Mastercard Incorporated (MA)

Investor Update

← View all transcripts

Sep 7, 2017

Ladies and gentlemen, please welcome Mastercard's Head of Investor Relations, Warren Neeshaw. Good morning. On behalf of the entire Mastercard team, I'd like to All right. Can you hear me now? Yes. All right. Very good. Anyways, welcome. And so we'll just get started here. We've got a great program for you. Let me just advance the slide. As you can see, we're going to start with presentations from a number of our executives. That will take us through most of the morning. We'll wrap up with a question and answer session and then we'll take a break, grab a quick box lunch and then we have a number of breakout sessions for you to choose from. We're actually going to do 2 rounds this year. So we'd be able to go to 1 breakout session and then go to another breakout session after that. In parallel to that, we are running our product showcase. We have over a dozen product demonstrations for you to see. And I encourage you to go to that, see some of our product experts and see the innovation that we have there. The slides that we are using today are in your handouts. So if you want to take some notes, they're there. And for those of you on the webcast, we have them posted on our website at mastercard.com. In addition to the presenters, we have a number of other Mastercard executives with us here today, and their pictures are in your handouts on Page 6. So hopefully, you have a chance to meet them and get their additional perspectives on the business. They'll be available in breaks, at the breakout sessions and in the product showcase. In terms of logistics, again, we'll be in this room this morning. We'll take a break shortly after 10 and then shortly after noon for lunch. I'll be back up at that time just to give you a little bit more details on the plan for the afternoon. I would like to thank all the people who helped make today's event possible, the Investor Relations team, Gina, Tina, Jazel and Sebastian in particular, but there's a huge group that I just can't say all their names. So thank you very much for that. And then without further ado, we may make forward looking statements regarding our expectations and other future events that could differ materially from our actual results. I'd like to refer you to our SEC filings for a description of our business and associated risks and other factors that could cause actual results to differ materially from these statements. In addition, if we use any non GAAP financial measures, you can find the required reconciliations to GAAP on our website and in your handouts. So with that, let's get right to it. Please join me in welcoming Mastercard's President and Chief Executive Officer, Ajay Banga. Ajay? They say wiring matters, microphone wiring matters more than anything else, right? Good morning, everybody, and thank you for being here. I'm going to spend just about 15 minutes hopefully walking you through my view of how I feel about where we are and where our future looks like being planned for. You will see connections between what I'm saying and what you're going to hear over the course of the day from my colleagues as well as from what you see in the product showcase. That's obviously trying to paint the picture for you from our eyes. So first of all, this slide is actually looking back. So it's interesting, but I'm going to move forward very quickly because you know this and this is why you've been investors with us for many years and it's really our cumulative average growth rate of revenue as well as EPS that speaks for itself. We have done that while investing both organically and inorganically in the company, whether it be the acquisitions that have enabled us to build out our capacity and our capabilities in terms of technology, geography, product, some form of specialty that we did not possess earlier or whether it be the organic investments in digital, in expanding offices, in growing geographies, in salespeople, in the training of those salespeople, in how they interact with customers. Those investments have happened while this EPS growth and this revenue growth has given us the ability to make that happen. The TSR chart is an obvious one. The one interesting factor is that we learned from Fortune 500 that in the Fortune 500 actually that we were number 4 in the last 10 years of TSR, which is great. But again, I guess that's why my photograph has appeared miraculously this morning on that wall up above. I'm convinced it will be gone tomorrow when the next company comes to do a session with their Investor Relations. So when I was younger and at Citibank, you kind of did these openings of branches. So they were foundation stones. I'm convinced that the same branch was opened by at least 7 people with 7 different foundation stones. Same thing will happen here. But more importantly, all this aside, you've already read that deck, I guess, and you've all gone to the last page to see that Martina is going to improve the forecast of what we're going to do between now and 2018. So I know you are all very happy with that idea. The point I'm trying to make here is, yes, this is past looking, but it informs us because we are determined to keep doing good stuff for the company in the coming years. That's what this chart is about. So those of you who have had the opportunity to be here for a number of years, you've seen us put up this grow, diversify, build chart. And truly this is what we're focused on. We're focused on growing our core business. That's the credit, debit, prepaid and commercial businesses. It's not a card, the card is just a form factor, whether that's delivered through a selfie or a fingerprint or a phone or tomorrow through a connected car or as you will see upstairs in the product demonstration, a connected mirror, to me, these are all just methodologies of delivering that same idea of consumers paying in advance, that's prepaid, paying now, that's debit, paying later, that's credit. There is no other way to pay. And so staying focused on prepaid, debit and credit is the essence of what we do. That combined with the opportunity in commercial and the B2B space, which you will hear more about as my colleagues get up to speak, is kind of what we're trying to do with our core business. Doing it in a way that our product teams and our sales team think seamlessly about digital and physical is part of what our team does. So as a simple example, we're not trying to write APIs for products. We're trying to design products where the APIs are written as a part of the product design. So it's a whole way of thinking about how we deliver our products seamlessly, physically and digitally. And that extends to how we work in the company from everything from the way our personal expenses are cleared, where the idea is to not go through paper, which you take expense receipts and you clip them with staples and you send them to somebody and they have to clear them, but you should be able to do all that digitally. That's what we're doing. So it's you're going to make your employees feel the power of digital, so they can sell the power of the physical digital conversions that we are building in our products and services. That's how important this is to us. It's in what we are doing. So that's the core. That's what we are building. There's a lot of opportunity there still. Cash conversion is still an enormous opportunity. I'm going to talk about it just now. But you will hear today from Ari about India, he's sitting right here and Linghai about China as just 2 markets where the opportunity for cash conversion is still substantial and we think we have line of sight to be able to implement our learnings from many markets and adapt them and have new innovations for those markets that enable us to convert cash in those markets. You're going to hear that from the 2 of them. You're going to hear about things like QR codes and you'll see QR codes in the product showcase. Why is the QR code so important? It's really important because it expands acceptance at a much differentiated cost into a completely new set of merchants who traditionally have not participated in electronic payments for various reasons, one of which was the cost of acceptance. And this changes that dynamic in a completely different way. Another one was the infrastructure. If you're living in a country where phone lines don't work very well, terminals aren't your answer to the future of mankind, then came mobile POS. Well, there are problems with that too. But QR codes allow you to go past that in a very simple way and you will see demos upstairs of that. More importantly, what it really shows is a comprehension in our company of how to construct our products and services at the front end in a way that suits the government and the society of the country we're operating in. We're not trying to give them American solutions for every country. We're trying to find solutions that make sense for the circumstances or what's important to that government, to that society, to those banks, to those merchants and to those consumers. So QR codes were developed out in Middle East, Africa and launched in certain markets there, entered into India. We actually facilitated the standardization of QR codes so that India could roll it out in part of the Prime Minister's method of getting cash out of the system. What that does for us is the Indian government starts to view us as a winning partner in what we are trying to do together. As you know, governments around the world have their own view of payments, how much of it should be run globally and openly and transparently and how much of it should be run-in a form that enables local governments to have some control, some methodology of participating and influencing the way the payment system works. Some years back, we made sure that our country managers whose bosses are here, the regional folks, the people who work for them are completely in charge of managing that local relationship all the time. Therefore, their sensitivity and their listening power has added many times to our capacity and our capability to comprehend what will make a difference for that country. If you listen well, you can find solutions. If a country is telling you, we want you to put everything on soil. What are they really solving for? What they're solving for is then the undersea cable from their country gets cut due to an earthquake or something else. Will their payment system comes down? That's solvable in many ways that does not have to be only on SOAR. And therefore having that sensitivity built into us is a large part of our DNA. And to me, working with governments to provide them with the ability to do a QR code, to do financial inclusion payments in South Africa and Nigeria and Egypt, and to also enable them to understand the importance of our global technology for their local effort that is all inside this grow, diversify, build. It's the core and the foundation of how our brand and our people and our technology and our data interact in countries around the world. The last part on this slide I want to talk about for a minute and then I'm going to get off the slide because it's longer than I thought I would spend on it. I care deeply about this issue of being locally relevant for a global company is that fast AC edge. I was talking to some of you outside. You will see just now in the slide coming up of the importance of how fast ACH plays into our strategy. So let me come to that in a second. This slide, you can see yourself, it's in your deck. It just tells you that we are conscious of all the movement. You've heard me talk a little bit about the bottom one, regulatory interest and nationalism. You will hear a great deal about security and cybersecurity from Ajay Bhalla. You know that as a company, we have adopted a very serious thought leadership profile on that topic. It really matters. I believe that as the Internet of Things progresses, this will become an even more important issue. Companies that are seen to be on the right side of helping consumers get access to convenience in a form that is safe will be companies that will win the next battle in this space. And so we are determined to do this the right way. That's kind of what that's about. And services, I'm going to talk about just now. So first of all, why is fast ACH important is laid out in the big picture of how our total market size and scope is looked at. We've always talked about the first part, the PCE, personal consumption expenditure, and you've heard Martina and me go on and on about how 85% of the transactions in that space are still not done through cards. That number is still 80% plus. That's it's lower than it was, but it's still 80% plus because the emerging markets tend to grow faster in PCE. And as they grow faster, their higher ratio of contribution to cash transactions biases the weighted average towards a higher number. That's a good thing. It gives us a runway for growth. Now in terms of actual GDV or volume, it's about half roughly that's in cards and about half that's not. But look at the other two opportunities. Look at P2P and B2C, the things we're doing in Mastercard Send with an Uber or a Lyft, which enables them to pay their drivers, that's a B2C example. Another one is with Allstate Insurance, where they're paying out people for their claims. That's another example of using technology to connect differently from traditional card rail connections to enable B2C payments to happen. To meet that opportunity in the P2P, B2C space that cannot be tackled without thinking outside of cardrails. You can use card rails, but you also need the ability to use what's in the yellow bar there ACH and more and more quick fast ACH, which is where the regulators are also going in a direction. So that's kind of what we're looking at. Same thing with B2B. Yes, we've done things with commercial cards, with P cards and T and E cards and fleet cards and launched cards and virtual cards and carda carda card. But the thing is all that goes to that little orange line at the bottom. To get to the rest of B2B, which is a really good opportunity, you need different products and methods, which provide better data and better messaging formats for vendors and buyers to be able to pay each other's bills seamlessly. Again, you will see this upstairs in the demonstration hub. You will see a B2B hub that we are building. Take a look at it. But the real fact is when you add fast ACH payments into that mix and you provide these companies the opportunity to pay by card, to pay by fast ACH or to pay by check and to optimize that payment, that's when you win the game. That's what the B2B Hubs all about. And you will hear about all of these over the course of the rest of today. Services, so I want to make sure you understand the importance of services and the context in which we are dealing with them. We've talked about this last year and at individual meetings between the year. I'm not doing services for the sake of being in services. We're doing services that 1, build off the core transaction. So we see the data that comes off the core transaction. Remember, credit, debit, prepaid and commercial transactions. And with ACH, we see many more of those transactions. You use that information, those insights, that capability and that connectivity to the core transaction to provide services that can build off that and at the same time create differentiation and at the same time hopefully create the stickiness in a number of the cases where we can hold on to clients the right way with this repertoire that we offer as compared to just credit, debit, prepaid or commercial. And that's what this is about. We do it organically and inorganically. Actually the packaging and bundling of these is pretty interesting. When you do a data analytics bundle out of advisors with something that uses applied predictive technologies for testing and learning in addition to information analytics, in addition to safety and security, you really get the client's attention because they're all dealing with very complex problems. They're not dealing with, I want to give a credit card. They're dealing with safety and security. They're dealing with cost. They're dealing with attrition. They're dealing with the cost of acquiring new consumers. They're dealing with a digital revolution. We can help with the repertoire of services that goes beyond just the core payment. That's the idea of what we're trying to do here. And so I've got 45 seconds left. So I'm going to tell you what this slide is about. I think we have that significant untapped opportunity, which was a slide you saw with the 3 bar charts, not just in PCE, but also in B2B payments and also in P2P and B2C payments. We are building the tools and repertoire to be able to go after the bigger opportunity that extends beyond PCE. That's what we've been doing. That's part of the strategy that we've been executing on the grow the core while diversifying your customer base and building new businesses and new services. Making sure that we understand the local market and understand the trends in that market, be it the use of blockchain, be it the use of QR codes and technology, you will see some of that and you will hear some of that when Gary comes up and see it upstairs and when Michael comes up and they talk about the products. You will hear it from the regions in their conversations as to how that's being implemented on the ground. I continue to believe that it's the willingness to execute day to day while putting aside the effort, energy and money to make sure that we are focused on the longer term that makes our company interesting and unique. And it's a lot of fun to work in aside from that. So thank you all for your faith and your investment over the past many years. I'm going to get off here and pass this on to Mr. Michael Miebach, who will take you through the product strategy. Thank you, Ajay. Good morning, everybody. So our corporate strategy, But the starting But the starting point always is a deep understanding of who we are serving and we take a distinctly different approach here with partners on one side and the consumers on the other side. So when it comes to partners, we take a partner first approach. Partners, it's financial institutions, it's government, it's digital partners, it's merchants. And the partner first approach very simply means, we're creating products and solutions that enable their business to enable them to serve their customers and compete in their market. We do have this product that are really designed to do 2 things mainly. 1st is drive choice and the other is drive convenience when it comes to payments. With regards to the consumers, we go a very long way to truly understand the consumer needs and to solve for the pain points that consumers have. So based on that understanding of what our partners need, what our consumers need, we then design products that reflect those requirements. A differentiated set of products, Ajay called out 2 of them, the B2B Hub and Mastercard Send. Over the course of the morning, you'll hear more about our products and you'll see some of them in the showcase later on. But I think we can safely say that they are uniquely differentiated product that only Mastercard provides. Those products are then enhanced in terms of their functionality and their value by our diverse range of services. Ones that matter truly for our core products are safety and security solutions, make our products perform better, our loyalty assets and our data analytics capabilities. You take differentiated products, you take our services, you combine that with our world class brands, you get a pretty powerful combination. World class brands, Mastercard brand, the interlocking circles is amongst the top brands in the world, very well regarded, very well known. And I think that strong brand performance that we have is a reflection of our commitment to our partners and to our consumers. So what we build clearly matters, but how we deliver against that matters just as much. So on the how question, the first thing I want to call out is, Ajay touched on that before, it's the importance of our digital capabilities. So delivering what we offer in a seamless digitized technology fashion is absolutely top of mind for us. It manifests itself from a partner perspective through APIs. So every service and every asset that we have is exposed through a best in class API through a Mastercard developer zone. Take that same logic to the consumer, seamless digitized technology, what does it mean there? It simply means the best digital experience everywhere with Mastercard, for example, through Masterpass. Now stating the obvious here, our core products aren't just in the physical space. The combination of our core products, credit, debit, prepaid with our digital assets is absolutely critical. More of that with Gary Lines in a moment. Grow, diversify, build, absolutely critical to keep a focus on growing the ecosystem. So our focus on acceptance solution, making it easier for merchants to really drive the ecosystem, a big focus of our product strategy. And finally, the shift from a card rail based company into a multi rail network now enables us to provide an even broader set of products and solutions and be a much more relevant partner to our customers. It's in a nutshell our product strategy. Now advancing to next slide. So the $225,000,000,000,000 the 4 times larger opportunity that Ajay talked about just now, take a look at the assets that we have accumulated across all these flows. And you will see that we are enabled through all these assets to capture every one of these flows out there. Now the reverse of this statement is also true. If you do not have all of these assets, you will not be positioned to capture all of these flows and capture that opportunity. As far as I know, we're the only network that has that range of assets. And I think that gives us more reach than anybody else and makes us a more relevant partner than anybody else. So let's take a look at our core business, creditdebitprepaidcommercial. I want to start off by saying we have grown share in 2016 and give you some perspective on that. We see strong performance in debit, strong performance in prepaid and in commercial. On credit, I would describe it as we're holding our own with strong performance internationally and very positive momentum in the United States where we're starting to put points on the board. We'll take a bit of a deep dive into credit in a moment and commercial. Let's take this time right now and take a look at how well we're doing in debit. Debit is a fantastic story. We're outpacing the market by 1.5 times on average over the last 3 years. And the way we're doing that, at least from a product perspective is to create products that truly drive retail bank performance. So deep understanding what our partners require, improving the user experience, instant digital card issuance for example, spend alerts that drive peace of mind for the end user. That is the direction that we're taking and it works very well for us. I'll give you an example here. Our partnership with Intesa Sanpaolo, one of the largest banks in Italy, a very innovative market and a particularly innovative bank, Here's picture the Italian market. Debit business there is dominated by a local scheme called Banco Mart and debit is nothing else than a cash access tool, an ATM card. So Intesa partners with us and we're putting together a very feature rich debit Mastercard. The next card, we bring it to market. It comes along with our priceless assets to drive engagement of the debit customer for the retail bank. It has Mastercard identity protection, drive peace of mind. All in, you get a very engaged retail bank customer of Intesa Sanpaolo, drives cross sell for the retail bank Intesa Sanpaolo is happy and the consumers are happy and they are so happy they're paying for this product while the utility product is free, which helps if you're in a low interchange market. So great example, I think of our debit strategy. Now let's take a look at prepaid. If debit was a great story, prepaid is an even better story. We're the undisputed global leader when it comes to prepaid. We've been innovating in products around prepaid for many years. We've just recently launched a very new prepaid travel product, Mastercard Platinum. And here we take our multi currency functionality and we partner that with some of the features of our affluent credit cards, which creates a very successful product that we're now rolling out around the world. Now prepaid matters for a number of other reasons. Ajay talked about financial inclusion. So prepaid is the cornerstone of our financial inclusion activity, but it's also the cornerstone of our millennial products. That's the perfect entry product. Later on at the showcase you will see Bloom, a really interesting product that is a combination of a digital prepaid account, a money management app and a physical card, physical companion card. And at the tip of your fingers, you can manage all your money matters, sending money, receiving money, budgeting. It is now piloting here in the United States. Again, I think we're positioning prepaid for further growth, but we are the global leader in prepaid. Now I think it's a good time to take a look at credit. So I said before that we see strong performance internationally. What does that specifically mean? We're number 1 in Europe. We're number 1 in Brazil. We're number 1 in Mexico. We're seeing strong growth in Middle East and Africa, strong new account growth in Asia. And as I said before, really strong momentum in the United States, more about that