Good morning, everyone. Welcome to all of you who are either here in New York with us-
Thanks, everyone.
This morning or else joining us on the webcast. I'm Barbara Gasper, head of Mastercard's investor relations. On behalf of the entire Mastercard management team, I'd like to thank you for joining us this morning for our annual investment community meeting. We think that we have put together a program today which will address many of the topics that we hear you ask about so often. It's a combination of formal presentations, as well as lunch table discussions, a couple of breakout sessions this afternoon, as well as 14 product demonstrations downstairs. Starting this morning off is Ajay Banga , our CEO, with some comments about how we are progressing on our strategy. We'll then hear from several other members of senior management, starting with Michael Miebach, our Chief Product Officer, who will provide an overview of core products.
Following Michael is Garry Lyons, our Chief Innovation Officer, will talk about how we are enabling a digital world. We'll move on to a panel discussing how we are differentiating with services. That panel will include Garry Flood, President, Global Products and Solutions, Kevin Stanton, President of Mastercard Advisors, Ajay Bhalla, President of Enterprise Risk and Security Solutions and Carlo Enrico one of our divisional President from Europe. We then move to hearing from regional percept starting from Craig Vosburg our President of North America Market. Following a brief morning break, we move on to panel discussion with our international market team headed up by Ann Cairns President of International Markets and three of our regional leaders; Javier Perez from Europe, Ari Sarker from Asia Pacific, and Michael Miebach from Middle East and Africa.
They will talk about some of the developments that they're seeing in their areas. After that, Martina Hund-Mejean, our CFO, will provide the financial perspective for the business, and then we'll move on to the Q&A session. Ajay will be back for some closing comments, and we expect to adjourn the formal part of the presentation at about 12:30 P.M., before moving on to the afternoon events. I hope that those of you who are here in the room with us have downloaded the meeting app we've created. If you agreed to accept alerts, then you will receive notices for the end of the morning break, as well as the start of each of the afternoon breakout sessions.
Copies of the slides that we're using today can be found in your presentation booklets, and they're also posted in the investor relations section of mastercard.com for those of you who are listening in. In addition, an audio replay of this event will be available for 30 days. Along with our presenters this morning, we have a number of other members of the senior management team here. Rather than having me go through and introducing them each individually, we have included a list of them and their photos in your meeting materials. To help facilitate the dialogue with our executives over lunch, there is a diagram in your books on page 5 showing the location of the lunch and discussion tables and the executives who will be hosting those tables.
The executives who are not hosting lunch tables will be floating around downstairs in the product demonstration area, so you can grab them down there and talk to them. I do wanna make a special call-out to the other members of my IR team, Matt Lanford, Jesal Meswani, Christy Lewis, and Tina D'Amato, for all the work and effort that they've put into this event. We'll all be around during the day, so if there's something you need and we can help you with, please don't hesitate to reach out. I also want to introduce the newest member of the IR team, Warren Kneeshaw. Warren, would you please stand up? Who is now in his second day at Mastercard and will be taking over for me later this year. We needed to be sure that he was here for this event so he could see how it worked.
Just a couple of administrative items to get out of the way before we get started. First, as in the past, we do have the ability to take questions from those of you who are participating online, there is a Ask a Question button in the webcast player that you can look for and submit your question. Second, as a courtesy to our speakers and the other members of the audience here, those of you in the room, I would ask that you would please turn your mobile devices on silent before we get started. Finally, just a reminder that today's presentations include some forward-looking statements about our expectations for future performance. Actual performance could differ materially from those that are suggested by our comments here today.
Additional information about the risk factors that could affect future performance are found in our SEC filings, our 10-K, our 10-Qs, and our 8-Ks. Now with that, let's get the meeting started, and I'll turn it over to Ajay.
Good morning, everybody, and I want to start by actually thanking Barbara. As you all know, Barbara is retiring. She just told you that Warren Kneeshaw is in the audience. Barbara has had 10 years with us, and in that 10 years, which is the entire life of our company as an IPO'd company, and my seven years as just finished as CEO, and I've had the pleasure and the privilege of working with her through all those seven years. The one thing I've understood that she's taught us all is not just the ability to be good in being practical and thoughtful about how we deal with our investor community, but she's changed the way we think inside the company and contributed greatly to our culture.
If you'd all join me in please thanking Barbara Gasper. Of course, welcoming Warren, who's got 1.5 days under his belt, and hopefully he's got a long tenure with us ahead to help us be the company you want us to be over the next decade to come. Welcome, Warren. Okay, with that, I'm gonna get going. Let me see my Yep, there we go. That first slide is a slide that basically says over the last 10 years, 2010, we've delivered revenue, net revenue growth rates cumulatively, cumulative average growth rate of in excess of 12% and an EPS growth rate in excess of 19% and an operating margin in excess of 50%. It's grown for a number of years.
In the last couple of years with the amount of investment that we're putting into digital as well as a couple of the acquisitions, the margin is kind of flat. These numbers, these CAGR numbers are all with the FX sort of issue in there. If the FX headwinds were removed, if these were ex FX, you'd get another 100-200 basis points on those growth rates. That's not the point. The point is the 12% revenue growth and the 19% EPS growth on a CAGR basis over this period of time, and the stock performance on the right you know better than I do. What we've tried to do to get this done is to focus on these pillars of our strategy that I've been talking about now for some years to you, the grow, diversify, build.
You'll see our group of people talking through those topics when they come up on stage, including in the panels. Of course, wherever you meet us, you hear us talk about growing the core business. In the core business, obviously it's credit, debit, prepaid, and commercial. It's not just the card, it's how you deliver it is just the card's one form factor. You'll find there's a lot of work going on with Garry Lyons's work on the chief digital and innovation side of our business to drive the thinking on physical-digital convergence.
