeing good growth.
For example, in 2023, our Mastercard-branded commercial credit and debit volumes this is excluding prepaid represented approximately 13% of our total GPV as a company and grew at about 13%. And so the reality is we continue to see good potential to continue to leverage our existing card rails with economics which our investors are very familiar with because I know there have been questions in the past as to, "What do the economics look like on commercial flows?" Well, these are card-based economics, right, to keep banging away at doing more on the SME side and serving their needs, doing more on T&E, and then virtual cards where we're seeing really good growth. So we have lots of potential. We'll continue to do that.
On disbursements and remittances, right, we talked about how, in 2023, that we saw our transaction growth in disbursements and remittances of over 30% take place in 2023. Again, so good growth taking place there. We're tapping into new use cases. We're tapping into new geographies. And there's still a lot of room to grow. So I feel good about the progress we're making. However, I still believe that all we've done is scratch the surface, I mean, there's such a sizable opportunity to go after here, right. I'd say the job isn't done, and the job's not going to be done for some time. No matter how fast we grow, we continue to feel like there's tremendous growth potential. We've just got more to do here, and we will keep doing more around this space.
Excellent. Maybe you can just wrap for us real quick with one more thought on, just broadly, what are the biggest risks and the opportunities for Mastercard if you're taking a long-term view?
Sure, Jason. So let's start with the risks. On the risk side, I think you touched upon this earlier, the point around regulation and increasing regulation. Well, look, I mean, Mastercard, as a company, has had to be in the midst of the regulatory environment for the longest time. We know how to deal with it. We've dealt with it. And I don't see that changing. But it does present itself as a risk, right, because there's a lot of effort, time, and energy which goes into explaining to regulators the value we bring, right, and why we should be running the models we run, right? And we talked about the U.S., but the reality is it goes beyond the U.S. In other markets across the globe, you've got the same regulatory pressure. So that's one we're certainly very much in tune with. We're staying very engaged on.
The other area, from a risk standpoint, I would tell you is actually, this is both a risk and an opportunity, is as technology evolves, right, it presents risks. And the reason it does is it presents risks in the nature of potential threat for disintermediation. But that's where the opportunity lies because if we are at the table having the discussion with the people who are trying to create new business models with new and emerging technologies, we have proven time and again that the value we bring as a network only helps them grow their business and helps them grow it faster. So yes, it's a risk, but it's a risk only to the extent we choose to ignore it and turn our back to it. Otherwise, it's a huge opportunity as far as I'm concerned.
The last thing I'd say is, from an opportunity standpoint, I continue to believe that the flywheel of what we have created between payments and services is something which I remain very excited about. I say that only because our bread and butter continues to be driving more payments across our network. We will continue to do that. We want to enable commerce. In order to do that, we have built a set of services which enables us to win more payments. But as we win more payments, we get the benefit of data which further strengthens our services. And so there is this cycle which we have created which allows us to differentiate with our services to win more payments which helps us get more data, which helps us deliver more services in a more efficient manner. I remain very excited about that opportunity.
I'm keeping it intentionally at a higher level and not getting into whether it's P2M or B2B or any of those specific flows because I do believe that the way the model works is a very combined model which is across payments and services. I feel like, so long as we continue to execute as we have been, I remain excited about that for the future.
Well said. Well, Sachin, it's always a pleasure. Really appreciate your time. Thanks to everyone who tuned in for the session. Our final session of the day will begin in five minutes with privately held Nium. So thanks again, Sachin.
Thank you, Jason. Thanks, everyone, for listening in. Appreciate it.
You're welcome.
Nice to catch up. Bye-bye.