from Craig later on. I want to unpack credit a little bit. There's a segment in credit that matters more than others, and one that we're particularly well positioned in, which is affluent. Affluent grows from a market perspective 1.5 times faster than the rest of the credit market. And for us, it drives 70% more net revenue in average than our overall credit book. So here we have leading share in the U. K. And we're having nice traction in some of the other regions. I'll spare you all those details. You can read it on the slide. Why are we so successful in affluent? It is because I come back to our deep to the point of a deep understanding of the changing consumer needs. You see all those trends here. That is what the affluent consumer is looking for. And we started to build product assets that cater to those needs. And one I want to call out, the desire for hyper personalization. Everybody wants a solution that caters specifically to them. So hyper personalization is really hard to deliver for our banking partners and our co brand partners. How do we do it? Through technology like personal card linked offers or Mastercard benefit optimized. Picture this on your phone, the slide of a digital button, you switch on a benefit. I'm doing a trip this month, I want to switch on my lounge benefit. Next month, I'm not traveling, I want to switch on purchase protection. That is how simple and easy it is and those assets we have developed and I think they position us well for further growth in credit. Recognizing different types of customers is important. In all of our product lines, especially here we've seen some really good success in partnering on co creation of products with our large customers. You saw an example here of American Airlines earlier in the video. That was a great example of co creation and we have more that we can share about share later in the U. S. Section. For smaller banks, they're looking to us for turnkey solutions and here it's really end to end standardization so we can leverage some of our managed services assets. So in credit, I think we're well positioned for growth and I think that is going to be a good story, continue to be a good story for us. Now commercial, we haven't touched on commercial yet. Last year I stood up here to talk to you about commercial and it was with a focus on our cargo products, as we mentioned it before, fleet cards, purchasing cards, all that and we're having great success. We're outpacing the market by a factor of 1.3 in average over the last 3 years. But if you look at it through a different lens, it is really the smaller portion of the $120,000,000,000,000 B2B opportunity that we have been successfully penetrating with those products. Much bigger opportunity is the $100,000,000,000,000 opportunity in the accounts payable space. We've made some successful entry here with our virtual card product. Virtual card is really a single use credit card that drives efficiency and effectiveness and control in invoice reconciliation as it's largely used by large companies. So good success for us. We're taking that into new verticals and I'm very happy to say that we are the leaders in the virtual card markets. We're the only network that has that functionality. Now, then then you look at $100,000,000,000,000 and you ask yourself well, if that is what the large corps are using, what about the small and medium sized companies? Now the B2B hub that Ajay talked about earlier, that's exactly how we're getting at the needs of the small and medium sized companies. What are they looking for? They also want control and they want efficiency and so forth. But they also want to get rid of the complexity of managing an accounts payable file. So B2B Hub is nothing else than a fully outsourced accounts payable solution that optimizes payments across all payment types. So for us that is the cornerstone of our B2B accounts payable strategy. Needless to say, it doesn't stop there. As companies go more international, we will be able to leverage Mastercard Mastercard Send and our fast ACH capabilities. I'll talk about that in a moment. So we talked about our core business. Think about the $225,000,000,000,000 What that actually means is, by us being able to reach all these flows, the total opportunity out there, we will be the one network that can connect more senders with more receivers than anybody else out there. So let's now look at those products enable us to really complete that circle and that would be Fast ACH and Mastercard Send. Now actually you will hear all the detail about Mastercard Send from Gary Lines after me. But I want to take one question head on that you asked us. It was actually just asked before we came into this room. And that is you have Mastercard Send, why did you go into fast ACH? Do you actually need that? Why was that not sufficient what you had before? I want to explain that to you. The first thing is on Mastercard Send, you have a P2P solution that allows to reach pretty much all debit cards in the United States, Mastercard branded and non Mastercard branded. And through our joint venture with HomeSend, we can reach 100 markets in terms of cross border payments. And the end destination points, thinking about connecting senders and receivers, cash out locations, mobile wallets, bank accounts, everything. So Mastercard Send alone is a truly differentiated product to start with in terms of its reach. But then you think back about all these B2B flows and the P2B flows that we laid out earlier, Mastercard 10 will not serve all of them. I give you a statistic to prove that point. The World Bank has said that there's 1,000,000,000 bank account holders out there that do not have a card associated with that bank account. That's just in the consumer space. You can expect that there are many businesses that have a business account, but they don't have a card associated with that. How will you reach them? Well, this is why we said we need to extend into bank account based payments, go beyond card based payments into bank account based payments. So that's the answer to your question. I will now spend some time to take a look at fast ACH. We spoke about reach already, so I don't need to cover that. It's a particularly important reason to go into fast ACH. There's a few other things that fast ACH does that I think we all need to understand. 1st of all, enhanced data. You have a data standard in fastACH called ISO 20,022. It's a broad and rich standard and I will spare you details. But the important thing is regulators, national payment schemes are pushing for that standard. If your network is not enabled for ISO 20,022, you have a problem to respond to those requests. On the messaging side, you think that Fast ACH is just a push payment, well it's a little bit more. There's some functionality in there in terms of messaging that makes it particularly useful for B2B and for bill pay. It's a request for pay. So if I'm the payer, you send me a request for pay messages, all the payment details, I look at it and say that's exactly what I want to pay and then you press the payment. Very, very helpful for B2B and bill pay solutions. So we talked about reach, we talked about data, we talked about messaging. The last one I want to talk about is of course speed. After all, it's fast ACH. Now here the difference to cards isn't actually all that dramatic. Cards brought immediacy for many years, so does fast ACH. The alternative is really now with fast ACH technology versus basic ACH, suddenly the utility of fast ACH is a real alternative out there. And that's why a lot of governments and national payment systems are using or pushing for fast ACH. If you combine the reach and the functionality, now we have everything in the toolset that we need. Now VocaLink was our route into fast ACH. We considered building, but then we felt that acquiring a market leader is the best way to go. It's a great team, good technology with proven multi market deployments. The U. K, of course, the home market, Singapore, Thailand, the United States. So we feel we're on a very good track here with VocaLink. Question earlier in the audience was how is the integration going? It's going very well. We have David Yates here, the Chairman of VocaLink and you can ask him all those questions later on in the breakout session. So we have this capability now. How do we take it to market? We take it to market across all levels of the ACH market and it's our desire to play across the three levels of the ACH market, the infrastructure level, the scheme and application level and the services level. Looks awfully similar than what we have in the card world if you think about it. So on the infrastructure side, this is really the technology layer. This is where clearing and authorization takes place. And this is where VocaLink is exceptionally well positioned. This is where all these RFPs are coming out from various countries to modernize their national payment system. We have the answer for that. Now we want to be very thoughtful on where we want to be an infrastructure provider. We want to do this in strategically relevant markets, but not in all markets because in many ways it's a country by country business model. A little bit more on the business models from Martina later on. Scheme and applications. So we are a scheme for many, many years, and we have a lot of experience in that and so does VocaLink by dealing with the U. K. Scheme companies. The organizing body. So how do you organize the access to the infrastructure, the operating rules and how do you define the most appropriate business models to scale up the investment that everybody in the market has made. And we believe playing an infrastructure in critically important market positions us to be a voice at the table of the schemes and be partnering with the schemes. And what else do you need to make such infrastructure work? Well, you need products that allow, participants and banks, for example, to monetize the investment in the underlying infrastructure. In the world of cards, we talked about it's credit, debit, prepaid. In the world of ACH, it's applications that drive bill pay, that drive B2B, drive P2P and retail payments. We believe the focus is going to be around the world in B2B and bill payments. But there will be markets where retail payments matter. Case in point, the U. K, which is the home market of VocaLink. Here, our retail bank fast ACH based solution called Pay by Bank App. I think we need to do a bit of maybe a few changes in the marketing of the name here. But Pay by Bank App is live in the UK and you can actually look at it later in the product showcase. It's a pretty slick user experience. It matters to us in the U. K. Because our debit share is a bit challenged. So it's a great alternative for us and it's a great alternative for the banks to have another option for everyday spend. In the U. S, we'll have to see where things go and the TCH switches on the infrastructure later in the year, But at least we're the one network that is equipped to partner with our banks when it comes to retail payments or bill pay or B2B. We have the capability and we can have the dialogue on how to build the right kind of solutions and compete in the fast ACH market. Finally, services. On the services side, we have built a services business in card. I told you about the differentiating aspect that it has for our core product and we expect the very same in the fast ACH space. There's a set of services that VocaLink has already developed. One of them is an AML product, anti money laundering, which usually happens through banks' accounts. You can see it in the demo showcase later on. We are extending that around the world as we speak. But there will be services in the safety and security space that Ajay Bhalla will talk about where you can it doesn't take a lot of imagination to see they make their way into the world of ACH. So a thoughtful go to market, the way you should picture this in the end is that in all critical markets we operate on all three levels. And it will take some time to build that out needless to say. So let's change the focus. We talked about core product. We talked about fast ACH. Now I want to talk about acceptance. Now acceptance is critically important as we grow the ecosystem. Displacing cash is remains an absolute priority for us. And from a product perspective, we really need to provide the solutions that make it easier for merchants to accept electronic payments. QR code, we heard from Ajay, QR code, we heard from Ajay, one very successful example. I'll give you another one. If we take every smartphone in this room, every Android smartphone in this room and you were able to you are now accessing your App Store and you download an application that is basically turning your phone into a POS device. No dongle, no nothing, all software driven. We've developed that in partnership with banks and merchants and that is something that we believe has a significant future because what it does is it lowers the acquisition cost for acquirers. It makes it very easy to grow the the acquisition cost for acquirers. It makes it very easy to grow the footprint of merchants that accept electronic payments. Now, so more merchants will drive more acceptance. It's the first lens that we have when we look at acceptance. Merchants beyond acceptance. Now, the more motivation we give a merchant to accept electronic payments beyond just a simple acceptance of it, what else does it do for me if I'm the merchant? The better it is. And to give you an example here, it's our installment product. So Mastercard installments provided to the POS, you go and swipe your card and basically the terminal prompts you for a loan right there and you just accept it, here's the rate, done. Wonderful product, piloted in Europe and currently rolled out region. Again, another unique solution provided by Mastercard. And finally, coming back to Fast ACH, in the world of push payments, acceptance pretty much changes, when you think about acceptance pretty much changes. When you think about push payments, if I send a payment from me to you, well, what acceptance has to be created there? It's already there just simply through the connection. Well, it isn't quite as easy as that. In such a world, there will be a whole new net set of needs emerging. For example, how do I find you? In a world of all these connected senders and receivers, how to identify you. So directory servers, for example, are going to play a very critical role in driving the growth of the ecosystem. VocaLink has that capability and is having some great success with its PromptPay service recently deployed in Thailand. So let me wrap it all up. I have 1 minute to go. Differentiated value propositions, the hub, send, directory services, installment, you heard about a range of them. I believe we can we are well positioned to drive further growth in our core business with these solutions. With our extension now beyond card based solutions into bank account based solutions and a wide range of solutions in that space, I think Mastercard is really positioned, to be that one stop shop critical payment partner that no other network can be with those type of solutions. And finally, recognizing our focus and recognizing the importance of acceptance and the additional fuel that it brings to our growth by growing the overall ecosystem, I think puts us in a great position for continuing share gains and continuing growth. And with that, I'm going to hand over to Gary Lyons. So thanks very much, Michael, and good morning, everyone. As Ajay wrapped up, he said there's significantly untapped opportunity ahead of us. And to my mind, nowhere is that more relevant than the digital channels, where we are seeing tremendous growth and tremendous demand. Now by way of a level set for those people that were here last year, at a macro level, the technology, the landscape and the consumer trends that we talked about, they've remained largely consistent since we last spoke to you. Now as all of you in the room and those on the webcast know extremely well, everyone and everything is becoming more connected and consumers are continually looking at new technologies. They're exploring new ways of doing things. They're using multiple devices and they're moving between these devices seamlessly throughout the day. And this behavior is increasingly extending into the ways that they determine how they're going to shop, how they're going to pay and beyond. And this is already driving huge benefit to our business. It's driving growth across all digital channels. And so at a high level, we believe that digital commerce is going to reach approximately 17% of all global retail sales by 2021. Now within our broader strategy, which Ajay outlined earlier and Michael added a lot of color to, our approach to digital remains consistent with what we told you last year. And we've made significant progress across all five pillars. We are a B2B2C company, and we take a partner centric approach to everything that we do. We remain focused on helping our customers to win in digital, not compete with them. And we do this in simple terms. Firstly, by delivering a fantastic experience across all channels and all devices. We allow our customers to deliver a fantastic best in class experience in developed markets via MasterPath, and we do a similar experience in emerging markets with both MasterPath and MasterPath QR. Secondly, safety and security is absolutely critical. You'll hear more of that from Ajay Bala. We focus on securing every transaction with tokenization, biometrics and machine learning, which is baked into the heart of our network. Basically, our approach is we want you to deliver EMV level security and EMV level benefits through every device in every channel. And this has been augmented some of the additions since last year with the acquisition of both new data and Brighterium, which Azure will talk about. Thirdly, and this is something that Michael really covered in a lot of detail. We want to address new payment flows. We have a goal here, it's a massive opportunity. We have a goal, we want to be able to move money from any funding source, cash, card, bank account, mobile money account to any destination globally, securely and in real time. And we're making massive progress in this space. And this allows us to address new flows, B2B, B2C, P2P, P2M, G2C and so on and so forth, both domestically and across borders. Fourthly, we want to make it easy for our customers and partners to leverage the many digital assets that we have and to easily integrate them into their digital solutions. We have a best in class developer portal, which you can see at developers. Mastercard.com. And it's the front door to access all of our services and as well as the tools to cost effectively take new solutions to market. And finally, within Mastercard Labs, we want to continue to bring our customers access to thought leadership, new innovation methodologies, new solutions, new technologies and the best and most relevant early stage FinTech players. So let's dig a little bit deeper into some of the pillars. So when we talk about delivering a fantastic digital experience, we mean enabling the consumer to pay how they want to pay, where they want to pay, whether it's online, in app or in store. We want to make the experience as secure and as frictionless as possible. The Masterpass remains a strategic priority for us as it allows consumers to make fast, simple, secure transactions on every device and every channel, whether in store, online or in app as I say. Today, we have MasterPass live in 38 markets. And over the last year, we've rolled out some new features. We've enhanced the browser and in app checkout experience globally, and we've also made significant platform improvements to make it simpler and faster for consumers to check out and for merchants to accept Masterpass. The new merchant onboarding experience is designed to allow merchants to take less than 5 minutes to implement Masterpass. And as I touched on this area, we believe that what you offer is very, very important, but also how you offer it is extremely important. We want to make it as simple as possible for our partners to take advantage of our technology. We think about it as reducing the time to revenue. Internally, we sort of call this process 5 Minute Masterpass. Merchants should be able to be live with Masterpass in a matter of minutes. We also believe that we can go further and we can make it easier for MasterPath enabled merchants to accept all cards and all brands without some of the confusion that exists in the market today as to what wallets they should support and how many buttons they need to present to their consumers. Now we've made significant progress as I've said. We're live with 140 issuers around the world. We've signed some new issuers in the U. S. Like U. S. Bank and Scotiabank, Davide Enda and Santander in Latin America, La Caixa and Ibanca in Europe, Indesat Pay Pro and CIMB in Asia Pacific. We signed National Commerce Bank, National Commercial Bank and Credit Max in Middle East and Africa. But that's only one side. It's obviously a 2 sided market. Acceptance is absolutely critical as well. We've made massive strides there from an acceptance perspective. We've recently brought on board Walgreens, AT and T, Dunkin' Donuts in the U. S, brought on board Costco in Canada, Pizza Hut in the UK, Pizza Express in Shell in Europe, and quite recently McDonald's in Latin America to name but a few. Now in the showcase area, which I would encourage you to visit, you will actually see our digital by default strategy in action and you get the opportunity to see all the various different ways that consumers can pay, whether online, in app, from a connected device. But one thing will hold true, we retain the ability to ensure that the issuer remains at the heart of the transaction because we totally understand that the consumer has a trust relationship with its issuer. We also see a massive opportunity to digitize the way consumers pay and the way merchants get paid in emerging markets. As I mentioned that we launched Masterpass QR, which is a QR based payment platform. We're live in 8 markets so far, and we've technically enabled another 22. So we're rolling out in 22 markets 22 more markets in the very near future. And in simple terms, what this enables the consumer to do is to scan a QR code and effectively put in the amount of pay and push that payment through to the merchant in real time. This basically allows us to attack opportunities that traditionally were cash only. And as Michael noted at the end of his presentation, acceptance is getting extremely complex. So with something like Masterpass QR, you have the ability to offer acceptance in markets where traditional acceptance just isn't appropriate. It could be often because of high costs or the need to provide expensive POS equipment. So basically, with QO, we're enabling our issuers to get into new flows, and we're enabling us to grow significantly our acceptance space. Today, we're live in Asia Pacific and Middle East and Africa. We've got over 400,000 accepting merchants today. And by the end of the year, we expect to more than double that number. Ajay also mentioned about Bharat QR, because we believe that standardization is extremely important. We don't want merchants to have to represent 1 QR code for our brand and different QR codes for our competitors. So what we've actually done is we've created a standard called Bharat QR in partnership with the Indian government and the other payment networks, which simplifies the process for the merchant to accept QR codes. They only need to integrate once present one QR code and basically they can support all payment brands. Now it goes further than that because we're also presenting standards for consumer presented QR. This is the example of whereby a consumer scans the merchant, the previous Master Bath QR, but we're also enabling the consumer to present a QR code for situations where the merchant scans that. We've actually done that as part of EMVCo. So this is going to join other standards like the contactless standards, 3 d secure standards and tokenization standards, which we launched a number of years ago. So we announced the new QR code standards on July 20. And this is going to give us scale, but it's also going to ensure that the merchants have that simple experience that I already talked about, one single QR code for all brands. It's also going to mean that consumers have a simple and consistent experience when they go to pay. So tokenization. So we think about tokenization as being absolutely critical to the heart of our network. So when we think about securing digital payment transactions and we think about enabling new payment experiences, we see network tokens as being a key enabler of this. So network tokens, I'm sure many of you know this, in simple terms are an alternate payment number, which replaces the primary account number that's typically on the front of the consumer's card. So along with the generated cryptogram, this token is typically stored on the device or at a merchant, so as to security the transaction and to better manage the account lifecycle. Typically tokens are locked to a device or to a merchant. So basically the user can control how, when and where it's used and their uses if they're compromised. So we've seen significant growth to date with our m DES platform, which is our tokenization service. Today, we have over 1100 issuers live on the platform. We're live in 29 countries. And we've actually seen significant growth. We've seen 60% growth in activated tokens and we've seen 140% year on year growth in