He's partnered up with Ed McLaughlin, who a number of you knew, who's now in our O&T shop, and together I think we've got the ability to do what Michael's focused on, which is on the product credit, debit, commercial, and prepaid, and make sure that our physical-digital convergence activities are directly meshed with that. I want to spend a minute on that because we believe that every device will be a device of commerce, and while today digital payments is still a small percentage of the total, the fact is that's where things are going, and we're determined to be at the cutting edge of this. We want to be participating in it. We don't want to be, as I said to a number of you, passengers watching the train go by.
We want to be on that train with the driver, making sure that we have a point of view on how physical-digital convergence develops over time. That point of view starts from the perspective of security. That's why all the effort on tokenization and MDES and all the things you find us doing, it starts from there. It moves on from there to making sure that we are partner-centric in the way we approach the digital world. What I mean by that is we are clear that our role is a B2B2C company. We are not a B2C company. Neither do we seek to become one by stealth. We are who we are, a B2B2C company. We operate through banks, through merchants, through governments and others.
A lot of the work that Garry Lyons and his team are doing, and he'll talk to you about this, is to ensure that that individual, that company that owns the consumer relationship is still very much at the core of that consumer relationship. Our payment system operates through, ideally, the banks' mobile banking apps. We believe in digital by default. We don't want to sign up one consumer at a time. We want the banks and the merchants to bring them [Non-English content] to us as part of their relationship, that's why by the end of this year we will have close to 80 million people on our digital wallet. The idea of having partner centricity in our digital strategy is really important to us.
If you combine that with the fact that we are channel agnostic, we operate across in-store, in-app, and browser. That is really important to us, and right from the first day we've been building that capability. We've spent a lot of time building use cases, and you'll see some of them over the years, and you'll see more today, whether it be Samsung refrigerators and groceries, or it be Whirlpool washing machines, or it be what you're gonna see in some of the product experiences today. The idea is those user experiences are meant to seed the idea of how every device could be a device of commerce with our approach to partner-centric digital payments inbuilt in that system. That's what our focus on digital is. The rest of the stuff on this page you've seen.
Diversify, yes, we're diversifying with more focus on merchants and governments and new markets. I want to spend a minute on one other topic on this slide, and that is on services and building new kinds of platforms for our company to benefit from the knowledge we have through the core payments data that we collect. Remember, we don't collect, in most cases, your name. We collect the number, the card number, the account number, the merchant code, the time of the transaction, and the value of the transaction. When you have 50 billion, 60 billion of those, you have an enormous database built over many years in a very simple way, which allows the right intelligence applied, both human intelligence but also machine learning and artificial intelligence, to create tools that can be enormously useful to our client base, banks, merchants, governments, and digital giants.
That's what we're trying to do. We're not trying to build services that don't connect back to our core business. We're trying to use our core payments data to build alternative revenue streams over a period of time, while also, most importantly, providing great value to our clients and embedding ourselves with competitive differentiators in their business. That's kind of what our strategy here is all about. You've seen this slide in different ways. This is just another way of showing you that there's a long secular opportunity still, and you'll find that in the middle of that page is all the markets together. This is a share of cash transactions of all types of payments, that is, consumer retail payments, but also P2P and also B2B and government payments. Basically, it's still up at 84%.
It used to be a little higher some years ago. As you know, what's happening here is while in the developed world, which is the lower line, the curve has definitely moved down. The fact is it's also moved down in the emerging markets, but the rate of spending, both of consumers and businesses in these markets being what they are, the average comes out in a weighted average form to be back at 84%, which really means there's a long runway of growth ahead. This is a slide done a different way. This is that same information, but done by value as compared to number of transactions. Now you'll find in the consumer world, 42% is cash and check by value. By the way, 85%-86% by transactions is still cash and check.
We do both value and transactions because we make money based on transactions, not just value. You'll find that in business and government side, it's only 20% that's cash and check. In P2P, anybody's estimate is as good as ours, but this estimate says it's 95% odd. You put that all together, you come back to that 83%-84% that you saw in the previous page. Typically, our strength of capabilities has been what you see on the left, which is much stronger in the consumer side. By the time we get to person to person, it's a much weaker ability to deliver the right tangible, simple, safe product for people to use. Where we're headed, as you can see on the right-hand side, is an expanded set of capabilities.
One of the biggest enablers of that set of capabilities is our focus on faster payments, fast ACH. You'll find that across these three categories of payments, ACH is now close to 50% of the value, and we are determined to play in every aspect that impacts the consumer, the business, the government, and in fact, their P2P payments. If you don't play with fast ACH, we would be losing out on an opportunity to be relevant in all these flows. They're different business models. There's gonna need a lot of work to be done. The acquisition of VocaLink is the first step in that space. It's not closed. We have to wait for the regulatory approval before we can tangibly do something with this business. The fact is, that's where we're going. Again, you'll hear about that as you go along today.
Second last slide, I promise. I'm gonna get off so you can get to the guys who really will tell you what we're up to. This is the six factors that I talk about to all of you when I meet you individually or in groups. It's just written in a different format for this. The first one that comes to me all the time is the fact that seven years ago or 10 years ago, governments were not into the game of reducing cash. It was not a relevant topic on their agenda. When we were first talking about the cost of cash and the values of not having cash, it was a new topic for most people.
Today, you can pick up emerging markets in the developed world, the concept of removing cash from their economies is firmly embedded in every regulator, every politician, and every opinion leader's lexicon. What that means is we also get the benefit of their love, as in they suddenly realize that, "Shit, this is an important business." Therefore, we get a greater level of regulatory interest and a greater level of participation, in some cases, nationalism. Nationalism is not new. Europe had nationalism years ago. You know, Canada has nationalism. Mexico had it. Brazil and Colombia had it. China has had it forever. You can see that that continues. You get regulatory interest in the space. Not all regulatory interests are a challenge. For example, reducing interchange in Europe is actually leading to greater acceptance of merchants.