transactions. We're also expanding this service to provide tokenized card on file, enabling the merchants to have a network token in their storage in their facilities, giving the consumer peace of mind. The real numbers not stored with the merchants and it also enables greater convenience for the merchant when cards expire or go lost or stolen. In the showcase area today, you're going to see how we're working with auto manufacturers like General Motors and digital players to create context, contextually relevant and personalized commerce experiences that also present new opportunities and new revenue opportunities both for us and for our competitors. As I already mentioned, the digital mirror that enables Masterpass experience and you'll also see the ability to pay directly from your connected car. So let's actually bring this to life. So we've got a challenge today and that's consumer and business cards are stored all of us in this room. We have our card stored in locations such as websites, streaming services, utility providers, unconnected devices. And we largely have limited knowledge or recollection of where these cards are. And we've even less control of how, when and where they're used. And we've actually just recently launched a service for a series of APIs that allow issuers to enable consumers to control how, when and where they're used and to add tokens to connected devices in a simple and frictionless manner directly from their mobile banking application. So I'm just going to show you on my phone here. I've got my mobile banking application. I'm going to log in as normal, the way the bank lets me log in. I can see my cards. I can see my balance. I can see recent transactions. I can see my points and a whole suite of value added services service So today, I don't know where all my cards are. But with this service, I'm able to see that my cards are with Penguin Music, All Night Gym, 7 Day Grocery and so on. So Penguin Music is my streaming service. I'm able to go in there. I can suspend the card. I can delete the card. I can get notifications when transactions occur. Can also set a spend limit. I'm going to set this to $50 I can set it per week, per month or per quarter. And I've just said there directly from a mobile banking application, the ability to control the usage of that card. But it goes further. So my cards are also in my connected devices, my smart fridge, my smart ring, my connected car and so on. And I'm actually wearing the new Fitbit Ionic device. We actually announced a partnership with both Fitbit and Garmin at the end of last month. And inside my mobile banking application, I'm going to tokenize, basically put my card number, a token representing my card number into my watch so that I can use this for contactless payments. So I'll just click add a device, searching, my Fitbit is there, select that. I can see the cards that I have with that financial institution, my personal card, my corporate card, my debit card. I'm being told not to add my corporate card. So I'll take that advice for once. So I'm going to add my personal card. I can set spend limits if I wish. I'm just going to confirm. And what it's going to do is it's actually going to create a token, a secure token in the cryptogram, it's going to put it directly into my Fitbit Ionic, so I can buy you guys a coffee later on literally by just tapping this at the terminal. So if we can go back. So as you can see from this, it makes the management and the knowledge of where my cards are so much easier than I've had before. We're giving consumers the ability to view the merchants and devices where their cards are stored. It gives them the ability to add a card to a device directly from my banking application. I can set spend controls and alerts. I can activate the spend and delete devices. And I can do all this directly from within something that I'm very, very comfortable with and all of us today have the mobile banking application. Now some of these services are available today and others are being rolled out to all of our issuers within the early and mid part of 2018. So this is not a duplicate, this is here intentionally. As both Ajay and Michael mentioned earlier, PCE is about a $45,000,000,000,000 opportunity and this has been a historical focus for us. We're actively targeting going beyond that B2B, P2P and B2C And they're significantly under penetrated and are a massive new opportunity for us. So combined, as you've heard before, the opportunity is $225,000,000,000,000 So in addition to using the assets that we have and VocaLink that Michael talked about, we're going to bring these things together to enable us to go after flows that traditionally would have been unavailable to us. So let me tell you a little bit more about Mastercard Send. So Mastercard Send is a first of its kind interoperable global push payment service and it facilitates the delivery of funds quickly and easily both domestically and across borders. This allows us, as I say, to go after person to person, person to merchant, business to government and so on and so forth. With Send, we're providing a better, faster and smarter way to digitize flows. And as Michael mentioned, there's 1,000,000,000 consumers today that have a bank account, but don't have a card account. By actually taking the best of Send and the best of VocaLink, it allows us to reach flows that traditionally would have been reached with the traditional card network. And this is not vaporware. This is actually live in market. We're actually partnering with some fantastic players. We're powering Facebook, Square, Zelle and Google person to person payments. And as Ajay mentioned, we've enabled fast, secure and convenient disbursements for companies like Uber, Lyft, Allstate and Allianz. And it goes further, it's not just the capabilities of going direct to ACH and going using the card network. We have a HomeSend joint venture, which allows us to enable global B2B payments to bank accounts, to cash, to mobile money accounts. And recently we entered into a partnership with Standard Charter Bank in Middle East and Africa to enable an alternate solution for cross border payments from 11 Middle East and Africa markets into key corridors, enabling faster payments across the key channels that they have, which are bank account, card account and their own mobile wallet. We also have extended our partnership with HomeSense to offer cross border remittances with people like KEB, HANA, Western Union, Atlas, Mara to name but a few. So on to APIs, APIs are in my mind extremely critical. It's absolutely imperative as a company that we enable our services going forward so that they work as well online, on a connected device, in a mobile app as they have worked on a piece of plastic for the last 50 years or so. So we do this largely through the provision of APIs. And APIs in simple terms are like Lego bricks that you can join together to effectively use these services to create better solutions for consumers and businesses. It also not only does, it means you don't need to reinventing the wheel, but it also means you can reduce costs, you can be more efficient and you can also increase the time to market, which is absolutely critical in today's connected world. Now we went live with our developer platform about 6 years ago. We're extremely happy with the breadth, the depth and the maturity of the APIs, but we're continuing to invest in us. We're continuing to invest in us. We've got 6 of the top programming languages. So if I'm a PHP programmer, a Java programmer, a C programmer, whatever programming language I want, I have the ability to quickly and easily look at the APIs, test the APIs, download the sample code, download the reference implementation and move extremely quickly. We've embedded and this is something we've done for a while, but we've really, really formalized it over last 18 months or so. We've embedded an API for everything strategy inside the company. That means that everything we create, if appropriate, inside the company will have APIs. So some of them will be internally, so that we can actually plug our technology components together. They won't necessarily be exposed to the outside world, but it will actually mean that we can be better, faster and cheaper going to market. But many of the services will be available through the developer zone and they'll be available in a consistent manner. Because one thing we've set a set of standards with the bar in terms of what we expect these APIs to have in terms of sample codes, standardized documentation, SDKs, reference implementations, a sandbox, the ability to test that API literally 30 seconds after I go on to the site, pre built components and automation and test frameworks. So you'll see that we've doubled the number of APIs in the last year. We have 60 APIs across 40 different services, and we expect to double that over the next year as well because we're getting more and more of the organization in opening up its services via APIs. If you're looking at the APIs, you'll actually see they're typically broken into 3 categories, payments, security and data services. And we've also opened up some new and experimental ones from and from Mastercard Labs. And over the last year, we've opened up things like Masterpass QR, didn't exist this time last year, our blockchain, spend alerts and controls and also installments. So the other thing that's quite close to my heart and a key part of our approach to experiment with new technology is to experiment with new technologies, to work with the FinTech community and also to co innovate with our customers and our partners using design thinking and agile development methodology. Now we created our labs a number of years ago, and we created it in my mind for four reasons. Firstly, we wanted to look at the future from a fresh perspective. We wanted to understand how emerging trends, technologies and new entrants, new FinTech players were going to impact our industry. And we wanted to be able to experiment and create prototypes in that space. Secondly, we wanted to be able to incubate new products and solutions in partnership with the product teams within the organization, but also in partnership with our customers. Thirdly, we wanted to embrace new ways of innovating. We wanted to embrace best practices. We wanted to drive a design thinking focus into the organization. So the key thing here was experiment with new ways of working and then drive that into the core organization for scale. And then fourthly, and this is a critical one and it really came about due to customer demand, is we wanted to augment the innovation and product development capabilities of our customers. And we did that through our Labs as a Service division, which we created in partnership with Mastercard Advisors. And that allows us to enable our customers to go from a problem to a solution to market in a rapid time. We've made massive strides across all these areas. And you're going to see in the showcase area today that many of the initiatives that you'll see will have had some of them would have begun in labs or some of the labs would have been involved in. You're going to see examples such as the connected car with General Motors. And you're also going to see a pretty interesting financial inclusion play, a product called Coupa, which is designed to digitize and simplify the process of school payments in East Africa. And believe it or not, one of the biggest challenges in Uganda is school payments. So again, focus on addressing real problems, leverage new technologies, leverage new ways of working and work with the FinTech community. And we have in our StarPath program, you can check this out at www.starpath.com. We've actually worked with over 150 relevant startups. And what we do with them is we actually, in my mind, we help them to be successful, which is a key goal. And if we do that, we win, they win. We actually get access to new ways of thinking, new products. But we also bring these start ups to our customers and we partner with them to co innovate and bring solutions to market at great pace. And we've done this with many, many of our customers around the world. So I'm going to wrap up as I began. There's a significantly untapped opportunity ahead of us. And really we have a very, very straightforward approach. Our strategy remains consistent with what it was last year. We think we're extremely well positioned to address this opportunity. I know this is a whistle stop tour and we do have breakout sessions where we can go into more detail later on. But we enable we're prepared to address this opportunity across these 6 pillars. We want to deliver a great experience, enable our customers to deliver a great experience across every device and every channel. We want to relentlessly focus on securing the transaction with tokenization, biometrics and artificial intelligence, which are baked into the heart of our network. We want to support the movement of money from any funding source to any destination securely, globally and in real time. We want to make it easy for our partners to take advantage of the services that we create, both our services and those of our partners and our startups. And we want to experiment and co innovate with our consumers and partners and bring them access to best in breed technology companies. And then finally, as a B2B2C company, we want to be partner centric in everything that we do. We do not want to sit in between our customers and their customers. We want to enable them to be successful in this new age. So I'm now going to hand over to Ajay Bala, who's our President of Enterprise Security Solutions, and he's going to talk about how we are securing and advancing commerce. Thanks very much. Good morning. The world around us is changing at a very fast pace and technological innovation and artificial intelligence, robotics, Internet of Things is making a new world of opportunities for us and our customers. Ajay spoke about our grow, diversify and build strategy and how we are building our services business, I'm going to share with you how we are enhancing and securing our ecosystem, how we are building new solutions to serve the needs of our customers and building a completely new services business for us. Some key trends that are shaping this new world of opportunities for us and our customers, the Internet of Things. It's estimated that there will be 30,000,000,000 devices connected to the Internet of Things by 2020. It's a world of opportunity for us and our customers. 90% of the data that we see today has been created in the last 2 years. That is a lot of data creation happening. That also brings the opportunity of insights and personalization. We are seeing new concepts of crowd trust in the sharing economy with companies like Airbnb, Uber, TripAdvisors, where new reliance on crowd trust is emerging. And finally, all these trends are happening when the 1st digital native generation is coming on, which is completely digital with multiple devices, multiple applications on and hungry for digital experiences. Now while we get all these opportunities in front of us, it's also coming with some problems, expectedly. We are seeing a lot of cyber attacks on infrastructure, on many, many industries, many organizations. We have seen it in healthcare. We've seen it in banking. We've seen governments being attacked. We've seen payment processors being attacked. The Bangladesh Central Bank is an excellent example where hackers tried to steal almost $1,000,000,000 and finally got away with about $100,000,000 The Mirai botnet attack, the WannaCry attack earlier this year, bought big large organizations to a halt. We've also seen a lot of data breaches, more than 1,400,000,000 identities were compromised in 2016 alone. Now our customers and our clients are spending 100 of 1,000,000 of dollars to solve for these problems and are asking us for help with solutions to handle these issues. So I'm going to share with you the strategy that we have to help our customers handle some of the issues that I spoke of. The payments ecosystem is a very complex ecosystem with millions of merchants, thousands of banks, billions of cards and billions of transactions happening on the system, there is no single silver bullet to handle security in such an ecosystem. So what we have is multiple layers that help our customers to handle security and protect the overall ecosystem. Very simply put, think of your own house where you put multiple doors, so there are multiple layers. So if one layer fails, the second layer kicks in, second layer fails, the 3rd layer kicks in and so on. We look at 4 layers to protect the ecosystem and our customers. It's prevention of infrastructure devices and data against cyber attacks. It's detecting fraudulent behavior because we know with whatever preventive technologies we use, there will be some smart people around the world who will find ways to circumvent these technologies. So we've got a number of technologies which help in detection of anomalous behavior. And then the 3rd layer is experience. Now we can have a lot of security and we can have security which makes transactions very difficult, but we can also have security which creates for a very smart, seamless and smooth experience. So our 3rd layer is focused on solutions that gives great consumer experience for our stakeholders. And finally, our 4th layer is identifying the cardholder, so that we know that the transaction is being done by a genuine cardholder that is of extreme importance, especially in the digital world, where fraud is a big number now. It's 50% of the total fraud that we see is already from the digital world, which is only from a very small base of transactions. We have tailor made solutions for our stakeholders, for consumers, for merchants, for governments and for our issuers. Let me now take you through how our strategy is coming to life and how our stakeholders are embracing some of our solutions to enhance their own security. So if you look at the prevention space, we have the EMV chip technology, which uses sophisticated cryptography to secure transaction. That means that these cards cannot be counterfeited like magnetic stripe cards. We now have more than 1,700,000,000 EMV chip cards around the world. 77% of our transactions around the world are now done on EMV chip. And we believe that we will have most of our transactions and cards as EMV Chip by 2021. U. S. Has been our single biggest accomplishment in the last 2 years, where we have done a big migration to EMV chip cards. U. S. Is now the largest EMV chip market in the world. What we've also done is that we have found a solution to use the same cryptography technology that secures the physical world to take it to the digital world, to secure transactions that you do in the digital world on your mobile phones, on your wearables. So that technology is now powering more than 600 programs around the world. The Apple Pay, Masterpass, Samsung Pay, Android Pay, all these wallets that we talk of are all using our EMV digital chip technology to secure transactions. In the detection space, SafetyNet is our flagship product to handle fiber hacking at a processor or at one of the banks. This solution, we shared that last year, has really gained scale. We screened more than 48,000,000,000 transactions on SafetyNet in the last 12 months. It's caught 100 of 1,000,000 of dollars of fraud which could have happened at our banks. Just this year alone, in the last few months, it saved our banks more than $100,000,000 of fraud that could have happened. Decision Intelligence is our fraud screening and risk scoring product, which helps our stakeholders assess the risk of a transaction. And if they do better assessment of a risk, that means better chances of approval of a transactions and that means better consumer approval for our consumers when they are at the stores. We have had large banks embrace our fraud screening solutions from Bank of America to Capital One to Itau. Many of these customers are using our fraud screening solutions. We have found that our screening solutions have been catching fraud 40% more than competing solutions around the world. The experience space as I said earlier is critical to us. We have several interesting programs, which our customers have embraced from account continuity to IQ series. Account continuity is a program where card numbers can be automatically replaced at card on file merchants. We have Netflix and Microsoft, which has embraced and they have found that their card declines have gone down by 30% by accepting this solution. IQ Series is a solution which analyzes the spend patterns of consumers and shares that information between merchants and issuers, which enables better assessment of the transactions. And finally, in the identity space, we verified more than 4,500,000,000 transactions in the last 12 months. And for merchants like Uber and Google who are using this, we have found that globally we find that approvals increase by more than 10% when they use our identity products. Let me now share 2 quick examples of how we are further enhancing our capabilities in some new areas. The world, the new world, as you can see is your watch is connected to your phone and your phone is connected to your car and your car is connected to your home and your home is connected to your fridge, your microwave and so on. We envisage all these as secure transaction devices for us. Now to enable that, we also need to make sure that there is good security on these devices because the more the devices, the more the potential hacking opportunity for hackers. We've built a portfolio of solutions to handle the Internet of Things space, our e and b digital technology, our tokenization technology, our risk screening systems are all solutions that help in this space. We recently acquired a new company, New Data Security, which has some very cool technology in the device space, which enables us to actually know that it's really you who are using the device. Things like how you hold the phone, how you press the buttons on the phone, what kind of operating system are you using, all these technologies help our customers handle the opportunity in the Internet of Things space. Finally, we are also leveraging artificial intelligence in a very big way on our network. Artificial intelligence is the biggest transformation our society will see in the coming years and we have found it to be extremely useful in changing and enhancing consumer experience. We see mountains of data from consumer data, behavior data, device data, merchant data, ATM data and artificial intelligence is helping us analyze the data better, get insights better, which results in better insights for our stakeholders, which results in more transactions and more volume and better consumer experience for our customers. We recently acquired a criterion, which is artificial intelligence company. We have been partnering with Bryterion for some years now and know their technology well and have seen the results. And we are very excited in this space and are working on some very new cool technologies for our customers. Finally, in summary, we are very excited about this space. We believe this is critical for the success of our business, for our customers' business. We have a very secure ecosystem running. We processed more than 55,000,000,000 transactions last year. And many of the cool solutions that I spoke about like Decision Intelligence, like the IQ series are helping us build differentiation and competitive advantage for us and are enabling new growth opportunities for our businesses and our customers' businesses. Thank you. Please welcome President, North America, Craig Forsberg. Good morning. That video from American actually is a great transition for us. We're going to segue with the content a little bit from what you've heard Michael and Gary and Ajay talk about in terms of our products, our technology, the capabilities that we're bringing to market, the things we're developing to bring to market into the next two sessions that Anna and I are going to lead to share some examples of the progress we're making and actually putting those things to work, bringing our business where it happens, making it happen on the ground. So it's interesting. I don't think anyone's mentioned it yet, but it's literally a year to the day since we were last together in this forum, sharing our progress with investors. And I can tell you from a North America perspective in that time period, a lot has changed, but a lot hasn't. One thing that has changed is that Ajay Bhalla took the slide turning thing with him. Last year, it was on the podium when I got here. This year, it isn't. Thank you. Yes, he doesn't trust anyone with that device. This is what we deal with. Anyway, a lot's changed and a lot hasn't. I'm going to start by talking through a couple of things that haven't changed for us. And in particular, what hasn't changed, North America continues to be the largest payments market in the world, continues to be our largest region in Mastercard, and one that's delivering strong results. You can see that it accounts for 41% of our global revenue. And over the last 5 years, we've posted a compound annual growth rate in revenue of 10%. There continues to be significant growth opportunities. You've heard us often talk about the things that drive growth for our company. Things like expansion of PCE, expansion of electronic payments to displace cash and checks, opportunities we have to continue to increase our share and win market share from the competition. All of those things true in North America as much today as they have in the past. You can see from a PCE perspective, we the North American markets of the U. S. And Canada are posting solid growth in excess of 4%. And within that category, which as we've mentioned has typically been where we focused a lot of our attention over the years, we still have opportunity to expand the penetration of electronic payments to expand the height of the orange bar to penetrate a greater percentage of PCE and win share within that. And I'll touch on our progress with respect to those things this morning. What also is true is we continue to have a significant untapped opportunity to penetrate into new payments flows, specifically in B2B, P2P and B2C. And if you look at the magnitude of those bars, 40% of North American payments flows, dollars 23,000,000,000,000 are still in cash and check, another 40%, dollars 24,000,000,000,000 in flows are in ACH. So, as Michael, Gary, Ajay have alluded to already, we're developing the capabilities and products to go after those in an aggressive way and we think that gives us some very significant runway to continue to grow our business, not just globally, but in these important markets for us in North America. So, I'm going to talk a little bit about how we're doing that. This is another thing that hasn't changed since last year. So for those of you who were here last year, you'll recognize this slide. I think I used the same one. It lays out the things that we are focusing on as priorities to grow our business in North America and these haven't changed. You can see they align with our global strategy of grow, diversify and building our business. And there are 5 areas in particular that we're driving to grow our business here. 1 is expanding product distribution across all of our core products that Michael talked about, principally through our issuing partners. The second is expanding acceptance into new verticals and new segments. The third is driving digital, winning in digital as a means of driving growth in our core business. 