It's not necessarily the way I would have liked it to happen, but it's the way it is happening. Combined with the focus on driving cash out of economies that the governments now have, comes their heightened regulatory interest in nationalism. A large part of our efforts go into ensuring that that develops in a form that is conducive for the payments ecosystem. The second part of that is that you've got technology which is continuing to evolve and come at you at a rapid speed all the time. I think the concerns around cybersecurity and privacy come side by side with that, and therefore the focus, as I heard you say about digital, we started with security. That focus is gonna be very important, not just for our company, but for the ecosystem as a whole.
Our participation as a company in all the efforts in cybersecurity at a local level ourselves, but also socially across other companies and government agendas, is driven by that concern and that desire to be a helpful part of shaping how cybersecurity policy develops over the years globally. Side by side with this is the clear aspect of a great advance for adjacent services, and that's back to the topic I was discussing on the prior page, safety and security, loyalty and rewards, information services, analytics. That's why a lot of these six factors are deciding how we invest our money and what kind of people we hire and what kind of energy we put into our future. That's our strategy. Grow the core faster than the market. Make sure you're diversifying with new customers and geographies along the way.
Build these new high-growth opportunities and platforms in the form of these services that allow us to deliver competitive differentiation. Make sure you're managing regulatory risk in a constructive way. You've got to deliver these safe, simple, and smart transactions. You can't do that without embracing technology as the core of your business. It is as important as anything else in our business. You need to do it not just across card rails, but also this new fast-growing, faster payments rails. Do all this while making sure we keep increasing the affection for our brand with consumers and merchants. Of course, make sure we have the right kind of people. That's what I hope you'll get a sense of as you hear a lot of our people speak and you get to meet them. With that, I'm gonna hand it over to Michael. Thank you.
Good morning, everyone. Let me start off with a word of caution. You've gotten used to a German accent, one at least from Martina over so many years. They're gonna have 20 minutes with me. Getting used to the second German accent, that is generally how German jokes fly. You know, I'm not gonna make any more of those. It's a tough act to follow, Ajay, you know, I'm talking about a topic that I find particularly very great importance, that is core products. As the one responsible looking for core products, I want to share with you how I think our core products contribute to the growth of our business. Let me start off by talking about our strategy.
You can see it here on this slide is essentially providing compelling payment products and then combining them with a suite of services to create a truly differentiated customer value and proposition. Compelling payment products combined with services, that is the differentiation that we drive for in our product strategy. Now, how do we do that? Sounds like the obvious thing to say, of course, we have to provide compelling payment products. Let me give you an example right at the outset on how we're doing that. I want to link back to the business that I used to lead until the end of last year, and that is our Middle East and Africa region. What we've done in that market in this past year is we went ahead and we completely revamped our affluent and credit segment.
What we are now offering our customers today in the region is a tailored set of benefits that allows our customers to differentiate themselves in the market vis-à-vis this particularly narrow and sought-after segment. Everyone else is after the same type of customers. We have to enable our customers to differentiate. Tailored, customized benefits is the way to go. Now, we collected data and we drove the insights much deeper into the segment. Really understanding who is that customer. Now, we do recognize that our customers do have their own segmentation, we brought global data to the table to understand what really matters. Picture that person. A Gulf Arab having two smartphones in their hand, very demanding, high service expectations. What does this person want to do most of all?
Not engage with his or her card proposition in a traditional way. It has to be digital. The digital user experience was the next thing that we looked at in this revamp, and we put together an app that basically allows you to engage with your card benefits digitally over your phone. No more faxes for, you know, bailing your lost luggage insurance or anything like that. That winning combination makes a compelling payment product, and I can tell you it does win us deals across the region. If you think about what we've created here, what we created here is a scenario where our core business becomes digital, and where digital looks like it's the core going forward. Garry Lyons and myself, we're partnering on creating that kind of a reality as we go around our business. Back to the strategy.
Compelling payment products, like I just described, but in combination with our services. We put both of that together. Let's talk about the services side of the strategy a little bit more. There was questions out there, questions from you. Might services be a distraction to our core business? Now, as the one responsible for our core business, I certainly have a view on that, and my view is quite the contrary. Far from it, actually. Services is the one key differentiating factor for our core products. The fact that we own both of them, and we can bring them together in a seamless turnkey fashion, that is what really makes us win and stand out. Now, all of that compelling payment product and then combined with services have to be rooted in a deep understanding of the consumer.
As Ajay said earlier, we are a B2B2 C company. The focus on our understanding of the consumer has to be deep. We have to understand what are the wants and needs of those consumers. While we don't want to have direct relationships, we are scaling through our partners. The understanding has to be there to create the right kind of value proposition. It is important to recognize that is how things work today, the credit, debit, prepaid, and commercial. As we look ahead, it is a stated element of our core product strategy to go ahead and drive an extension of our products and services to capture new payment flows and capture new revenue streams with that. We're doing that in a number of ways, and I want to call out two of them this morning.
One is our focus on the acceptance ecosystem. You could ask, you know, "What have you been doing for the last 50 years?" Of course, that has been part of our business. There are specific challenges in that space. For example, the onboarding of small and micro merchants around the world. Removing those barriers that prevent small merchants to accept electronic payments today, that is getting a significant focus from us. Ajay referred to it clearly when it comes to capturing new payment flows, 50% of the volume out there of payments between governments, businesses, and people is in the ACH space, getting into that. Significant focus more on that later on Voca Link specifically. How's the strategy playing out? How are we executing?
You see our four products, and I have to say it's good to stand here as a Chief Product Officer because you can see everything is looking good. We are growing across the board. If we go one by one on the consumer credit side, you see continued growth there. It has been a bit muted this year, and that is mainly on the account of a loss of one significant U.S. customer that you are aware of. If we take that aside and we start to take a look at our U.S. business, we see momentum kicking up. You'll hear a lot more from Craig on that later on.