4th is scaling services to deliver value added to our customers, both to help us grow the core and generate incremental revenues. And then finally, building the new payments businesses to go after those B2B, P2P and B2C opportunities that we've talked about. So I've spent a little bit of time talking about things that haven't changed. You may be asking yourselves what actually has changed in the last year. And what has changed is, the progress that we've made against each of these five areas, with some tangible results in each that I'm going to share as I go through each of these in turn over the next few minutes. So let me start with product distribution. This is really where it all begins with our business in getting products into the market through our partners. And let me just start by saying, while it's easy to focus on individual deals as examples of making progress in product distribution. I want to emphasize for our business in North America, as is the case in the rest of the world, We're fortunate to have a very broad base of high quality partners that we work with and a broad which gives us a broad and solid foundation upon which to build the business. That being said, there are specific examples of progress, and I'll go through each of the core product areas in turn here in the United States. With U. S. Consumer credit, We are positioned to grow our share with 6 of the top 8 consumer credit issuers who collectively represent about 2 thirds of the 4 party market. And we feel very good about the progress that we're making there. As an example, and this is an example of a specific deal, I'm pleased to announce that beginning next year, new Bank of America cash rewards credit cards and non rewards credit cards will be Mastercard branded. This win adds to our growing partnership with Bank of America, which covers all of their payments business lines and one that we're particularly excited about given the importance of these products in the Bank's portfolio and the presence that they have across all of the Bank's acquisition channels. That's in addition to partnerships that we've renewed over the course of this year with partners like SunTrust, Santander, Huntington to name a few, as well as growth that's being driven by the product propositions we're putting in the marketplace. Michael talked about some specific credit product platforms and in particular those that are most relevant for the affluent segment. Our World and World Elite product platforms are helping us to grow share with important partners like Citibank, Capital One, Barclays and HSBC in the U. S. And in Canada with Bank of Montreal and Royal Bank of Canada. And in fact, in Canada, over the course of the last 3 years, we've increased our market share by 400 basis points. So pleased with the progress there. Let me touch briefly on co brands. You've heard us often talk about co brands and Ajay has shared some results that we've announced over the last several quarterly earnings calls. Co brands continue to be a really important part of our business. In the U. S, we've won 25 new programs in the last two and a half years, including the largest global cobrand program with American Airlines, the great partner you heard from at the start of the segment, and recently announced wins with Kroger, which we've won in partnership with U. S. Bank and new programs with both Belk and PayPal, both of which we're working with Synchrony. So we're very happy about that. If you look over the course of the last 4 years, we have launched almost 40 co brand programs in North America, including 14 conversions from other networks. And those represent programs that have converted from all of the other networks. And we've had more conversions than any network. So we're very happy with the progress there. Debit also continues to be a really important part of our business. In the U. S, as you all know, things change significantly in the debit landscape post Durban, which has resulted in us really having to win in 2 steps. The first step is making sure we have Mastercard available on debit cards as a routing option, either on the front or the back of the card. The second step is making sure that routing option is exercised by a merchant or an acquirer and that the transaction comes our way. With respect to getting our brand and our network enabled on cards, we are available as an option on more than 60 percent of all debit cards in the U. S. Market. I'll say that again, more than 60% of all cards, which we feel really good about. And we're continuing to grow that with renewed or new partnerships, expanded partnerships in many cases with partners like Capital One, Wells Fargo, U. S. Bank, SunTrust, Huntington and Bank of the West to name a few. In Canada, we launched Debit Mastercard and we're seeing good momentum there with more than 1,000,000 cards in the market at this point. Commercial also continues to be a real bright spot in our portfolio. We work across the leading players in the commercial space, including the major wholesale banks like Citi, Chase and Bank of America and with commercial specialists like WEX and FLEETCOR. And I'm happy to share that we're growing our market share with 3 of the top 4 players in the commercial space. And in Canada, we're growing at twice the rate of the market. So progress there as well. And finally, last but not least, prepaid, also an important part of our overall portfolio. In the U. S, we enjoy some really strong presence as the exclusive brand on the largest prepaid program in the market with Direct Express, the prepaid payroll program for the largest employer in the country with Walmart, the brand on the largest prepaid tax program with H and R Block, and we're well positioned in working with program managers across the market to continue to expand our presence in payroll programs, in government and social benefits distribution and in the healthcare sector with HSAs. So all in all, we're feeling good about the progress on the product distribution front. Let me turn my attention now to acceptance as the 2nd priority. Acceptance, it's interesting, it's hard to overstate the importance of acceptance in our business and growing it is a priority for us, not just in the U. S, but everywhere around the world. This is an area where again we continue to make great progress and you can see the slope of the curve here. Our acceptance network is unsurpassed globally and it's unsurpassed in the United States and North America overall where we have more than 10,000,000 acceptance locations. You can see there's been some inflection points as we've continued to expand the number of locations where Mastercard is accepted. That's been driven by a number of things. One has been our continued focus on working with partners in underpenetrated verticals, areas like healthcare, areas like charitable organizations, rent payments, education that haven't traditionally been cards accepting merchant categories, but where we continue to make progress in expanding the availability of the Mastercard network as a means to make payment. We're also working increasingly with partners who are bringing new merchants and new segments into the ecosystem with new technology, whether that's a lower cost technology to enable acceptance as has been the case with Square bringing so many in or a technology platform that reaches a long tail of merchants in a new category like e commerce where partners like Stripe and Braintree have been essential in helping us expand the reach of the network. Embedded within this, I will point out the CAGR here before I go on. Growing acceptance by 11% on a compound annual basis over the last 4, 5 years, that's a number we feel pretty good about, given the length of time that we've been added in these markets and what you might think of as the relative maturity of the U. S. And Canada as electronic payments markets, We're growing at a nice clip and we've got even more room to grow and we're continuing to work hard to make sure we're doing that. At the same time, we're working within that universe to ensure that we've got good penetration of Masterpass acceptance. That's embedded within these numbers. Gary shared some of the major merchants, as a few examples of, those who are accepting Masterpass. We're also working not just with individual merchants, but importantly with our partners that help scale in larger numbers by offering Masterpass to a greater number of merchants seamlessly. Braintree, for example, now has Masterpass live in its technology stack and available to its customers as an option to accept payments. We've announced partnerships with both Vantiv and First Data to make Masterpass available within their technology platforms and on their gateways. And in Canada, Masterpass will be available as a standard offering with several of the leading acquirers in the market starting in 2018. So we're making good progress there. I fully anticipate that as we continue to look at this in the future, the trajectory of this is going to change even more steeply given what we've been talking about this morning with the Internet of Things, the advent of connected commerce. When we think about acceptance moving from merchant locations to connected devices, it completely changes the frame in terms of where our network can reach and where it can enable payments to be transacted. And we're excited about the possibilities that that brings for us in our business. We're preparing and investing in the kinds of capabilities that Michael and Gary talked about, make sure that the products are there and that Ajay talked about to make sure they're safe and secure, So that as connected commerce continues to expand, we're positioned to be the backbone of payments capabilities within that universe. So good progress on the acceptance front. The actually the conversation about the Internet of Things is a nice segue into the next priority area, which is digital. A lot of our work in digital, you hear us talk about MasterPaths a lot. MasterPaths is obviously a very important part of our digital strategy, but there's much more to it than that than we think about when we think about how we are driving towards the digital future. An important aspect of this is taking a lot of the capabilities that you heard Gary talk about that are enabling both us and our partners to prepare for and participate in a digital future and making sure we're getting them out across the marketplace through our partners to enable their businesses. And we're making great progress there as well in a couple of particular areas. Our tokenization capability with MDes is now available to 80% of our accounts in North America. Mastercard Express, which is the program that sort of the franchise rules, if you will, that govern the rules of the road for how tokens are used, how by those who create them as well as those who request their use for use in all of these connected kinds of environments, whether that's a wallet or a connected device, is also scaling nicely with more than 600 The recent launch of CityPay is a great example of this that we're very excited about. And if you happen to be a City credit card customer and you haven't signed up yet for CityPay Masterpass, I'd encourage you to do so. It's a terrific experience. Other things that we're looking at in the digital space and working hard, continuing to engage with partners across the ecosystem, whether those are wallet players, whether those are e commerce players, whether those are gateways, other kinds of service providers that are helping to expand the digital universe. We're working closely with them on a variety of things, including commercial partnerships, setting standards, distribution partnerships, marketing arrangements, etcetera. And we're working closely with those players who are at the forefront of creating that digital future of the Internet of Things and Connected Commerce. A couple of examples here that you'll see later in the demo area with General Motors and Marie Claire, both of which have been referred to earlier with the connected car and a new sort of retail experience where you can shop literally on a mirror or on a window. And other partners like Cisco, Intel and Fitbit, many others who we're working with to bring to market new retail experiences and new payment experiences that our consumers can take advantage of. Next area is services. You've heard us talk a lot about services over the course of the last couple of years. The relevance the significance for us here is developing these great capabilities that help us differentiate our offerings to our customers, both to help us win more share of our core business and drive growth in our core credit, debit, commercial and prepaid businesses, as well as deliver incremental revenues. And the main takeaway here is that we're having success in scaling these things. If you look across our portfolio of services, we are consistently deepening the penetration of those services within our customer base in North America. So with the Mastercard Advisors, for example, more than 50% of our large customers are working with Mastercard Advisors on a variety of topics, including things like digital payment strategy, on portfolio optimization, on enterprise information management, and other topics. Our data and analytics services, which includes everything from macroeconomic data to portfolio specific data to APT and the kinds of things we do with APT on an individual counterparty basis to look at, test and evaluate the effectiveness of different campaigns, different investment options, so that decisions can be made on a more informed basis and increase the ROI of those decisions. We've got more than 60% of our customers in North America using those kinds of services. The fraud solutions that Ajay just talked about, almost half of our transactions in North America are utilizing optional fraud services that either issuers or merchants are deploying as part of their processes to help them identify and eliminate fraudulent transactions and importantly make sure that we're approving transactions that are in fact legitimate transactions and not being declined because of unnecessarily restrictive parameters set around those approvals. And that's in addition to things that are available across all of our transactions like SafetyNet that Ajay talked about. Loyalty, we've got 65,000,000 accounts on our loyalty platform. Our processing business continues to grow and is a key enabler in helping us connect to partners, deliver our products and solutions, enable growth on the Internet of Things strategy. And Labs as a Service, as Gary talked about, is consistently in high demand by our customers and is really helping us differentiate with our partners in working on their innovation agenda. So good progress there as well. I'm going to pause for a minute before I go on to the 5th area and just talk a little bit about how some of these things come together. I've been talking about our core products, acceptance, services, digital as if they're discrete, which of course they're not. The real power of these things comes when we bring them together to work with our partners and utilize them to address the needs that are most relevant to them. And I've got three examples here of ways in which these things are coming together to help us serve some of our most important partners more effectively. The first that you see is PayPal. Of course, last year, we announced an agreement with PayPal that enables Mastercard products to be established as a default payment option within the PayPal wallet. We've seen an increase in Mastercard transactions as a result of that and have since expanded that relationship with them to include Asia Pacific and Europe. But our relationship with PayPal goes way beyond that. And I've talked about Braintree and the availability of Masterpass and their technology stack. PayPal is using Mastercard Send as a way to help distribute or disperse funds from the PayPal wallet into consumers' DDA accounts. PayPal is leveraging our core product platforms in consumer credit and debit as the basis for putting co brand programs into the marketplace for both consumers and small businesses. And in fact, every co brand program that PayPal has in the United States is Mastercard Branded. American Airlines, who you heard about at the top of this segment, a terrific partner, who we not only align with on values, as Kurt said in the video, but we also align on awful lot of really exciting business opportunities. American is taking advantage of things like Mastercard Advisors, APT, our loyalty platform and our marketing assets to drive deeper engagement with consumers and not just consumers who are cardholders, but consumers who are also buyers of airline tickets. So we're working with them to grow both the cards portfolio and their core business. And finally, Citibank, Citi with whom we enjoy a very broad relationship across the branded cards business, Citi Retail Services, the retail bank with the debit portfolio as well as Treasury and Trade Services where we have commercial partnership with them. Citi is utilizing a broad range of capabilities as well, including data and analytics and fraud solutions to help optimize the performance of those portfolios. And as you'll hear a little bit later in the video from them as well, Masterpass and MDes as the backbone of creating and launching the CityPay Wallet. And that's a terrific example of collaboration on what has been a very important initiative for both of us. So back to priority number 5, building new payments businesses. You've heard a lot about this, so I won't belabor these points. I will just call out a couple of things for you to note. One, you see an awful lot of these things decked against B2B, which we're excited about, because as we've often discussed, B2B is an enormous opportunity that is very underpenetrated at this point from a cards perspective. We continue to have cards products that we market into the B2B space and we are doing that effectively with T and E cards, procurement cards, virtual cards, where in each case, in North America, we're growing at a rate faster than our forecast of market growth. So we think we're gaining share there. But again, the applicability of those products is to a relatively small subset of the overall B2B opportunity. So expanding that solution set with the kinds of capabilities Michael talked about is really important in helping us get after that. Mastercard Send and Home Send, Gary touched on this. It has these two things combined actually have applicability across each of these areas of new flows. The cross border example that Gary talked about with Standard Chartered is also something that we have coming to market with partners in the U. S. And Canada. The P2P applicability of Mastercard Send is live in market with EWS as part of the Zelle solution. And the B2C capability of that continues to grow as well. So and we're doing that in working as we were with Masterpass distribution, working with partners who can help us get that to scale quickly across the market. We have reseller agreements in place with the likes of Wells Fargo, with Stripe, with Green Dot, who are offering these to their customers as part of their product proposition and we're excited about that. We're also finding new applications for this literally every day. And I will mention one that we are hopeful is going to be live tomorrow and that is utilizing Mastercard Send, working with a major aid agency to help disperse aid to those in need as a result of Hurricane Harvey and potentially Hurricane Irma. There are needs that people have that are difficult to meet when disaster strikes through established financial intermediation channels. And Mastercard Send is a great example of being able to meet those flexibly, quickly and seamlessly for consumers. So the B2B Hub, you've heard what that is. The key point here for us in North America is that we're out there in the marketplace. We've got an active pipeline of conversations with a number of important partners, several of whom are moving to the contract stage. So we feel good about that. And Fast ACH is coming live to a theater near you in North America in the U. S. Quickly as a result of the work The Clearing House is doing on their real time payments platform. And we look forward to working with the Clearing House and its member banks to develop applications for that technology to be used in this market very soon. So in summary, I would say that North America continues to be a strong market for us, one and one with significant opportunity for growth in growing the core, in expanding our presence in the digital realm, in continuing to penetrate these new flows that we've assembled a great portfolio of products and technology to go after. We're fortunate in these markets to have a terrific roster of partners who continue to invest in growing their payments businesses and we continue to invest in capturing a greater share of that business. And we're working with them to both accelerate and sustain our momentum in these markets, both now into the future so we can deliver the kind of results you've come to expect from us. And with that, I will close on North America, and I believe we will head to a break. Ladies and gentlemen, at this time, we will take a 10 minute break. Our session will resume at 10:36. If you are participating by webcast, there is no need to reconnect. Just stay on the line. Thank you. Ladies and gentlemen, please take your seats. To Hello, everyone. It's always great to be back after the coffee break. At least you've all had a chance to stretch and get some sustenance. So this is a great video actually from London and I use the underground every day that I'm in London and it truly is a wonderful contactless experience that works with your card, with your phone. And I often think that contactless is the first step actually into digital because it's a very easy step to make from the tapping your card to actually using your telephone. And we have opportunity across the whole of international markets. You heard Craig talk about the North American strategy. Ours is somewhat similar as you would expect. But we have the great opportunity to actually replicate things across over 200 countries. And with that comes also great challenges, because we're actually dealing with many local and global competitors and we're also dealing with lots of different regulators. And we're dealing with increasingly nationalistic regimes around the world. I mean, R. J. Started by talking about on soil and what does this really mean. So these are the kinds of questions that we look at as we're trying to roll out our capability on a global basis. The transit visio is really great because I think it serves to illustrate that in our world we're dealing with a fast changing dynamic young population who are digitally savvy and adopting new ways to pay. We absolutely have 100 cities that we're working on across the world and many of them are rolled out already. And the thing about this is that we're actually creating infrastructure to build Mastercard into the fabric of the smart cities of the future, which is a really exciting proposition. Now let's look a little bit at the financial side of things. I actually love this new format that we've got to look at our business here in terms of trillions of flow. And you see here that the PCE in our world is pretty big. It's €31,000,000,000,000 PCE. And not only that, but it's actually growing at a rate of 7% a year, which is pretty great. But apart from that, if you look at the B2B space and you look at the P2P and B2C, that's $140,000,000,000,000 worth of flow that we can now go after. And just to kind of put that in perspective, that's