We're winning deals like JetBlue or Capital One, the Fone business. If I take a look at how product matters in those wins, what we're consistently hearing across the consumer credit side is that the strong products that we provide has been critical to the success. Moving on to consumer debit, strong growth across the board, globally. We are putting a lot of focus and product on online and digital enablement of debit. For our Maestro brand as well as for Debit Mastercard, it should be a tool that works essentially on every channel. That is working well for us. We're winning deals like Nordea in the Nordics. We're winning deals like Buddybank in Italy, which I'll talk a little bit more about later on.
Now, what I'm really interested in when it comes to debit is how do we move the needle by extending our distribution? Moving beyond traditional retail banking, are we doing that? We're putting more technology in our products that enable online banks. We are trying to find more use cases that drive everyday spend. Everyday spend that is really making debit the better cash. How do we do that? For example, by partnering with transit authorities on urban mobility solutions. Transport for London is a great example. If you ever use a card there, tap your card at the turnstile, move through, walk out at the other end. Very, very convenient. That takes a lot of technology, takes a lot of focus from the product teams, and it helps us win. Moving on to prepaid. Strong growth here as well.
One thing I wanna call out on prepaid from a product perspective is just simply because you can see it later on at the product showcase when you go downstairs, is biometric technology. Biometrics is absolutely critical for us to overcome the authentication issue, especially in markets where you have infrastructural challenges and KYC, you know, KYC is hard to achieve. In our work with governments on social disbursements around the world, biometrics plays a key role and helps us scale and diversify our business much faster. With that, by the way, we will be having another tool in our, you know, arrow in our quiver that allows us to deliver on our financial inclusion goals. Finally, commercial. Strong growth there. Again, it is fun to be the Chief Product Officer. Strong growth across the board.
Here, across the three segments that we focus on, small, medium enterprise, T&E, and B2B, we see growth across the board. Our product propositions, behind that, Smart Data, our expense management, purchasing cards, central travel solutions, all that is winning us deals. We have a very broad and pretty unparalleled composition of product solutions in that space. We see growth across the board. We feel pretty happy about that. I personally feel pretty happy about it, and it tells us that our strategy is the right one. We do anticipate continued momentum going forward. We see growth across the board, across all products. How does it translate regionally? Across every single region that you see on this slide, we are gaining share in aggregate. Some big names you can see.
I wanna call out a couple of them. Starting off with the U.S. Now, Craig was standing here at this very point before as the Chief Product Officer. He now leads our North American business, he knows that it's good. You know, you wanna talk about deals as a product person. I don't wanna steal all his thunder here, just call out one of them, JetBlue. Strong proposition that we put together for the airline. What it really got over the line, back to our strategy of compelling product coupled with services, was our data analytics provided by our Advisors team. The combination of both of them really won this customer over. Give you one other deal to talk about. All the way to the other end of the world, Australia, Bendigo Bank.
Bendigo Bank in Australia, we won a deal across debit and commercial. That is consumer and commercial credit. We're in the process of migrating the portfolio with the help from our Advisors colleagues. When you look at what this deal entails, every single service that we have, loyalty, advisors, consulting, as well as managed services and our Enterprise Security Solutions, it's all in. The customer in the end said, the full breadth of the suite, that is what is getting us over the line. Looking at these deals, how do we win them? Gotta have the right kind of product proposition. The services is all good, but it needs a bit more. It needs consumer insights. I was saying that it is a key element of our strategy.
You gotta be really close to your customers, and you have to start thinking about the consumer, even as a B2B2C company in a very different way. Now, we're working very closely with our partners as we create, design, as we build our products with them. It is our role as far as we see to bring consumer insights to the start of that process that ensure two things. One is create the right value proposition. Secondly, to ensure that the performance of our product in the end moves Mastercard to top of mind and top of wallet.
Now, whether this is a partnership that is addressing a product that already exists or creates something new with one of our partners, in the end, what we're trying to do, take the conversation always back to the consumer, understand what are the wants and needs, and drive those global insights into that conversation. As I said, we do recognize our customers have their own insights and have their own segmentation. With global research and deep global research, we can provide nuances and angles that allows them to differentiate themselves to the next competitor down the line. One more example to bring that to life. That one example is related again back to the Middle East revamp of our affluent business that I talked about earlier. It is a global truth that the affluent like to travel.
That is not a deep insight. What is a deep insight is when you take that further and you try to understand across each of the regions what does that specifically mean. In the Middle East, they have very long, hot summers. It's one thing I'm not gonna miss since I just moved here. Now what do you do in a long, hot summer? You try to get away. You get away for a longer time than any of you would take a vacation, two, three weeks, and everyone in the family wants to get away. You travel in a large group for a long time. What do you need? You need something different than a hotel benefit on your card.
You need something that is a home away from home, That is what our new revamped credit proposition in the region does provide. It is service apartment benefits. Sounds like a nuance, but when we took that to the market, that is what was winning us deals. Consumer insights, absolutely critical. You drive all the way and said on the base of that, you pull our product features together, and you layer it up with services. Let's take a look at our credit business. In our credit business, how does all of this come together, and what is the impact on our core business if we do all of that? Partner-driven is the approach. We wanna enable our partners to compete. I talked about that.
The digital user experience, partnering closely with Gary on Masterpass for payments and other digital experiences for cards and benefits. We do all of that, then we come to a point where we layer on our services. I wanna talk about, as the core product person here, what does services do for the performance of our credit, debit, prepaid, and commercial portfolio? How about loyalty? Loyalty, there is a measurable and marked difference of a credit card that is part of a loyalty program. We see higher activation, we see higher usage, and we see higher retention. The combination of our loyalty services with our core credit business makes better performance for our customers and us. Advisors. Advisors allow through the data resources that we have benchmarking of portfolio performance of one of our customers against the rest of the market.