about 3.5 times the flow in this space that you have in North America. But remember, it is the rest of the world, but it's a great opportunity. And of course, it brings challenges, but what I would say is that over the last 5 years, we've been growing at a compound growth rate of 15% in international markets, which is way outstripping the PCE growth and it's creating a very healthy margin of growth. And the reason for this is not only are we seeing this secular shift of cash to electronic, but actually we're seeing real share gains in many people many people in our markets are young. They're already connected to the Internet. They already have smartphones. But yes, that hasn't actually translated to ecom yet, except in a few places, Britain, China, markets like that. But in most places in the world that ecom is nascent and that bodes really well for the future because already the e com growth is over 23%. Now the travel sector is one of those areas that's driving cross border growth. And Craig mentioned the wonderful deals that we've done with American Airlines over the last 30 years and most recently in all the packaging and bundling of our products and services. But actually we have the power of replication. And we've won some significant deals not just with the airlines, but with some of we've actually put virtual card solutions in place, which I think you heard from earlier when we went through the product talks with Michael. Now turning to the actual strategy away from the flows. As you'd expect, like everyone in Mastercard, we're all working on the same agenda of grow, diversify put it at put it at the heart of things. In terms of growth, we've got our core business and Michael has already mentioned our debit and credit business. But just to say that we've actually got a very, very strong credit position in some key geographies around the world such as the UK, Italy, the Nordics, Brazil, Egypt. But as Michael mentioned, many of our emerging markets are actually debit and prepaid markets. And that's where we've had consistent market share gains around the world in Asia Pacific, in EMEA and Latin America putting us into leading positions in many of these geographies. And not only that though, we have been in leading positions on debit in Europe and some of the most advanced geographies in the world such as Sweden and the Netherlands for a number of years. And this winning in digital, which is at the core of everything we want to do, you've heard Craig talk about the rollout of MDS across North America. Well, we'll have 2 thirds of the targeted flow of the international markets actually rolled out, tokenized before the end of the year, which is a great platform on which to connect to everyone around the world. Now what about the diversity side? Well, we've been working very hard with governments around the world. RJ mentioned his passion about understanding governments and what they were trying to achieve for their company and country and really fitting in with that. We have been working with them and the big NGOs such as the World Food Programme to drive financial inclusion. And we've been very sensitive to geopolitical changes as well. A couple of years ago, I was up here talking to you about Russia. The good news, our business in Russia is growing really well today and that's because we're cooperating with the new Russian payment system. In Europe, we've been very intelligent about the way we've handled changes in ownership of our main competitor and also very intelligent on the way that we work with regulators there. You're going to hear much more about this when we go into our European panel. In India, India has gone through big changes lately such as demonetization. And again, we've been very proactive with the government and the market as this has been happening. And of course, we've been working with the gig economy around the world. We've already mentioned Uber. There are many, many look alikes around the world and we're working with Uber and all their look alikes to actually drive volume through our platforms using our priceless experience actually in 30 major countries around the world to actually accelerate that growth. And we're building big partnerships, not we're working with Craig and his team who look after the Silicon Valley Tech Giants and helping them around the world, but also we're working with the big tech giants in the other geographies, the likes of Rakuten, Alibaba, Tencent, Samsung. If you move to Europe, Klarna, Adyen, the big acquirer and Worldpay. So there are many players out there that are great partners to us, which are helping us diversify. And what about the future? Well, the future is very bright because obviously we are rolling out our new capabilities. You've heard about our applied predictive technology that's rolled out across 26 countries now. RJ Baler talked to you about safety net. Just last week, we saved an African bank tens of 1,000,000 by capturing potential fraud in our safety net. Biometric authentication is becoming huge across our markets and particularly in places like India and so on. And even in developed markets, we've obviously launched Cellfy Pay in 30 markets. It's very popular. That's the pet name for it. I think it's called something like identity check mobile product. But in any case, it's I heard that millennials actually take something like 12 selfies of themselves a day. So I mean, if that sort of links to transaction flow, I'm happy. And so in terms of diversifying our payment flow, you're going to hear more about VocaLink during the European panel. I come from Britain. I live in Britain and I use Voca every day to pay my bills, to send money to my mother and my sister, to actually sort of just live everyday life and be able to make payments from my bank account. So I know it's an absolutely fantastic platform and I know that it's going to be incredibly successful around the world. So I would now like to move on and actually introduce you to my fantastically talented and diverse team who are helping me manage this business around the world. We're going to start with our European team with our President, Mr. Javier Perez with our President of U. K. And Ireland in the Nordics, Mark Barnett with Carlo Enrico, who runs everything from the Netherlands to Benelux to Spain to Italy to France. Did I miss any, Carlo? I don't think so, Western Europe. After which, we're going to have the pleasure of having our Asia Pacific and Latin American President come up here and talk about their geographies. But let me join my European panel. So got to remember the clicker. So Javier, great to have you here with your team. Would you like to give us an overview of Europe? Sure. So as you heard a little bit this morning, Europe, great opportunity, still a lot of money to go after, right? A lot of cash there, as you can see in the slide, a lot of ACH even bigger than that, right? So large opportunity, a lot of cash to be had, a lot of ACH to be had. So great opportunity, good acceptance. We have 17,000,000 terminals already deployed in Europe and about half of them already are NFC capable. And by 2020, all of them will be. So and we have occasionally, we get some help from legislation. Yes, you probably all remember the interchange legislation, the 2,030, which in fact has enabled us to continue to expand on acceptance and some of the large retailers in countries like Germany or the Netherlands or Belgium and many others who were reluctant to accept Mastercard. Today, they do accept Mastercard. So and it's not over. We have another big piece of legislation coming down our way, which is PSD2. I know you're dying to talk about that, haven't you? But before you launch into that, how about telling us a little bit about the competitive landscape and how you see us? So Europe is competitive for sure. No question about that. We all know all the domestic schemes and all the stuff that is going on there is very dynamic. But we're doing very well. I mean, if you go to pretty much any external source, but I would say, for example, you go to the Nielsen report, you will see that we have been growing number of cards and volumes for 6 years year on year, 6 years in a row. So we're doing well. And many times I get the question, so why is that? Well, especially for me. Yeah, you do actually, yeah. So why is that? And there is some people, some of them sitting in this very room that think that all schemes are created equal. And that is certainly not the case. So let me just bring 4 points. I'm going to bring 4 points to you that I think that differentiates certainly in Europe, very much Mastercard from other schemes. Let me start by telling you that we have a different product offering. You're seeing this today, whether it's internally generated like digital would be a good example or whether it's through acquisitions and Voca will be a good example of that. We have the best brand platform of any scheme in Europe. We are very close to our clients and we are able to develop service and technologies to them. Well, I mean, Javier mentioned digital. Carlo, what do you think about digital in Europe? We're pretty happy where we are in digital in Europe. And I would dare a little bit more. I would say that we are recognized to be the only true partner in digital for both banks and digital players. Why is that? Well, first of all, we are the only one that actually delivered a wallet strategy. We have all our key issuing partner distributing Masterpass. We even have banks that are not necessarily large Mastercard issuers that are distributing Masterpass. We have more than 100,000 merchants with the bottom display and we have really rolled out and that's the tokenization as a standard in the marketplace. So that's done. Not only we have built around that. We have built security and very consumer friendly services. Let me give you a few examples. We are releasing right now immediately after the PNT II regulation the new authentication standards that will require biometrics. We will require decision intelligence that Ajay Ballet illustrated before. We are requiring nice features such as automatic biller update. What is it? It's a feature that gives you as a consumer with your card on file at Netflix, Spotify, Uber, you name it. When your card is stolen or expired, your card credentials are updated automatically without the need of reentering them. So I think all this focus we have, all this engagement we have with our partners definitely give us a very recognized partnership. Let me give you 2 examples of 2 very strong partnership. 1, BBVA. BBVA is now serving all their merchants with their own proprietary commercial acquiring services now combined with Mastercard Gateway Services in order to offer an omnichannel solution. This is life in Spain being rolled out across the globe. Last but not least, the partnership we've had with PayPal, it's not a new one, dates back to 2011 when we started in Italy and in UK, very successful prepaid programs has evoluted over time of course. And today in Europe, we have a partnership which is along the same lines we have in U. S. So we have a mutual agreement on acceptance. PayPal will access our contactless acceptance footprint via MDS. Braintree will incorporate Masterpass in their offering. But I think the most relevant and interesting part of the partnership is what lies ahead, which is a partnership in push payments, in ACH, leveraging our Mastercard Send and VocaLink. So I think we have a very strong recognized leadership in digital. And you've given a really broad view of digital. There's a lot of consumer payments in there. Michael actually talked about how well we were doing in commercial. Mark, what about the commercial side of things? So, Andy, we've seen tremendous growth in commercial. It's really come from 3 areas. The first is with small businesses, SMEs. A lot of small businesses either use personal cards or cash for their business transactions. And working with our advisors colleagues, we're able to work with 60 issuers across Europe, identify those flows that are truly commercial and make sure they operate on commercial products. It's a great win for the small business because they got a better product and it's a great win for our banks and for us because it's new flows. So that's the small business side of things. In the T and E segment, I just think we've got a better product. Our large card product, for example, our smart data online solution, our issue, the issue is just prefer those products. So we've had a lot of success there. And then finally, something that Michael talked a lot about, which is the B2B space, dollars 120,000,000,000,000 opportunity globally. We really are getting after those payment flows in Europe. It's mainly through a virtual card number solution. It's mainly operating in with infrastructure players in the travel space, but we're beginning to attract new verticals and it's really exciting because that's where enormous growth can come from. Yes. So the other thing, Mark, I mean, obviously, you're sitting in the UK and I know we're desperate to talk about Voca. But what about the inorganic side? When Javier was referring to product differentiation, he sort of said organic, inorganic. What about the other acquisitions? Absolutely. Let me give you a couple of examples. So we if you're shopping online in the UK or indeed across Europe, there's a good chance that the payment page that you see on your retailer's website is handled by a company we acquired many years ago called Data Cash. It's a gateway company. Because we've been able to integrate that fully into Mastercard, we can now have conversations with those retailers that a standalone gateway just can't have. We can talk to them about loyalty. We can talk to them about fraud. We can talk to them about analytics. And not only has that helped us renew the business we had, but we've driven some pretty impressive growth rates. Staying with retailers, another example, we have a lot of conversations with 100 of stores, thousands of stores even, it's obvious that they should be looking at the test and learn capability of the ATP company that we bought a couple of years ago. So we make that introduction. And again, we've had lots of success across Europe of cross selling there. So Javier, back to you again. You mentioned product and then you went on to say, well, we've got a great brand platform and we've got proximity. Maybe you want to expand that. Sure. Let me give you a few examples. So what I was referring to is we have a huge number of sponsorships of assets in pretty much every country in Europe. Now, so we go from massive platforms like the Champions League, which is the biggest event in Europe by far, it would be bigger than the Super Bowl, to the Kunfin Festival. So that's an opportunity for us to work with our clients. We also touch millions of people. Remember priceless, we have priceless cities. We have priceless experiences. We have priceless events. We have priceless causes. And today consumers, certainly in Europe, they want something different. They want an experience. They want to feel that their card is doing things for them, that their providers are doing things for them. So we partner with our clients, the banks if you like, to provide those experiences to the consumer, which brings me to the next point that we were talking about, which is proximity. I remember that we have been a single company in Europe, a single public company in Europe for more than 10 years. And we have used that time. We have continuously leveraged, used, structured and customized our global products for the European scenario. We have developed also over all these years a very well sophisticated and trained sales force. We have groups of experts deployed across the region in delivery, implementation, digital, safety, our advisors, which add a lot of value to our clients. And we have therefore expanded the consumer base and the customer base. So we now deal with governments. We now deal with travel industry leaders, with retailers, with digital giants and many others. So we have expanded the client base. I certainly think that the advisor story is really good in Europe. I know that practically every single relationship that we have uses their sizes. That's absolutely right. But I think on your last point about expanding the customer base, maybe Carlo, you'd like to tell us a bit more about that. So we were willing to expand the customer base, but we also had to expand the customer base because this intermediation is actually taking place in Europe and with the PSD2, this intermediation of banks will even accelerate. So we had and we wanted to embrace governments, merchants and FinTech, which is now a bucket of partners, which is growing 5 to 10 times faster than traditional banks. Let me give you some example. In the government space we have the cooperation with the Swedish government for the disbursement of benefits to migrants or we launched a pre pre program in Spain with the post office or again we have very strong relationship with the governments in Central Eastern Europe that really have payments at the top of their agenda. And as an example, I would mention the landmark agreement we have in Poland where the government, ourselves and the banks all mutually committed to increase the number of POS terminals by 2 in 4 years. So that's a market transformation. And of course, we have the smart cities agenda that we have seen in the video. We have now more than 60 cities where we are knowledge partners. In most of them, we are exclusive knowledge partners to open up closed loop or paper based ticketing systems into open loop and contactless models. So that's the government example. In the merchant space, of course, we're going after co brands and the last few months we signed pretty big deals with Amazon, InterContinental Hotel and Marriott. But also we are cooperating with Coca Cola and its vendors for a quite innovative mobile application for vending machines. And we have launched in January the largest debit program for a retailer with Carrefour in France. Finally, something that was very marginal a few years ago, but is gaining traction and size is the FinTech space. We are lucky enough or good enough to be the exclusive partner of the largest Fintech challengers in all the continental markets and in UK as well. We are the exclusive partner for N26 in Germany, Konigand in France and the 4 digital banks in UK, right? Yes, absolutely. So let me just build on that because what we're finding across Europe is that increasingly our customers, whether they're banks, they're merchants, they're governments, need partners who can work hand in hand with them solve complex business problems. So in Europe, over the past few years, we've been re equipping our customer facing staff to be what I call solution builders rather than just product sales. Let me give you a couple of examples. So in the UK, there's a government portal where government departments can acquire services and supplies and so on. We've payments enabled that portal. What does that mean? It means when somebody makes a procurement with one click, they do the order, the payment, the reconciliation and the settlement. It saves the government a fortune in procurement costs. We reckon it can reduce it by up to 80%. Doing something like that isn't easy. It's not an off the shelf product. We have to work with our banking partners and our technology partners and obviously government. So an example in the government side, Carlo just mentioned the digital banks. We've got a fantastic momentum in the UK with the challenger banks. So the likes of Metro and Virgin, the 4 digital banks Carlo just mentioned. The biggest of the challenger banks recently TSB, just said they're coming exclusively with us. TSB represents 5,000,000 debit cards that will be flipping over to Mastercard. Why have we gathered that momentum? Well, the reason isn't one silver bullet. It's all the things that Michael and RJ and Gary talked about added to the ability to marshal those capabilities and solutions to the client that will create value for the issuer in this case, but also great products and services for the end consumer. And then just finally, one other example of this deep engagement. So we've got a great partnership with Tesco. We're helping them build their wallet. They want to drive retail sales. We want to drive Mastercard volume working together. We can do both. But to give you just a feeling for the level of engagement, they have a big project team working on this, a big development team and we have Mastercard staff with passes on-site working with our client to develop that. So we do have to have all the fabulous products and services, but we need have this solution creation ability, which I think is part of the secret sauce Javier has created in Europe. And how many loyalty cards does Tesco have today? Well, it's got 22,000,000 club card holders. Yes. That's a significant player. So I mean obviously we have these deep relationships. Javier says we have a brilliant sales team. That's what he says to me at the end of every year actually at a certain time of year. But Carla, what about winning deals? What's happening with the deal pipeline and the momentum in Europe? The momentum has been pretty strong for quite some time now. Javier said it before, we've been gaining market share. I think that according to Nielsen, we've been gaining more than 1 percentage point per year, actually accelerating over time, which is very encouraging. And this is a combination of factors. So first of all, what we have done over the past 12 months is really to secure the markets where we are leaders. So now we have nailed down and renewed for 5 years and more markets such as Netherlands, Belgium, Italy, Sweden, the credit business in UK, Hungary, Poland. So that's lockdown. Then we have of course 2 main segments where the deals and the revenues are coming in and the driver for market share gain. 1 is the small and medium accounts. And this is, again, something that we have been creating over the past few years, which is a dedicated sales force to really engage with the smaller accounts, which require more agility, which requires a good engagement both remotely and locally. That's a long list of deals that I don't think we need to discuss today, but it's definitely a very important contributor to our market share gain. And then we have of course the large flips, the large national champions such as Exhibits, Debit in Sweden that we signed 2 months ago, the flip of Post Italiane prepaid portfolio in Italy, the large and market transformational deal in debit UK with TSB and also in Central Eastern Europe in many markets, but I would mention one in particular where we have completely changed our competitive position, which is Romania, where Besiare and Rapaizen have decided to bring all their portfolios with us. So that's pretty much the reason for our market share gain over time. So I'm going to go on to another couple of topics before we close. I mean, we mentioned VocaLink. Mark, what does VocaLink mean to you in the UK? How do you see it fitting into the market? And then Carlo, I'd like you to come in and talk a little bit about how that works across Europe. Well, I think you know, Ann, that we're super excited about the prospect of VocaLink in the U. K. Let me put it in a bit of perspective. So the total payment flows in the UK that VocaLink handle is about $8,000,000,000,000 On the Fast ACH platform, that's over 1.5 $1,000,000,000,000 If you look at total card payment flows in the UK across all schemes, it's just a little under $1,000,000,000,000 So what am I saying? ACH volume is already huge. The fast ACH, which is the latest development in the ACH world is already huge. And so we can do 2 things and that's what the 2 opportunities are. 1 is we can try and add value to the already existing flows and the other is trying to capture new flows. So there's a great example in the showcase that was referred to earlier by Michael. Something we were very good at in the advisors group was monetizing or adding value and insight to the data on our card payment network and then monetizing that. There's no reason if we transfer that skill and that knowledge that we can't do exactly the same thing with those payment flows. The first example of that is in upstairs in the showcase today and it's a fraud product. It's called AML Insight, but effectively what it does is it identifies money fraudulent money muling accounts where money jumps from bank to bank. Individual banks find it very difficult to identify, but because VocaLink has to look across all the banks, it can pick up that sort of fraudulent activity. So do go and have a look at that. But I think the other big thing we can do is, again, Michael talked about it was pay by bank app. So at the moment, 60% of the UK population use their mobile banking apps, 60% and that number is growing all the time. What you can do of course is use it, as Anne said, you can use your mobile bank app to make payments to people that you've already set up as payees. But what you can't do is use it to go shopping. You can't use it in store, in app or online to buy stuff. But what Pay by Bank app enables us to do is exactly that. It's exciting because it will just be added as new functionality into your mobile banking app. Therefore, 60% of the UK population will be able to use it overnight once it's switched on. So we've got a lot of momentum, the big banks getting behind it or are behind it. So we're very, very excited about the prospect of that. And Carlo, Europe? Well, in Europe, we are very excited about the opportunity as well. The natural and obvious ambition is to take the fastest ACH capability of VocaLink and to bring them in Continental Europe. The opportunity is huge. We're talking about $40,000,000,000,000 10 times the size of the card payment business and the landscape is pretty promising. The landscape in Europe is we have 26 ACH, different technologies, different standards, different governance models. And they have 3 features in common. All the ACH in Europe are domestic. All the ACH in Europe are talking about bringing ACH capabilities in the P2P space, in the digital space at point of sale, but they don't have acceptance. And all the ACH are stating I wouldn't, but they state that they have a level of frauds that are currently experiencing, which is concerning. And the more they're exposing current account credentials to digital, the more the problem gets bigger. So we come in a scenario, which I would say pretty fragmented and pretty fragile, and we come in with VocaLink and Mastercard. So VocaLink is well known to be the first one that brought faster ICH in the marketplace. It's well known for having the best services in Europe. And this couples with Mastercard that brings in the skin nature of our business, so the ability to bring in governance and rules. Mastercard bring in the acceptance, the acceptance that is global, omnichannel because we have contactless and e commerce, which is interoperable. And Mastercard also brings in the plumbing because we are already connected to all the European banks. So the combination of VocaLink and Mastercard in Europe is a tremendous opportunity. What we're doing now with Michael and David is to go market by market. We need to go market by market assess whether we want to go in cooperation with the local ACH, the local legacy, the local processors or whether we want to go in competition with them. But definitely, it's a very clear opportunity and we have a very clear roadmap perhaps. That's brilliant. We've got about 2 minutes left, Javier. All right. And I know you're desperate to talk to us about PSD2. So is it a good thing? Is it a bad thing? What does it mean? What is it you mean? It's a good thing. It's a very good thing. So you heard how well prepared we are, right? Because probably the most important thing about PSD2 is open banking. And if I have to summarize open banking is the ability for almost anyone to get into your bank account, which is ACH. So and it's really interesting to see what's going on in the market. The different stakeholders are taking very different positions, right? So we see the banks fear this intermediation. Now anybody can go into my bank account. It's not that difficult to get a license in Europe, especially will be. Retailers now are saying, well, I want to own my own data. I want to own my own payments. I want to generate my own information. I now can convince my clients to go straight to the bank account, right? We have the large tech players who are increasing their interest in payments. You have it with Facebook, Amazon, PayPal, Apple, so many and so many more. And the Fintechs who want to capitalize on the disruption. But so do we. We can and we will capitalize on the disruption as well. So what are the things that we see that are popping up as opportunities for Mastercard? 