With the help of Advisors Consulting, we go and optimizing portfolios. You benchmark, you optimize the results. Again, better performance. Safety and security, lower false declines, peace of mind. If you as a consumer know your card will only work when it's supposed to, you will use it more often. Again, better performance. Across the board, we see services and core naturally fitting together. You see an example on this slide of one of our customers with the name of BuddyBank. I personally find with all my German enthusiasm, this is a fantastic example. What is really happening here is you do have everything that we do, all of our assets, product features, as well as our suite of services come together for this one customer and in a digitally accessible way. BuddyBank is a mobile phone-only bank.
The only way you can access those services, on an app. Everything that I just described to you is available on that app. Installments, for example. You can choose through your app at the point of purchase, you want an installment plan for the purchase you're making before or after the transaction. Let's talk loyalty and services. Here's a Mastercard Benefits Optimizer. What does this do for a consumer of BuddyBank? You all have payment tools with lots of features where you might not remember what they all do for you, and some of them are more valuable to you than others. Mastercard Benefits Optimizer for BuddyBank, you choose the benefit you like. That airline lounge matters to you use that. Rather you have another benefit, you choose something else. BuddyBank, very cool, bank fully powered by Mastercard.
The management of BuddyBank looked at us as the payment brand because of the breadth of features that we have. They said, "All right. We as a bank, we have a complex technology setup." For all this new world to come together, can we have your help on the processing side to enable all of that? We're also the processor for BuddyBank. Here you can see the full future coming together. The good thing about that future is every single element of that we can do today. Commercial. Same thing again. Compelling product coupled with services wins us business. You saw 11% GDV growth. Craig gave you an update on that business last year.
I'll talk a little bit more on how we're advancing here. Again, we have the insights. We have the insights in the three segments. We understand what our customers want to do. They wanna drive SME growth. They wanna enable smarter T&E trend decisions. They wanna optimize B2B processes. Now, we took that insight one level deeper, so we have much clearer, you know, insights and research on what is an SME owner really about. What are they about? Same thing as a consumer in the end. They want recognition. They want rewards. They want more control for their business in addition. We take those insights, we couple it with that very broad suite of product features that we have for commercial. Central travel solutions, purchasing cards, contactless corporate cards, you name it.
You have a compelling base product, we can go ahead and we can enhance it. Enhance it with additional data and reporting, with migration and conversion services through advisors, with control and fraud management tools. Same strategy and is winning us deals. Winning us deals like the one that we have won with Barclaycard, one of our partners, when it comes to our commercial business. We're in the process of migrating their portfolio to Mastercard, what we're seeing here is a customer that has chosen to buy every single product feature that we have. In the Barclaycard deal, we have Smart Data, our expense solution. We have contactless cards. We have central travel solutions. The whole breadth.
In the end, what won them over was to say, "All right, what you can do for us in addition is to ensure that you manage the fraud and control services for us." Again, product and services. When I saw the customer earlier in the year, I asked them, "Why did you choose Mastercard?" What was the answer? The answer was, "You were willing to create a new product for us, and you were willing to commit to be with us for the whole journey." Pretty powerful, and very encouraging for our commercial business. Now, moving ahead, and taking a look at the opportunity of capturing new payment flows. By expanding our products and solutions. We have an opportunity to build products and solutions to capture new flows, especially in the ACH space.
At the same time, you know, there is an opportunity to buy some of those solutions. The movement towards fast ACH that Ajay referred earlier is accelerating. It's accelerating on the back end of commercial regulatory push. It is accelerating on the basis of, you know, the industry basically demanding more efficient and integrated networks between the card side and the account side. It's happening. We decided that buying is the better option for us, the opportunity to purchase VocaLink presented itself. As Ajay was saying, we're awaiting the approval processes between two and 11 months, somewhere thereabout, depending on how the process plays out in Europe, that we will hopefully conclude this transaction. VocaLink does have very strong capabilities in fast ACH.
They also have a very critical and important position in the U.K. payment market, which of course is a very important market for us. Their capabilities don't stop at the borders of the U.K. VocaLink has taken their ACH capabilities to Singapore, to Sweden, to Thailand, and right here in the U.S., they are actually building a real-time, fast ACH for the U.S. market for The Clearing House, which is a landmark deal for them, a real breakthrough. Over the last three, four months, I was working with David Yates, the CEO. You would have heard some of him speak on the investor call that we did in July. Talking to external stakeholders, to VocaLink staff, to Mastercard staff, and everyone gets it.
That combination, cards and, you know, ACH-based accounts starting to be complementary. Everyone gets that. We do get the question occasionally, does this mean that the cards is less important? Again, quite the contrary. It is a complementary proposition. We'd like to push consumer choice. We'd like to participate in a broader range of flows. That is the motivation that we have. Let me close here, and talk about our strategy one more time. In the end, it is about driving compelling product propositions based on consumer insights, matching them with, our suite of services to give us that differentiation in the eyes of our customers and in the eyes of consumers. That strategy is working well for us.
With that, I do believe that we will be well-positioned to continue to displace cash, drive share, and drive usage, and win with our partners around the world. With that, I'd like to hand over to Garry Lyons, my partner in crime and our Chief Innovation Officer. All right. Thank you very much.
Thanks very much, Michael. Good morning, everyone. If you think Michael's German accent was bad, wait till I hit full throat. If you can't understand my Irish accent, we're more than happy to provide simultaneous translation via headphones. We have them available at the back of the room. Just to give a little bit of context today, because generally, chief innovation officers do different things in different organizations, I lead our digital payments organization, and I also lead our R&D team, Mastercard Labs. I think it'd be fair to say that we're living in extremely interesting times. The world is becoming more connected. Technology is evolving at a phenomenal pace. Industries are being reinvented. Consumers have huge expectations about what technology can do for them to remove the friction as they go about their daily lives.
Navigating the digital maze behind me successfully presents huge opportunities for all businesses, including Mastercard, but it also presents some threats that we need to be aware of and we need to deal with as we evolve our business, as Ajay talked about earlier. Dealing with regulation, security, and privacy is obviously top of mind for us. In some ways, what I wanna talk about today and what may be most relevant for this audience is I wanna demonstrate that while Mastercard is continuing to win today, we're also doing it in a way that allows us to simultaneously invest and reinvent ourselves and prepare ourselves for the future. Winning in digital is extremely complex, irrespective of the business that you're in.
It's certainly not just the case of migrating what you do in the, in the physical world today and making it work online, or in our case, enabling what we facilitate today on our network for plastic cards, making that work with smartphones. It's a lot more complex than that. Excuse the busy slide behind me. It's meant to demonstrate that it's not just a product initiative, it's partnership, it's co-innovation and so on. As you, as you're going to see as we go through this presentation, we have an extremely complex and comprehensive digital strategy. We're enhancing the payment experience with Masterpass. We're digitizing new forms of payments with P2P, disbursements, remittances. We're setting standards for security and tokenization through our digital enablement service. We're upgrading our development platform.
We've done a major overhaul of Mastercard Developers because we want to make it easier for partners, big and small, to enhance their solutions with our services. We're constantly experimenting with new technologies such as the blockchain, which I know is a topic of interest, machine learning, and biometrics. We're also augmenting. We're very customer-focused. We're augmenting our customer's innovation and product development capabilities by giving them access to our environment, our products and processes, so they can actually use for their benefit to deliver real solutions at scale. All of these initiatives, it's not like a hodgepodge of what we're defining standards and securing various different things. It's actually very linked. It's all of the initiatives that we're doing are related and they're focused on one single common goal.
That goal is we want to displace cash, and we want to continue to deliver better, safer, smarter payments everywhere. If I was to pick some of these to dig into, we start with enhancing the payment experience. When we talk about enhancing the payment experience, we're really focused on simplicity, speed, convenience, and confidence. They're the four things that we think about when we think about the payment experience. Masterpass, our digital payment service, that gives you all four of these things across all channels, and it functions on all devices. The other thing about Masterpass, as well as enabling consumers to make fast, secure, simple payments, it's also the world's first digital payment solution that can enable payments online, in-app, and in-store via contactless.
One of the areas where we differ or diverge from our competitors is that Masterpass is typically provided to consumers by their banks. We believe that payments is a natural extension to mobile banking, and it makes complete sense for our banking customers to offer payment solutions to their customers. In fact, the Federal Reserve did a survey earlier this year in March, in fact, and what they found out was that 53% of all U.S. smartphone holders that had a bank account had used mobile banking in the prior 12 months. Consumers are using mobile banking. Payment makes sense to integrate with that. We want to make that as easy as possible for them to do. As consumers, we're all aware of the effort or the friction that it takes when you're signing up for a new service, particularly a financial service.
You've got to give information, you've got to prove who you are and so on and so forth. By integrating Masterpass directly into the mobile banking experience of the bank, you effectively are able to remove all that friction. Signing up for Masterpass can be as simple as accepting terms and conditions. It really can be that simple. No need to fill in card details, personal information, shipping address, because your bank already has that information. We call this approach, you probably heard of us call it digital by default. The great thing about this is it allows us to scale Masterpass quickly. There's no need for us to sign users one by one. That's going to be a long journey. We want to actually sign them bank by bank.
Already we have banks such as Citi, Bank of America, Capital One, Fifth Third, KeyBank, SunTrust, Nordea, and Commonwealth Bank of Australia, among others, who've already signed up to be partners with our Masterpass. That's going to give us 80 million Masterpass-enabled accounts by the end of this year. Because we've got this partner-centric approach, we expect to scale that number quite significantly over the coming years. It doesn't just work for consumers whose banks are engaged. We also have the ability for consumers whose banks have not decided to integrate with Masterpass. They can sign up either at masterpass.com, or they can actually sign up the first time they go to make a purchase with Masterpass. Masterpass is not just about the payment, because banks want to differentiate too.
What it also enables through APIs, it enables banks to take advantage of our services and their bank-specific services to differentiate their offerings. You've got the ability to put things like controls, alerts, loyalty, offers, who knows what, to enhance the experience and differentiate the one bank's offering over another, while still taking advantage of our global acceptance footprint. Additionally, the Masterpass brand is recognizes the fact that the bank wants to be present at the point of sale, and we have a Masterpass co-branded button. If my bank, if I'm using my bank's wallet, I have the ability to see my bank's brand at the point of sale on the website or in the app without the bank having to have any relationship with that merchant. Having bank partners is a bit like having one hand clapping.
You know, it's no good if you don't have wide acceptance, you need to have wide acceptance too. Today, Masterpass is available at 290,000 online merchants, including industry leaders such as Avis, Bass Pro Shops, Burger King and Gilt. The other thing about Masterpass, because it works in-store, online and in-app, is you can use Masterpass today at 6 million contactless merchants around the world. This is still a little bit away. We're on a journey here. This is a marathon, not a sprint. It's a little way off the 40 million merchants that accept our physical cards today. The goal and the objective and the activities that we're doing are absolutely focused on getting the same level of acceptance for Masterpass as we do for Mastercard.
Masterpass delivers real value on the banking side, but it also delivers real tangible value on the merchant side as well. For starters, if you've got millions of users, merchants want access to those millions of users. Any merchant that accepts Masterpass instantaneously has access to the community of users that have signed up through their banks. Masterpass provides a faster, simpler checkout for the consumer, so you have less chance of abandoned carts, because abandoned carts occur when a consumer gets to a page and goes, "Do I really want to fill in all that information? Not so much." There's no need to register with the merchant, and there's no need for the merchant to actually store your card details. We look after all that. We secure the transaction.