1 is offering the services we already offer, not only to our existing clients, but to the new entries. 2nd, you just heard it, 1 stop shop. Now Mastercard can offer you the opportunity to route transactions whether it be through the card rails or through the ACH rails. And last but not least, part of the PSD2 is also information flows. So we will now be able to participate in those information flows and do things like for example, permission management, which will be necessary or data transfer. So we are really excited about PSD2. Only you could be as excited about new regulation. All right. With that, I'd just like to thank the panel for coming up. Obviously, if you're interested in Europe, they're all around later. And it gives me great pleasure to move on to the next part of the program. Thank you, Anne. Thank you. So now we're going to hear about Asia Pacific and Latin America. And to talk to us about Asia Pacific, we've got our 2 Co Presidents who are Ling Hai and Ari Sarker and they'll be followed by Gilbert to call Dart who will talk to you about the great growth we've seen in Latin America. Thank you. Thank you, Anne. I am Lin Hai. It's a pleasure to be here and sharing the stage with Ari to talk to you about how exciting Asia Pacific is for all of us. When I thank you. So when I think about Asia Pacific, three words come to my mind, big, diverse and vibrant. We have some of the world's most vibrant and important economies in Asia Pacific, India, China, Australia, Korea, Japan. We also have more than 60% of the global population living in Asia, some of whom are the wealthiest in the world and most of whom are digitally savvy and connected. So we're very excited about the opportunities this presents for all of us in Asia. Let me tell you why. First of all, we actually see huge opportunities in the affluent segment and cross border travel, really our sweet spot. Because of the rising wealth and a growing middle class in Asia Pacific. We have done 2 things that have positioned Mastercard really well in the region. 1st of all, under the leadership of Michael and his product team, I think we have a fantastic product platform with best in class benefits that speak directly to the needs of our affluent customers. What are those? Well, family, affluent people in Asia have money, but no time, so saving time and also money cannot buy priceless experiences. The second thing is really airline co brands, a very relevant proposition to the world travelers living in Asia. We're very, very proud all the airline partnerships that we have developed in Asia Pacific, including Asia Miles, Qantas, Japan Airlines, Thai Airways, Singapore Airlines, just to name a few. The second opportunity that we are really, really excited about is really in commercial. Now here I am talking about large corporate T and E. I'm talking about small business payments. I'm also talking about B2B flows. B2B alone in Asia Pacific is about US54 $1,000,000,000,000 So what are we doing about this? Well, we're making huge progress in the online travel vertical. We are also doing something called supplier enablement. It's the simple task of just enabling suppliers to take card payments or being able to accept virtual card numbers. We're working with governments to embed our payment solutions into national trade platforms and a great example is Singapore. And more importantly, now we are piloting some of the most innovative solutions such as blockchain in our trade corridors. The 3rd opportunity that we're very excited about is actually debit, right? As you can see on this slide, Asia's addressable cash opportunity is about US39 $1,000,000,000,000 and debit is a great cash conversion tool. Now we see this in very developed markets such as Australia and Singapore because of contactless payments. We also see this in emerging markets where almost every single government has a national agenda of financial inclusion and cashless payments. We're very proud to tell you today that in markets such as India and Indonesia, we are the leader in debit. We're the market leader in debit. So very exciting. We continue to see huge room in driving acceptance development. In AP, our aim is to triple our acceptance coverage led by China, India and ASEAN, spending e commerce, low value payments, telcos and the transit, which is also a very important area for us. Our list of priorities also include digital and domestic relevance. I'm not going to go into a lot of detail right now because Ari and I will talk about those when we cover China and India. But in summary, we see huge opportunities in Asia and Mastercard is really well positioned in this region. All right. Now I'm going to talk about let's go on to the 2 important markets in Asia Pacific. First, China and then India. I do have a disclaimer here very quickly. The sequencing, I'm going to read this to you, so I don't screw this up. The sequencing of the discussions is merely in alphabetical order because C comes before I and it is in no way reflects the relative importance of these two countries. And Martina, I don't think this message has been approved by Warren yet. All right. Jokes aside, let me start with China. China is really about 2 things, new opportunities and existing businesses. And I know you're very anxious to know about our market entry in China, so let me get this one out of the way first. Market entry will remain our strategic focus for the next 12 to 24 months. Now it is worth noting the China opportunity will continue to be a medium to long term opportunity. Here's why. The licensing process itself will probably take another 12 to a year and a half at a minimum. And also getting the license really is one step in a very long journey. There are many, many pieces we have to put in place. For instance, the on soil infrastructure, domestic acceptance, talent and people acquisition. Those are all the things we're working on very, very fast. And the important thing to remember is also, we're getting huge support around the world within Mastercard. I'm very grateful to all the colleagues sitting here, safety, security, digital products. Those are all the things that will become very important for us to be more effective once we enter China. So now let me tell you a little bit about the existing business, how we are doing what we are doing about it. As you know, Mastercard has been in China for over 30 years now. We have actually built a very sizable and vibrant cross border business, which is still growing this year. And while we make our domestic inroads, it's very important for all of us to focus on protecting and continue to expand our cross border business. And we're seeing very solid growth on the cross border spend this year. On the issuing side, we're doing several things. First of all, we are managing the dual brand to single brand transition and that's going really well. We continue to do both, but this year we have quadrupled our single brand issuing. We will continue to develop relevant cross border propositions that speak directly to our target segments, things such as merchant funded rewards and cash back offers. And the other thing that we're doing is really on the debit front. We have launched our first single branded debit card with Bank of China and we have more in the pipeline to come. This is going to be a long term growth driver for us and we're very, very excited. On acceptance, our plan is to really expand and grow both physical and digital acceptance to reach the critical mass that's needed. And on digital, I think Craig Vosberg talked about both digital enablement, but also digital partnership. And I think that's the formula in China as well. We need to enable our traditional bank customers to compete effectively using our digital assets, but we're also working really intensely with the digital players in China. Last but not least, let me also touch on our service differentiation in China. I do believe Mastercard has unparalleled service assets in the world that includes loyalty, that includes data and analytics, safety and security. When Mastercard can touch all the transactions on our cards in China, that service differentiation become even more powerful and more meaningful. So this concludes my discussion on China. And there's another country, which I said, which is called India that I wake up every morning thinking about. And but thank goodness, I only need to do the thinking because India is in the very capable hands of my twin brother and partner in crime, Mr. Ari Sarkar. Ari, the stage is all yours and I'm leaving the clicker here, I'm not stealing that. Thank you, Ling Hai for that introduction. Good morning, everyone. I must admit, Chuck is the big brother of the Asia Pacific region. So I do pay my respects to Ling Hai every morning when I say him at the office. So I'm here to talk about India. And what I'd like to do is give you a sense of where India is today. India over the last many decades has had the cycles of rising optimism with less than satisfactory delivery on the promise. We believe India is breaking away from their past challenges and it's at an inflection point and let's talk about why that's the case. Growth outlook, a $2,500,000,000,000 economy, which in the coming decade will more than double to cross over 5,000,000,000,000 dollars Infrastructure, hard infrastructure investments is gaining momentum, tremendous progress on power and multi 1,000,000,000 of dollars of investment in rolled, rates and airport infrastructure both for expansion as well as modernization. On digital enablement, very significant progress. A country with 1,200,000,000 citizens on a digital ID biometric system will have a profound impact on digital services in the country in the coming decade. Many of those things have already started to happen. The other big play for enabling Digital India is the infrastructure that India is laying on the telecom side. 4 gs LTE technology with fiber broadband going deep into rural India is again going to have a very major impact on digital services in general. And more importantly for us, payments is going to be a very vital piece of enabling commerce deep into rural India. I'll talk about government policy, but FinTech activity is at a heightened pace in India with multi 1,000,000,000 of dollars of investment, both from domestic players as well as international players, The likes of Alibaba, WeChat, Tencent and others are already present in India and we are seeing some very significant innovation from local Fintech startups in India. The reason I left governments for last is, it is a real enabler and the kind of political leadership we are seeing in India today, we haven't seen that in decades. And the implications of that is a government which is driven to go after what we call the parallel economy and bring that to mainstream. Last year, India went through some very significant changes. A tax amnesty scheme was followed with a currency demonetization drive and that in the current year has led to the next wave of change with the radical tax reform with the goods and services tax reform. And I'll spend 30 seconds on what GST really means. GST really will be the real game changer for digital payments in India. At a merchant level, the previous tax regime created an incentive for the merchant to take cash transactions from consumers to avoid taxes. The current GST rules provides the merchant the opportunity to offset the input taxes the merchant would have paid from the output taxes they recover from the consumer. Therefore, there is no incentive for the merchant to let the consumer not pay the taxes. I think that's going to have a very profound impact in the coming decade. So what's the size of the price? If we were to look ahead, India today is at roughly depending on what research you read is a 3% to 5% penetration of PCE. The outlook on India is in the coming decade you could well see 10x penetration on that number and that's only talking about retail consumer payments. Many of my colleagues have talked about commercial, which is an equally significant opportunity in the Indian market. So what's our call to action and where are we today? Current core business is in great health. We are really excited that the growth in the market and our current position with debit despite the emergence of a domestic network and scheme by the way of a name called rupee, we are market leaders in India with debit and this is the fastest growth vertical on spends in the Indian market. We are making great traction on the affluent card propositions. We've gone through a major product revitalized across the region and have a really strong pipeline in India for the affluent product. I'm really excited that this will also have some very significant traction for us in the coming decade. Acceptance environment, which is critical, as you can imagine, for our industry and the scale that we can bring with building a really robust acceptance environment, India has a merchant universe of 60,000,000 merchants. And we are now looking at an outlook, which in the last 12 months alone, India has added over a 1000000 new merchants to electronic payments. And with QR code innovation and MPOS and other enablers, you're going to see this number from around $2,900,000 merchant universe on electronic payments growing roughly 5 times from the current level in the coming decade. We're also looking at and working on some very significant partnerships in the digital space. The entrant of new telcos in India and the entry of payment banks with Reliance Jio and Airtel and others who've come in. We have partnered with them bringing our suite of digital payments capabilities in an open interoperable environment is also going to have some very profound impact on our growth story in India. We've talked about QR. It's at the showcase as well in the coming years. The lower price point for merchant usage on QR is going to have a very profound impact with the GST and other such regulations to drive digital in India. We've also led on the front foot on policy engagements in India with respect to transit and new capabilities. You saw the video on TFL and we've used that very effectively with regulators and development agencies in India to espouse a case for open loop transit payments. And we must admit, we're making some great progress. 6 out of 8 bids have gone Mastercard's way and will have again major implications for us in the years ahead. We've spoken a lot about commercial, so I won't spend more time on that. We're going to essentially build our global capabilities in the India market. We're seeing some good traction in the local market above all, really exciting market opportunity. We're expanding our teams. We're investing in marketing on the brand and are very enthusiastic about what this market opportunity will emerge in the coming decade. With that, I will invite my colleague and friend, Gilberto Caldar, President of Latin America to provide an update on LatAm. Thanks, Harry. Some things don't change, right, Craig? So thanks, Harry, for the introduction. I'm glad to be here to be talking about the LHC region performance and growth opportunities. I want to start by saying that in spite of the political and economic turbulences that you've been seeing in the region, we've been a growth engine for Mastercard for the last couple of years. Actually over the last 18 quarters, we've been outperforming the market in a row and we still see a lot of growth opportunities in the region. So we really feel excited about the region momentum today and going forward. And let me tell you why we feel good. First, we have a very positive demographics, if you will. We are a young and vibrant continent, where 50% of our population is under the age of 30 years old and 67% will be on the working age by the year 2020 5. Thus, we're going to continue fueling consumption. The region PCE has reached $3,000,000,000,000 has been growing at a CAGR of 9 percent over the last couple of years and it is expected to continue growing at 8% going forward. 2nd, we are the most urbanized region in the world. 80% of the population lives in cities. And 3rd, we are one of the most digitally connected population in the world. Over 40% of our population has smartphones. And then when all of that translate into payments, the opportunity lying in front of us is tremendous. In consumer payments, for example, we are still under penetrated, only 21% of PCE is with electronic payments as we speak. In countries outside of Brazil and Chile, the penetration is still incipient is on the mid teens. So it's a lot of potential. There's still a lot of untapped payment flows as you can on the slide, dollars 5,000,000,000,000 in cash and checks, dollars 7,000,000,000,000 in ACH, spaces that will be able to penetrate more with our new digital and ACH capabilities in the region. So on our strategy execution, you heard a lot about the growth, diversify and build. That's clearly enabled us in Latin America to have achieved and established market leadership in a couple of very important markets. We achieved market leadership in Brazil, in Chile, in Colombia, in Venezuela, in Uruguay. These countries together represent 45% to 50% of the purchase volume in the region. And this growth has been really kind of a consequence, if you will, of a strong local presence and solid partnerships with players like Itau, Santander, Scotiabank, Bancolombia, Davivienda, Citibanamex, just to name a few. At the same time, as you heard throughout the day today, we have diversified our service strategy and done a lot of the services that you heard a lot in terms of data services and so on. So I'm not going to go long in there. So as we look forward, we continue kind of focused on executing our strategy and sustaining the growth of our core business and partnership, displacing cash by growing acceptance and penetrating new flows, winning in digital by expanding the MasterPath's presence beyond Argentina, Brazil, Mexico and Colombia where we already are and deploying tokenization and authentication services in support to our issuer wallets. So I cannot talk about Latin America without talking about Brazil. And so let me kind of talk about Brazil. Brazil is a great example of how Mastercard has been executing our strategy in the market and outperforming our competitors. As you know, Brazil is the largest market in the region, still kind of, although developed the most developed payments industry in the region, we only have a 27% over PCE and we still see a lot of underpenetrated flows similar to the rest of the region of Masterpass. We're also very pleased, as I mentioned before, to share that we have at the end of 2016, achieved leadership in the Brazilian market. And then this is clearly demonstrating that our strategy execution is actually working well and we'll continue focus on deploying it and actually perfecting the execution. I have a couple of examples. My time is almost up, but just on the growth side, we have very strong partnerships, as I mentioned. Here's a couple of examples of these partners of Itau, Santander and Caixa just to name a few. We also have diversified our partnerships not only with banks but with retailers, innovative players as you see on the slide, which have opened up spaces for us in the issuing, the acquiring space and in card on file spaces that kind of helped us to continue growing in the country. And in the service side in Brazil where we kind of switch 100% of the purchase volume, we have actually a privileged position to offer differentiating services to our customers. Just two quick examples of it. 1st, offering test and learning capabilities through our APT tool, which we've been doing a lot in the country. 2nd, enhancing the security in the digital space by offering fraud tools such as MDAS and authentication. When it comes to loyalty, we have Surpanda, which is our merchant funded loyalty platform in the country with more than 6,000,000 cardholders subscribed, which is a clear kind of differentiator for us in the marketplace. In the transited space, as you've seen in other regions, we have 3 major projects going on in the urban areas of Sao Paulo, Rio and Curitiba. And we continue to expand and grow our commercial business and exploring more opportunities to capture new flows on ACH, B2B, B2P spaces where Vocalink actually will be a great asset for us to explore. So really feel excited about what's happened in the region. There's a good momentum going on and there's growth ahead of us. So we feel good about. And with that, I want to pass to Anne to kind of wrap up and closing remarks on international markets. Thanks. And he slapped me the clicker, which is great. Look, I understand that I'm standing in front of an audience of analysts and the CFO, which is going to be a precarious place to be. So just to conclude this section, I would like to say the international markets is vibrant, has some of the world's biggest economies. The great news is we've still got very high cash usage and we've got young and digitally savvy populations. We've got incredibly strong relationships across all of our markets. And of course, we're moving to that nirvana of the one stop shop. So the real thing for us and the reason that we're focused on winning in digital is that digital conversion is really driving the migration of cash to electronic in our markets, which is the big goal that we have around the world. And with that, I'd love to invite Martina to the stage or the video, sorry. I'd love to queue the video. And that's the problem because I thought Martina should come up here and you can see us in our corporate colors, but okay. Thank you. Good morning, everybody, and thank you for joining us either here in the room or on the webcast. And for those of you here in the room, I hope you enjoy these absolutely beautiful facilities. We are right now in the boardroom of the New York Stock Exchange. And the New York Stock Exchange has actually redone these facilities. Now I tell you why I really like these kind of facilities. I like them because when you are a New York Stock Exchange registered company, you get them for free. So if you guys complain that we are not in Midtown, but that we are in downtown and you have to take a $2.50 subway ride, I'm sorry about that. Now what I didn't realize, okay, what I didn't realize is that Warren seems to have taken this whole cost management thing to a whole another level. The chairs that you're seeing actually here on the stage are the shares that we're using in purchase. So he chipped in him from purchase. He didn't want to pay the rental furniture company for that kind of fee. So Warren, I love it. They're actually from Ajay's office for those of you who know Ajay's office. So anyhow, as the last presenter before the Q and A session, I would like to pull our story together from a financial perspective. So let me queue up here the first chart. So let's start with our 2017 financial outlook. And I know you guys have been feverishly looking for our quarter to date drivers update and you couldn't find any chart in there. So I'm just going to talk about that for a minute. All of the drivers business drivers are either similar to what we have seen from the numbers that we actually talked about at the July earnings call for the July 31st period. So until the end of August, it's similar drivers with the exception of one, which is GDV, which is slightly better than what we had seen in that period. So for the full year 2017, our expectation for net revenue growth have slightly improved since our July earnings call. That's primarily due to the stronger performance of our various services lines as well as some of the business drivers. So we now expect net revenue to grow near the high end of the low double digit growth range and that is up from low double digit. We continue to expect on operating expenses to grow them in the high single digit range. There's absolutely no change from what we had said before. And with that, we anticipate positive operating leverage for the full year of 2017. Now all of these numbers by the way are on a currency neutral basis that exclude acquisitions as well as exclude special items. Our recent acquisitions, they're still forecasted to be about 0 point 0 $5 to 0 point 0 6 dollars dilutive for 2017 and that's primarily driven because of the purchase accounting as well as the integration costs. And there's no change, by the way, to our expectation for the tax rate. And we now expect, given the depreciation of the U. S. Dollar, a slight benefit from foreign exchange for the year. So let me get you to the next chart. And here, I want to talk a little bit about our investment priorities and the focus that we have. You heard my colleagues talk about a lot of these areas. I'm not going to regurgitate all of these areas, but I'm going to just pick out a few and just want to touch on that. So first of all, in terms of growing our core business, digital is super important for us, right? It's right at the top of the list. And Michael and Gary have talked about this. We've made significant progress when but there's still quite a bit to do. And I hope you heard that through all of the sessions as we touched on digital. Now with our tokenization solutions, so as we call it affectionately, MDes, I don't know who comes up with these kind of words, but okay, our tokenization solutions, not my team, we are enabling the proliferation of secure payment potentials across a variety of device types. And we continue to develop and deploy MasterPaths and we're supporting it as you have seen for a big part of this year with an awareness campaign. We're also continuing our focus on growing acceptance around the world. Now secondly, with the relatively low penetration of electronic forms of payments in emerging markets, investing in geographic expansion remains at the top of our agenda. So you've heard from Anne, from Ling Hai, from Arie and from Gilberto on some of the more significant opportunities that we're pursuing. And we do believe that, that is very important for our long term growth. Thirdly, from a safety and security point of view, you heard this remains to be a very strong growth driver for us. And as Ajay Bhalla outlined, we have made both organic and inorganic investments to address this opportunity and you should expect that to continue. And finally, with the addition of fast ACH capabilities, we're investing in going after new payment flows. And this includes not only investing in the technology and the related apps and services, as Michael talked about, but it's also in the talked about, but it's also in the business development effort to drive expanded customer relationships and to, of course, expand the geographic footprint. So I thought at this point in time, it would be good to just take a minute and talk about the business model for Fast ACH. We get a lot of your questions through our various meetings that we have. As Michael laid out, there are really 3 different levers or levels on which we can operate: the infrastructure level, the scheme and or the app level as well as the services level. We have, by the way, capabilities to address each of these levels. At the infrastructure level, over 25 countries have or are looking to implement fast ACH systems. And the approach and the ownership of these kind of networks will vary by country and we may participate in many different forms. So one form how we could be participating is as an owner operator similar to what we do in the U. K. Or we might be participating as a technology provider like in the United States with the clearinghouse. And as you can see from the chart, depending on how we participate, the economic model is different. So if it's an operator model, based on our current contracts, banks. And in the case when we are a technology provider, we would have a licensing arrangement in place that can be nicely scaled. At the scheme or the app level, whether it be a P2M app, such as the Pay by Bank in the U. K. Or a bill pay service or a B2B application, we will pursue value based pricing. So in the case of the Pay by Bank example, that's the push debit payment that Marc Bennett was talking about in the UK. These economics are similar to debit economics. And in each case, the goal is to capture additional electronic payment flows with a scalable economic model. And at the services level, we are offering value added services such as the fraud detection product, again, that Mark was describing, the AML Insights product. I think Michael referenced that too. And we are demoing it up in the showcase as we had said before. But that's one example of these type of services that we can provide. And by the way, from a value proposition point of view, we believe that those services would be developed and priced fairly similar to what we have already done with our many different other services that we had developed over the last many years and that we're offering today. So overall, I hope you can get the sense from our management team that they're pretty excited about this opportunity for generating new flows with our fast ACH technology, but I also believe that it would take a few years to have a meaningful contribution to our top line. There's a lot of work that the team has to do. So let me move on and switch gears and talk a little bit about our capital structure. So our capital planning priorities have not changed. Again, we want to preserve a strong balance sheet, liquidity and credit rating. And that enables us by the way to make the investments that are needed to drive the long term growth of our business. But given the strong cash flow capability of this business, we continue to expect to have excess cash and we would continue to be returning that excess cash to our shareholders. And at this point, our bias continues to remain towards share repurchases as they provide more flexibility for the business overall. Now we intend to move towards a more normalized debt to equity ratio over time, as we have been doing over the last 3 years or so. But we need to keep in mind that we do have to keep and preserve our strong credit rating, which is important considerations when our customers choose with whom to do business from a payments point of view given the settlement counterparty risk that is between those parties and us. Now having said all of this, I just want to show you the chart what we did since the IPO in 2006. So we have returned more than EUR 23,000,000,000 to our shareholders either through dividends or share repurchases. And as you can see on this slide, over the past several years, we have actually increased the capital return. So in 2016, you see a number of $4,300,000,000 And we have continued that very strong trajectory into this year. So year to date, this is until the end of August, we have already returned $3,200,000,000 And this includes the 16% dividend increase that we had announced last December, which is, by the way, the 6th consecutive year of dividend increases. And at the moment, we have about €2,500,000,000 remaining under our current share repurchase authorization. I'm going to come to this next chart. This is a little different for you. So this is for the first time in many years where we updated this chart, which depicts our long term growth opportunity. So as you know, we have always talked about PCE growth and the secular shift to electronic forms of payments as the primary driver of volume growth. But with the acquisition of VocaLink and how we have actually widened our purview in terms of looking at new payment flows, so I'm pecking to that $225,000,000,000,000 that we're talking about today, we are updating this chart in order to reflect this broader set of opportunities. So globally, we continue to expect TCE to be about 5% growth. This is no change from what we have heard from us before. It differs obviously by country. It obviously also differs by the macroeconomic cycles. But from a long term average point of view, we kind of expect 5 percent. That's where it has been historically too. Now while we cannot really influence PCE, we have been and continue to do a lot of work to drive the secular trend from cash and check to electronic forms and payments. And that we believe continues to be in the 4% to 5% range annually and that's adjusted for the available market due to domestic schemes that are operating quite a few markets. And by the way, these numbers again no different than what you have seen from us before. So during this morning's presentation, you have heard many examples to drive particular growth such as from Greg, you heard expanding into new verticals like rent, healthcare and utilities. You heard from our emerging markets, but also in Europe, partnering with the new digital banks. You heard from Anne, making cities smarter. And you heard from Gary and from Michael, giving merchants and consumers So our lead So our lead on virtual card technology, the Mastercard B2B Hub and the Mastercard Send capabilities and our fast ACH assets, all of those comprehensively together allow us to go after these B2B, the B2C, the B2B, the P2P and the disbursement opportunities. So these $225,000,000,000,000 of opportunities and that's essentially summed up in this orange box that you can see on the chart. And then on top of that, on top of this volume and transaction opportunity, there are a number of factors that influence our revenues, including services growth, the mix, pricing and of course, share. Now putting all of this together, we continue to believe that the long term revenue growth opportunity for our business is in the lowtomidteens range over the long term. So I want to just pick out one more thing on this, which is our many different services that we are offering to our customers, and you heard quite a few examples of that. They just remain a very important differentiator from us, right? You heard a lot of examples on this. And you may recall that I showed a very similar chart to this last year at the Investor Day. What we've done here is we just updated the chart for you. So services when you take them all in totality together remains a significant portion of our revenues about 25 percent of the net revenues. The growth remains very robust. You see the updated numbers here with the net revenue CAGR from the 2014 2018 period of over 25 percent well over 25 percent inclusive acquisitions. And when you just peel apart the acquisitions, it's about 6 percentage points. And as a reminder, some of these revenues show up in the transaction processing fee. So that is when they are priced on a per transaction basis. So a lot of our safety and security services are priced that way as well as our gateway by the way. And then the balance of the revenues under these various services show up in the other revenue line as it is priced differently separately. So these are like things like our consulting business and our loyalty business. So we believe that our value added services will continue to be a key enabler to our long term growth objectives and aspirations. As these services expand in scale, they're increasingly contributing to our overall profitability. So now let me switch gears a little bit and get into something more mundane, okay? The new revenue recognition rules, lots of you have always asked us something about that and what the impact would be to us in Mastercard. And just as a reminder, the primary impact is that certain customer incentives will be recognized over the life of a customer contract rather than when earned by a customer. And there was some debate when the initial account here in the P and L, these incentives would actually occur. And we now finally have clarity on that. And they will be treated as contra revenue similar to how we have treated them up to this point. And we will adopt these new rules actually prospectively as of January 1, 2018. We did a preliminary analysis for 2017 and determined that the impact for 2017 on 2017 revenues will actually be minimal. So now let me go back and talk a little bit about our long term financial performance objectives. And again, I want to remind you, they are currency neutral, they exclude acquisitions, they are normalized for tax and they're based on the current revenue recognition rules. So our underlying business fundamentals, as you just have seen this morning, remain strong and our investments are really showing some tremendous results. We're now expecting that our business can deliver a net revenue CAGR at the high end of the low double digit range during the 2016 to 2018 performance period. And this is up primarily due to increased services revenues and stronger business drivers just due to the terrific work that all of our people are doing around the world. And we continue to manage the business to deliver an operating margin above a minimum of 50% each year. That's the minimum when you put all of the businesses together. And we now expect earnings per share CAGR during that period of approximately 20%, up from the mid teens due primarily to the stronger revenues. So I just want to sum up for you our investment thesis. We have a significant untapped opportunity ahead of us, both with the secular trend and the new flows that we're going after. We have a comprehensive strategy and we're executing well against it. We are building new capabilities and differentiating with services. And we're investing in the right areas. And at the same time, we're returning significant capital to our investors. So overall, we believe that we are very well positioned for long term growth. With that, I would like to thank you and my colleagues are going to come up now and so that we can start the Q and A session. Thank you. Ladies and gentlemen, please welcome back Ajay Banga, Anne Karnes and Craig Vossberg, as well as President, Global Products and Solutions, Gary Flood President, Operations and Technology, Ed McLaughlin General Counsel and Chief Franchise Officer, Tim Murphy and moderated by Warren Neeshaw. All right, great. It looks like we're ready to go. I'm going to moderate things here and direct traffic a little bit. There are some mics that we're going to hand out. If you could just please state your name and company affiliation before asking a question. We're going to cut this Q and A a little shorter, so we're going to try to do this rapid, both question and answer. So David? Thank you. David Togut with Evercore ISI. Martina, question for you on Slide 76, your long term revenue growth slide. In that last bucket, you include pricing as a driver. Can you talk about pricing quantitatively going forward? And more specifically, how do you think about the pricing opportunity in Europe now that VC Europe is moving from association based pricing to market based pricing? So I start a little bit overall from a worldwide perspective and I'm going to hand it over to Javier to talk a bit about Europe. But from a pricing point of view, our philosophy really has not changed, right? We do value based pricing, so it depends on what kind of value we are bringing to the customer and that's how we recognize it. So nothing has changed. And you guys probably remember when we put out the 2016 to 2018 objectives out there, we said there will be a little bit of pricing, minimal pricing included in that. We have not changed our view from that point of view. You want to talk a little bit about Europe? So nothing to add there. I think you've seen how in Europe we really price for value. So price is not a it is always of course something we discuss with clients, but it's not the driver of the decision making. Just as a quick follow-up, new markets for virtual payments were highlighted today. You're already strong in travel technology and fleet cards. What are the big new verticals you're looking at for virtual payments and B2B? Do we call on Sachin? Okay. You need a microphone. Just introduce yourself, Sachin. I'm Sachin Mehra. I'm responsible for Global Commercial Products at Mastercard. Some of the verticals which are actually particularly attractive in the virtual card space are the media space, the construction space, commercial real estate, insurance, healthcare. So these are some really, really interesting areas in which we're seeing real opportunity and potential for growth. Great. Lisa? It's Lisa Ellis from Bernstein. Can you guys directly address how you're dealing with the competitive threat from Alipay as they're making aggressively investments ex China through MoneyGram, through Paytm, through HelloPay, etcetera? Let me take that to start off with. I would say, 1st of all, Alipay's model outside of China is still unproven to me. I think in China, it was a unique combination of circumstances that enabled Alibaba, Alipay, WeChat and all of them to play a very important role there. That isn't quite the case in a number of other markets. And so I'm going to watch how that develops and goes. Having said that, I'm not going to respond to them without thinking about what we're doing in this space. What are they doing really? They're enabling digital commerce to proceed. You've had to spend a lot of time on everything we're doing on digital commerce. We're doing it in all the markets where those people are also investing. And so our approach to this is both do what you need to do to be there in that market and meet unmet needs, but also keep an eye on them and in some ways partner with them when our assets are complementary. So we're actually helping and discussing with a number of them everything from diagnosing fraudulent tools on their websites to what they could be doing in different spaces that could use data, that could use foreign exchange clearing systems. There's things we could do together. I don't know what that will lead to, but I do know that what we need to do is to keep our foot forward on what we are doing in digital. That's the best way to grow and protect and develop what we've got in our asset base, right? And Mingai, you got something else on your favorite friends in China? Remember, there were very few Indian names there. They were all Chinese names. So, I have no answer. The other thing I think that's worth pointing out is Alibaba today is a customer of ours as well on the cross border side. I mean, AliExpress, border and we'll continue to explore border and we'll continue to explore with them on broader partnerships on the cross border side. And that's true for Alibaba, but that's also true for other digital players in China. And then once we enter China, we'll figure out what other things we can do together. You should take the perspective of what we did with PayPal, where everybody thought of us only as being competitive. But in actual fact, there's a lot we can do together while ensuring that our brands are still competitive at the front end with their consumer in a marketplace. That's not dissimilar to our learnings and approaches to the big giants from other countries. Great. Next question please. Darren at the back. Thanks guys. It's Darren from Barclays. Ajay, just the first question is around the services opportunities. You've done a pretty big initiative over the past few years investing in different areas, building that out, and that's clearly helped your growth profile. I guess, where are you now? Where is your mind in terms of incremental? Do you still need more? Was VocaLink the sort of capstone for now or are we going to see more deals like that around the world to complement? So VocaLink to me is actually not a service as much as a whole different way of attacking alternative payment flows that traditionally were stronger in non card rails than card rails. The services actually new data, criterion, those are real examples of services. And I would say that it's really hard for me to tell you that there's a time to put pencils down on services because these are continually evolving in today's circumstance. They evolve with the technology. New data as a firm would not have been on our radar screen 5 years ago. But today, they're critically relevant to providing safety and security for devices. So you can read what as Bala was saying, you can read how people use their device, how they type, what they type, the frequency, the speed, the manner. That kind of thing enables you to get intellectual heft at applying to whether that device is being used by me or by Ajay Bhalla, who is masquerading as me, which he could, and get away with my salary, right, which she has tried to do in the past. So the point is that and the thing is that new data would not have been on my radar screen 4, 5 years ago. And therefore, I can't tell you that there will be another one in a year's time, in 6 months' time, in 3 months' time. At any point of time, Martina's team is looking at somewhere between 5 10 acquisitions. We probably end up doing 1 or 2 out of those on the average year and our strike rate of 10%, 20% is at best what we would get. So they're a little overworked about the M and A deal, but we're actually very careful what we actually do. It's got to fit into the portfolio of services that you saw in Martinez listing. It's got to bring us either technology we don't have, a geographic footprint we don't have, some people skills we don't possess in some way or some form of distribution with an embedded client base that we would find impossible to break into. It has to bring one of those or multiple of those things for us to work with them. Okay. That's helpful. Just a quick follow-up for Martina. Thanks. On the FASB adjustments, I know you mentioned for 2017 not a material impact, but just so we could help understand 2018, just longer term. I mean, you're going to amortize some of these over a few years now, obviously. Is that something we should be expecting to have very little in terms of material impact on 2018 and beyond as well in revenues or? That's very hard to forecast at this point in time because it also depends what kind of deals you're actually signing in 2018 and that obviously impacts the amortization of those incentives. So at the moment, I can only tell you for 2017, it had a minimal impact. Thanks, Scott. Great. Brian? Just behind you there, Jason. Hi. It's Brian Keane, Deutsche Bank. The B2B opportunity comes up a lot. It's starting to feel real to me though time. Can you explain how do you convert that volume? How do you get it on to Mastercard rails and what kind of yields are we talking about in that? Okay. Sachin, you want to give that a try? As we think about the B2B opportunity, I think it's important to recognize as we did up there that the channels of B2B payments could go across point of sale or the point of interaction and the accounts payable channel. And there are multiple ways to go after this. It's not just about cards. Cards will be a big part of it as it relates to the virtual card strategy, which we have in place. We've been executing on that. It's been growing in a very nice space and we'll continue to go down that path based on some of the new verticals, which we want to penetrate and the new segments we want to get into as it relates to virtual cards in the B2B space. But there is more to it than just the card side of the business. And it's around this is a very big need in the B2B space as it relates to data, data particularly as it relates to reconciliation for folks who are receiving money, I. E. The payees and their ability to actually get data associated with what they're getting paid for. And there's a real opportunity to actually work across the ACH rails to enhance that ACH payment flow with enhanced data and monetize that. And that would be the other approach for us to be taking and that's what we're going down the path of. In fact, the B2B Hub which we talk about is around providing both card and non card rails to allow to meet the needs for working capital, data, efficiency and control in the B2B space, allowing us to monetize both through the card rails as well as non card rails. The only thing I'd add to that is you should think of us we've been growing in the commercial business, the overall business that we've been able to tackle with the tools we had till now. We've been growing at a faster rate than the typical core product growth rate. I don't think you should