Also from a security perspective, we are able to take advantage of best-in-class security mechanisms like tokenization, like biometrics. The key thing, Ajay talked about this earlier on, you want to make sure the transaction is secure, but the onus is on us as well to take friction out of the process. We want minimal impact on the user experience. You've heard the theory, what about in practice? What does Masterpass enable? As well as enabling the obvious faster checkout online and smarter checkout in store, Masterpass enables all manner of experiences. You can buy from connected devices such as fridges and cars. We've done a deal with Samsung for to create Groceries with Mastercard, which allows you to go straight to your new fridge, your Samsung fridge, and you can order your groceries directly online from that.
You also have the ability to pay at the table with Masterpass on your smartphone without ever having to call for the check. You can buy directly from inside a messaging application. These are just examples. There are thousands of different things that you can do. For those of you that are going to attend the demonstration showcase later today, you're gonna see what I feel is an awesome experience of a consumer booking and paying for a flight from inside the messaging application simply, safely, securely with Masterpass without ever having to go to the airline's website or having to download the airline's app. You're gonna see a variety of other experiences. Some of them are on the screen there behind me.
One that I like, which is a little bit gimmicky in some respects, but it does actually demonstrate the potential to change the retail experience. What we've done is we're actually leveraging a really, really clever technology called Pepper the Robot. What we're doing, we've actually announced that we're gonna be partnering with Pizza Hut in Asia to bring this to real stores in early 2017. Consumers are gonna be able to go up to Pepper, and they can order directly from them. I don't know if it's a he or a she, doesn't really matter. You've got the ability to order from Pepper and pay on your smartphone with Masterpass. All of these experiences are there to be seen.
The great thing from our perspective is that by unlocking Masterpass via APIs, who knows what experiences are gonna be available next year. Next up is safety and security. We want to secure every transaction. Our digital enablement service, or MDES, it's the industry standard tokenization service, which enables the loading of Mastercard tokens into digital wallet solutions such as Apple Pay, Android Pay, Samsung Pay, and Masterpass. Through MDES, we're providing end-to-end digitization. We've already seen pretty strong growth in connecting bank partners to all wallets. To date, we have over 550 issuers connected into MDES. We're live in 11 countries commercially. We're technically live in 28 countries. We've already expanded with our partners into countries such as France, Brazil, Switzerland, Hong Kong, Australia, Canada, the U.K., and Singapore.
We've many more markets coming soon. Another thing that's important here is it's again, it's a two-sided market. There are device manufacturers that could be creating phones, they could be creating wearables, and there's financial institutions. We want scale. Everyone wants scale. Banks want to enable their consumers to transact securely and simply across all devices, but they don't want to have to negotiate one by one by one with every one of these device manufacturers. Equally, the device manufacturers, whether they're smartphone providers or whether they're wearable providers or connected devices, cars, watches, fridges, whatever, those companies don't wanna have to negotiate one by one by one with financial institutions either. The challenge with negotiating one by one is it really limits the speed to scale.
Last year, we created the MDES Express program to actually facilitate this. We sit in the middle, and we actually make this happen so we can scale extremely quickly with all partners. Over 200 issuers have signed up to our Express program already. That's actually further helping us scale digital payments with digital wallet players and device manufacturers. Let's switch gears a little. You heard Ajay talk and you heard Michael talk about digitizing more forms of payments and going after new payment flows. Obviously, we're well known for facilitating retail payments between merchants and consumers, both in-store and online. Given the connectivity that we have, we're connected today to 23,000 financial institutions globally. There's a huge opportunity for us to support new payment types and new use cases.
What we've created is the Mastercard Send platform, and we're enabling what would have been to us non-traditional payment flows such as domestic person-to-person payments, disbursements of funds into consumers' accounts, and remittances. We have a single-minded goal in mind as it relates to supporting these types of payments. What we want to do is we want to facilitate money transmission from any funding source, card, cash, bank accounts, mobile money, mobile wallets, from all of those funding sources to any receiving endpoint globally. It's pretty early days as regards this initiative, but we're making really strong progress. We've actually got acquisitions in play. We've acquired two companies, Omni and Applied Predictive Technologies, and we've also invested in a joint venture called HomeSend. Let's break it into the three things. First up, P2P. We've recently announced a deal with Early Warning Services.
Early Warning in the U.S. is the owner of the clearXchange network. Using Mastercard Send, clearXchange is now going to enable all U.S. debit cardholders to send money and receive money to clearXchange member banks in real time. The funds will be in your bank account in real time. This Send platform also facilitates P2P transactions that originated from Facebook, Square Cash and Google Wallet. Moving on to disbursements. Disbursements to me is an absolutely massive opportunity, even just traditional disbursements. In the U.S. alone, $14.8 trillion is disbursed in cash and check. What we're doing is we're enabling businesses to disburse funds in real time via the Send network.
With recent wins in the traditional space for insurance companies, instead of actually using ACH or sending out checks, we have the ability to disburse funds in real time. We've partnered with Berkshire Hathaway Travel, Allstate, and a number of others. What's quite interesting from a technology perspective and a digital perspective is that the sharing economy has opened up new opportunities for us from a disbursement perspective. We've partnered with Stripe, and they're using the Mastercard Send platform and the Send APIs to deliver faster disbursement of driver fees to Lyft drivers. If I'm a Lyft driver, instead of having to wait for two weeks to receive my fees, I can now request from my driver app to get paid in real time, again, using our B2B2C Send network.
The driver has instant access to their cash. They have the ability to buy gas. They have the ability to buy food for their family or whatever else they need to do. Because of the value that this is giving to them, instead of waiting the two weeks, they're actually charged a small fee every time they actually make a request to have their earnings paid out instantly. We've also partnered with Green Dot to enable Uber drivers to also request their fees in real time. On to the third thing, disbursements or remittances and international money transfer. A key thing here is building out our network, building out that reach and capability so that we can have a real position in remittance and international money transfer.