expect that to change, but figuring out how to monetize the opportunity that VocaLink and their technology and their people and their skills represent and what that would do to our growth rate going in the future, that was still a year or 2 away because of the reason that the business model in that space tends to vary a little country by country, opportunity by opportunity, whether we get it at the infrastructure level or the app level or the services level or a combination of all three, that's all right now WIP. And so we understand that there's an opportunity to address that space. What we don't yet know adequately to give you clear guidance on is how does that translate into dollars and cents tomorrow morning. Don't assume that because I can't give it to you. If I gave it to you, it would be a mistake. It will change every time for the next 2 years. We're going to learn our way through that because VocaLink has had experiences in how many countries now, David? Five countries. And would you give a microphone for a second? Talk to us a little bit about your experiences on revenue generating opportunities in those 5 countries and others that you're talking to? Well, I think this is a piece of work in progress because prior to being acquired by Mastercard, Bokalinks have a fairly constrained balance sheet. So we always chose to go to market in collaboration with somebody else as an operator and we allowed the local countries to determine what scheme rules they wanted to have. But if you look at ACH as a way of making payments, it's quite localized where we market. It really needs a high degree of professionalization. And the opportunity to drive business to business flows in a profitable way across this is opened up quite dramatically. Once you can invest in scheme structures and the rules, sorts of things you see in card. The other characteristic of ACH is they're intensely national and they probably shouldn't be. Think about the ability of moving money real time within the U. S. Should it stop at the U. S. Borders or should it move beyond that, what the businesses need. So long term, as I just said, is a great opportunity. One of the things we were trying to do today was to make you see what we are seeing with VocaLink and its capability that goes beyond Mastercard Send. Even with Mastercard Send being enhanced by our Home Send collaboration, which allows us to go beyond debit card to debit card connectivity all the way into mobile phones and a Western Union pickup center. That itself is more than the old Mastercard Sense could do by itself, which by the way is what our competitors also have. They don't have HomeSets. Beyond that, the data, messaging and instant payment systems that a fast ACS system bring to us is yet another level of opportunity. That's what we were trying to make sure you understood and you knew that our eyes were very clearly focused on that opportunity. That's why we did that transaction. Getting a transaction done to get 17 banks to approve a sale to 1 party is not a transaction I want to do again. But I did it because it's worth that opportunity that I can see. Okay. Very helpful. And just a quick follow-up for Martina. The guidance increase in the 16% to 18% in the performance objectives, is there an implied acceleration in those numbers for 2018? And if that's true, what would be a result? I'm not going to give you the split by year. That's a good try. It's a good try. You just have to figure out what you want to do with your model at this point. Great. Let's go to this side of the room. Sanjay? Thank you. Sanjay Sakhrani from KBW. I wanted to follow-up on the M and A question. Just in terms of the current environment, is there any identifiable need that you might see for yourselves and then maybe size and scope? A lot of the deals that you've done have been more bolt on type outside of maybe VocaLink. Just in terms of size and scope, that would be helpful. So I'm just going to take this, right. So first of all, I mean, one thing I hope you took away from today is that the payment space is extremely dynamic and growing. And when such a space is dynamic and growing, you will see opportunities that you can't all deliver on from an organic investment point of view. And but we will evaluate at any point in time in terms of how much does it cost, how long would it take us to develop the capability if you want to develop it internally, do we have the right kind of skill set, people, resources, etcetera, in order to do it and get to market in the right time. And there are certain circumstances, as you have seen us do in the past, where you will decide or where we will decide, it's not going to be an organic opportunity, we have to buy something in the market space. From an overall where we are looking, we continue to look in the safety and security space. We continue to look in the data analytic space. We continue to look in the loyalty space. So those are kind of the main spaces. In terms of zip codes, it's really hard, and I hope you saw that over the last 6, 7 years, to find bigger companies. Most of the companies that operate in these kind of spaces are rather small. So at this point in time, I could not foresee that we're going to have a large change in terms of the kind of zip codes that we're looking at from a purchase price point of view. And just one follow-up question. Congratulations on the Bank of America. When we think about the opportunity in terms of size and scope, maybe you could just talk about that in timing, like how that plays through into the numbers? Is that a 2018 event or is it thereafter? Thanks. I'll leave it to Martina to tell you that she's not going to tell you when it's going to show up in this. But I can provide a little more color on it. As I said in the remarks, it's beginning next year is when we'll see that activity start to be issued as part of the Mastercard network. It's something we're really excited about. We've been working with Bank of America for a long time. We've got a great relationship with them in the debit space. We do small business. We've got a lot of activity in the commercial space. And we've been active with them in consumer credit, but in a relatively on a relatively smaller scale. These portfolios are important parts of Bank of America's overall consumer credit book, the Cash 123 and the non rewards credit cards are Cash 123 in particular is an important part of the affluent, mass affluent offering that they have. And I can tell you, we'll significantly increase our presence with them in the consumer credit space. The one thing you should know, it's not a back book flip, it's a forward issuance. Therefore, don't do any numbers in 2018. How's that for an answer? Great. In the center here, Tien Tsin. Thanks. Yes, just a couple of questions. This is Tien Tsin Huang from JPMorgan. First, just I want to ask a B2B question maybe a different way. Why has card penetration in B2B been so low? Is it a cost interchange issue? Is it distribution? Just curious. And are you going to be shifting resources from card to ACH given what you guys talked about today? Sachin, you're up again. Sachin, you're on my seat. Actually, if you want to get a job, be careful. It's important to understand me and this is where the channel of payment comes into play. When you think about a point of sale channel, you think about what the most important need at point of sale is, which is to establish trust between a buyer and a seller, I. E. You walk into a store, Target, you fill up basket of goods and when you're checking out, you need a valid authorization code in order to check out because when I walk out, the person who's checking me out doesn't know me. And the only way they can let me walk out is with valid auth code. That's where cards come into play. Cards work really well in that point of sale channel. Now think about the accounts payable channel. In the accounts payable channel, typically the buyer and supplier of goods and services know each other. They actually have entered into a contract, a purchase order. Goods and services have been delivered. There's an invoice which has been sent. And typically, the invoice gets paid 30 to 60 days later. They know each other. They don't need real time authentication or validation between a buyer and a seller. And this is where Carswell, they're important from an overall liquidity and a working capital standpoint. What they don't necessarily provide is other than virtual cards, the data capability which is required. So in the AP channel, we should think about the needs being more around the need for data, the need for a controlled payment environment and need for a more efficient accounts payable process, all of which actually happen with virtual cards and will happen more extensively as we go down the ACH path to actually create applications over ACH to provide those needs or rather meet those needs. So that's the reason why penetration of cards, when you think about it in the whole stack of B2B opportunity, seems really low. When you think about penetration of cost as a percentage of point of sale, it's roughly about 10% and it's growing and it's growing pretty rapidly. So you need to break this up by point of sale versus accounts payable and what the needs in your channel are and then the solutions come after that. Tien Tsin, the other thing is the B2B hub idea is to ensure that we aren't biasing the offering that we're giving to the company, in this case, the B2B space based on what we think we can shoehorn into what suits us. Instead, it's about optimizing the way of paying for that vendor and that supplier and that purchaser to each other, whether it be a check payment, an ACH payment, a virtual card payment, that's actually what we're trying to build. So that in theory, a turn through the agnostic system could help that buyer and seller interact in the most efficient way for that particular transaction. That's kind of what Sachin is built with the B2B Hub in our partnership with a couple of other players. Sure. That makes sense. Maybe just to bring Tim Murphy into the conversation, just a question on We actually had planned somebody was going to ask a question and none of us would answer it, yours. I'm prepared for very long answer for whatever you ask. Pay by the minute or second. Just you guys talked about a lot of the regulations going on in Europe and the UK. We've been focusing on the litigation side of it. What's going on on UK litigation? And what's the implication for us from escrow in the sector? Yes. So thank you, Vas. So I actually will be brief. I think our job on the legal side is to continue take down the overall litigation risk. Broadly, I think we're making decent I think we're making good progress. It doesn't mean it's gone away, but I'm seeing positive signs. Some of that is because of, frankly, regulation. We are seeing you know the trend in the payment system is to see more regulation. Frankly, when you've got a regulated environment, you don't have litigation risk because you're following a law. And that is an unintended and a benefit of the regulatory environment. So I see our current litigation challenges is mostly about addressing legacy issues. We've got an ongoing challenge in the U. S, which you didn't ask about, which I can we can talk about offline. I see real good progress in Europe. So, you asked about the U. K. We won the Stuart's judgment earlier this year. That was the first time interchange has been affirmatively positively found to be lawful in Europe, set a new standard, requiring the courts to look at 2 sides of the market, which we think is critical. And I think that's going to be very helpful to us in terms of taking down the ongoing merchant risk, and we've seen good progress on that so far. We'll try to work to continue to get the cases behind us. We also got rid of the U. K. Consumer case this year. So a lot of you had questions last year about that claim, very inflated numbers. We have been able to dispose of consumer claims now, not just in the U. K, but previously in the U. S. Interchange fundamentally benefits consumers. So we thought that case was wrong from the beginning, and we were happy to see it excluded. We are seeing the export of U. S. Style class action litigation into Europe and into other markets. So this is an important precedent for us. So we've I don't get paid on my batting average, and I don't want to be in this job, but we actually had a pretty good year. That's a hint that's very poor. Yes. That was right. By the way, that was my that was the beginning of my year end review with Asha. Now you all know. Fin months can be paid well. Notice I was paying attention to the last part. That's the only part that made sense. Yes. Tom. The wheel. Jason Tom, right here. In front of me. Forward to your right. Down 1. There you go. Hi. Thanks. Thanks for taking the question. Tom McCrone with Mizuho Securities. Question on contactless. What's your sense of the market readiness in the U. S. For contactless to take off? And how do you expect to overcome, there seems to be some reluctance by the larger retailers to turn on the NFC capability? Thanks. I think the question around contactless starts with enablement of the technology. And the fact that the United States has gone through a massive re terminalization over the last couple of years, driven in large part by the EMV migration, has resulted in hardware now being deployed across the marketplace that largely is capable of facilitating a contactless transaction. So, there's one significant hurdle that's been overcome. There's a question around, so does the hardware get enabled? You need to turn on the software for it to work. There are pockets of the market, I'd say, in the merchant community where there's sort of philosophical issues or concerns with a couple of large merchants in particular that for strategic reasons, they probably will not enable it. But by and large, I think with the hardware in place and with the ability to turn that on with software relatively easily and some increasing interest on the issuing side and getting contactless enabled cards into the marketplace. We're seeing that now with several issuers, with portfolios contactless enabled and more issuers evaluating that. I think we'll start to see a kind of a slow and steady increase in that. I don't it's not going to happen overnight, I don't think, because it's going to take both sides of the issuing and merchant communities to activate that in parallel. But this is something we've seen happen in markets around the world. And what you have to remember is contactless is a fundamentally better consumer experience. When you look at the data, once people tap 2 or 3 times, they don't go back to the way they did it before. So the experience in transit of 1,000,000,000 contactless transaction from from nothing 18, 24 months ago. And that experience is now going across the merchant community there. So as you see transit systems come up, as you see more consumers getting exposed to it environments, I think savvy retailers will want to provide the best checkout experience to their customers. And now that they have the equipment to do it, the question of whether or not they enable it, I think you'll see that roll across the market just like we've seen across Australia, Canada, UK and many similar markets to the U. S. Because consumers like it better. I'm actually going to take a question off the web. Craig Mohr had hoped to be here, was unable to be here at the last moment. Regarding India, so Ari, get ready. I'm concerned about Mastercard losing the market to Paytm the way China went to Alipay and WeChat Pay. So the circumstances were different in China. Why are you confident you're going to win in India and other EMs versus disruptors like Ant who are willing to lose money? No mode of interchange like in the U. S. Well, Paytm has made good progress with respect to their proprietary QR code based payment system. And now with Bharat QR, which is the interoperable EMV standard, Paytm is looking to adopt Bharat QR as well. So what you're going to end up having is a universe where Paytm builds out its own merchant acceptance environment. And with Mastercard, with our 250,000,000 cardholders who will be enabled for Bharat QR through their mobile banking app becomes an extremely attractive opportunity for Paytm to enable at their merchant side. So I think this is where I think Ajay referred to it as well. There will be areas for partnership. And if we can bring standards, we can bring higher safety and security products, we'll be able to monetize in a market where there will be competition and yet collaboration. Great. Thank you. I think we have time for just maybe a couple of questions, maybe in the back, Gentleman here. Thank you. Ramsey El Assal from Jefferies. I wanted to ask another question, Craig, about Bank of America and that win. Are there any other kind of replicable factors that you can point to in this win maybe that would have could apply to other credit issuers in the U. S, things like wanting to balance out these issuance or differentiated product capabilities. Is this a kind of a thin end to the wedge for increased pace of S. Credit or was this sort of a one off? I'll take it this way. The way in which we approach Bank of America is not dissimilar to the way we're approaching other partners of ours across the marketplace. And it's leveraging all of these capabilities and assets and services that we spent much of the morning talking about, use them in ways that we align with our partner to address challenges they're having with their business or opportunities that they see to grow faster or tackle new segments of the market. So whether that's leveraging innovation through the things we do in Mastercard Labs to help co create new concepts, whether that's leveraging our core product capabilities to and our product team working collaboratively with our partners to think about the right value proposition to target a particular consumer segment with, services capabilities like this, fraud solutions to tackle a problem that any partner may be having and trying to get those costs down. These are things that we're doing across the board with our partners. And it was no different with Bank of America. And it's that's the basis on which we try to build relationships with our partners and make them see us as the network that's most aligned with helping them grow their business and differentiated in giving them the products and capabilities and technology they need. Thanks. One super quick follow-up on PSD2. You kind of couched that as an opportunity and I get where you're coming from. At the same time, is there a disruptive threat there? It seems like the bank account is a bit of a walled garden and card payments are a bit of a preferred payment method there. Could this also be letting a lot of other players into a territory where you kind of had some dominance before? Javier? So yes, absolutely. Of course, there is a challenge, right? So every time there is an opportunity, there is also a threat. Now, I don't totally disagree. What you said one thing is that we're dominant on those flow payments and that's not exactly the case. You probably saw that the ACH volumes in Europe for sure are much larger than the card payments today. So the question is really are we going to be able to and capable of displacing some of that I'm sorry, I'm going to call it done ACH flows today with something much more intelligent. And if we are able to do that well, we will do well. And yes, there could be some movement between rails, but at the end of the day, if we are strong in both rails, we ought to be better off than not. Just to jump in for a minute, what Javier means by dumb ACH rails are the old batch systems, not the fast ACH. So in terms of going after the opportunity that is opening up with CSD2, of course, our card rails including Mastercard Send, Home Center, etcetera, will be important. But the fast ACH capability out of VocaLink will be very important on that too. One thing I'd say is that from a bank in Europe right now, PSC2 has enormous implications, enormous. Whether you're a bank bank or you're a merchant who has become a bank, a Tesco, a Carrefour, it has enormous implications. Please do not for a minute believe that we are not cognizant of those challenges for our banking partners. In fact, when I travel in Europe with Javier and his team, that's the discussion every single bank CEO raises with us. We're actually trying to find a way to give them a roadway and a pathway to enabling them through this change in a constructive way, whereby they can see a road to getting protecting their consumer information, protecting their consumer relationship, keeping themselves in the primacy of that relationship and not becoming a commoditized back office service provider as compared to their current role, which is a consumer linked role. That's what we're talking about. That's the opportunity. We recognize the issue and the threat. We believe that we have a real chance here to be an even better partner of those institutions because so much more of their payment rail was ACH than card. And they know us in the card business as being a good partner. We think we can bring all those skills into that ACH space, particularly with fast ACH, which is even better than the older ACH. That's the segment of things we're talking about. And you add to that what we could provide with safety and security and the identification of consumers, which is going to become the bank's responsibility in PSD2, and you'll begin to see why we think that the repertoire of things we are building actually can solve for a real emerging pain point for institutions in Europe. And final question, James. Thank you very much. Just wanted to ask, I guess, kind of a big picture question. I'll leave it open. When we look at the adoption of electronic payments among consumers, your issuer partners have been willing in many parts of the world to incent consumers through rewards etcetera to make the transition and I think that's been really successful. How do you think that dynamic plays out as you start to move into B2B payments? Is the cost savings and convenience will that be sufficient or are you going to I'll start and then we can go from there. I think when you think about when you're looking at the B2B space, you're dealing with a different end user, a different buyer, if you will, that's going to be motivated by different things. And there are different set of motivations for B2B buyers, whether it's a large corporate down to a small business that will vary depending on the needs of that business, but they have less to do with rewards. There's obviously an economic equation that may revolve more around the cost of the transaction. But importantly, other things drive the value, most significantly data and the information that's involved in reconciling a payment with an invoice, the difficulty in doing that drives huge cost burdens and inefficiencies in a lot of corporate environments. So being able to add to a value proposition around at the right price point with the right set of data to enable seamless reconciliation with the right sort of speed and finality of the payment transaction. It's just a different bundle that goes into the value proposition that is much less rewards driven, with the exception of maybe when you get down into the small business segment that feels an awful lot more like a consumer. And the value propositions that are aimed at small businesses are sort of consumer plus, I would say, where there's some motivations that look and feel like a consumer. Yes, they want rewards, but they're also time starved and there's a need for recognition around their business, etcetera. So that's what Sachin and our commercial team spend a lot of time doing is thinking about the needs of those different segments and making sure we have the value proposition to line up against. So and that makes sense to me. I guess, I wonder though, how does that impact Mastercard as organizationally to make sure that you can deliver that? Or is that something have to deliver directly? Or do you continue to rely on your partners throughout? Yes. These will continue to be products and capabilities that we deliver through our partners, principally banks, who are serving the needs of the B2B segment of large corporates, mid markets, small businesses, in some cases, commercial specialty players like WEX and FLEETCOR, but it's going to be through our distribution partners who are focused on those segments of the market. We have no intention of becoming a direct vendor of these services between a payer and us. That's not what we're into. We're very clear that the B2B2C idea, which operated as I think Gary Lyons was mentioning it when he stood up here that operated in the consumer payment space. It's very much the same logic in the commercial space. We're not in the issuing or banking or that's not our business. That's not our core strength and we would probably do very badly if we try to do it. We're very clear that we would play with our partners in the right sandbox, functioning as their true partner, putting them at the center of that relationship. We're not trying to get in between them. And thank you for that question because I'm glad that you raised it because it's actually integral to everything we're doing is to recognize our role and not try and play outside our role. Great. Well, thanks, everyone. That actually concludes the webcasted portion of today's event. So for those of you online, thank you very much for attending and you may now disconnect. And for those of you here in the room, a few logistic items. First off,

• Slides