To date, we've established reach to card, bank accounts, mobile wallets, and we have cash out in over 70 markets around the world, including the top 15 disbursement markets, globally. This reach is going to give us access to 2 billion new, that's new consumers, on the Send network by the end of 2016. Again, it's the one hand clapping side. You have reach, so that you're able to put the funds into a certain account. You need to leverage that reach by partnering with senders. What we've done is we've actually partnered with many of the world's largest money transfer organizations so that we can enable all of our existing financial institutions to send and receive money via the Send network. Now, we have lots of deals signed, we have projects ongoing around the world.
I just thought maybe I'll pick two or three to give you a sort of flavor of the types of things that we're enabling with our Send platform. Earlier this year, we launched a cross-border remittance service in Bangladesh, and we partnered with Western Union and bKash to make that happen. What that means from a consumer standpoint is if I'm a consumer in Bangladesh and I have a bKash account, and they have 22 million consumers today, I have the ability to receive funds internationally into my bKash account. We also signed a deal last week with KEB Hana Bank. They signed a deal with our HomeSend joint venture, and they're one of the largest banks in Korea. They're using our Mastercard Send assets to create a brand-new cross-border digital remittance service.
Another thing that's important to note about Mastercard Send is it plays a key role in our financial inclusion efforts. Where cards and bank accounts are not necessarily available, what we've done is we've partnered with some of the largest telcos in the world. We've partnered with telcos like Vodafone, MTN, Airtel, Indosat, because what we wanna do is we want to enable reach into mobile money accounts. This connectivity to mobile money has recently been highlighted in a partnership that we did with the American Red Cross. What we did was we were able to provide digital relief for drought victims in Indonesia via our Send network. Now, as a B2B2C company, partnership has been and will continue to be absolutely critical for this company.
Improving the way that we support both our customers and our partners is an important and ongoing exercise for Mastercard. A great example where we can bring that to life is the recent overhaul of our developer platform. For those of you that have smart devices, which I am sure you all have, you can actually go there on your mobile phone, your tablet, your laptop, etc , to developer.mastercard.com, and you actually see what we have done. We launched this platform, Mastercard Developers, it was formerly the Mastercard Developer Zone, about six years ago.
What we've done in the last number of weeks, we've actually launched a new version to simplify the process by which any partner that wants to use Mastercard services to enhance their product, will be able to do that in a really simplest and seamless way via our APIs, our application programmer interfaces. When we talk about partners, obviously we have, we sell to banks, both on the issuing side and the acquiring side. We have deep relationships with merchants, technology companies, and so on. This platform is designed whether you're a startup, an issuer, an acquirer, it doesn't matter what sort of business you are, you will have easy access to our services, and you can integrate them into your solution to make your solution better.
We have many fantastic services within Mastercard, and today we have between 25 and 30 services on this platform in categories such as payments, data, security. What we've also recently launched is we've launched an area where we're giving access to new and experimental services that were created in Mastercard Labs for developers to use and integrate with their own solutions. Mastercard Developers was designed and built by developers for developers. When we talk about a lot of our products, we're creating products for consumers, but we're selling to banks.
From a developer perspective, the API platform needs to be used and understood by the development community, so we actually had to change the way that we spoke, engaged, and made these services available. We provide clear, consistent APIs, documentation, software development kit, sample source code, reference implementations, and we provide that across six of the top programming languages today. We're gonna continue to improve this platform. In fact, we had another launch of it this week. We have another launch again in a few weeks, where we're adding more and more services and more and more features to it. We will over time, we will make all of Mastercard services that are appropriate available via this platform. We will also integrate newly created services and newly acquired services into this platform.
The key thing from our perspective is by making it easier for others to take advantage of our services to make their solutions better, we can accelerate the rollout, the monetization, and the scaling, 'cause it's all about scale, the scaling of our services. Now, I probably bored you on APIs because to a non-technical audience, APIs are often seen as confusing. Really, they're actually quite simple. You really should think about APIs as basically like pieces of Lego that have unique functionality that can be easily integrated into third-party solutions to make those solutions better. Rather than actually boring you a bit more about the APIs, let's actually talk about partners that are using these APIs, how they're using them, and what they're integrating them into. Just to give a couple of examples.
Apple Pay, Android Pay, Samsung Pay, they actually use our MDES APIs to generate tokens to put into their wallets. Banks such as Citi, Bank of America, Cap One, and many others, incorporate use the Masterpass issuer API to incorporate checkout capability into their mobile banking application or their mobile payments companion application. Merchants such as Walmart, Newegg, and FreshDirect use our Masterpass merchant API to simplify the online checkout experience. We have many merchants around the world that leverage our payment gateway solutions. Coupon users and many acquirers use MATCH to manage the risk associated with onboarding new merchants. Companies like Microsoft are integrating with Simplify Commerce so as to provide payment acceptance on their digital, on their Dynamics platform.
Given the rapid change, I think all of us today have talked about the rapid changes are happening with technology. Given these changes, experimenting with new technologies is absolutely critical to us. We need to be at the cutting edge, but not the bleeding edge in terms of what and how we provide to our customers. A lot of this experimentation takes place in Mastercard Labs. Now, obviously, this has to be focused. It can't be just a mishmash of, you know, we play with these technologies and see what happens. When we actually look at new technologies, we're very focused on can the technology make payments safer, simpler, and smarter. When we explore a new technology, we always do it in a thoughtful and structured manner. We'd be asking questions like, does the technology solve a real problem?
If it doesn't solve a real problem, you know, there's not a lot of point, working with it. Can it make our products better, faster, cheaper? Can it improve the way that we serve our customers or our partners? Does this unlock new opportunities for us? Are there risks? Are there dependencies? Is this technology likely to go mainstream? If it's likely to go mainstream, in what timeframe is it likely to go mainstream? As it relates to this technology, do we want to be a leader or do we wanna be a follower? If you look into the screen behind me, you know, the opportunity that we've talked about related to the Internet of Things is something you've heard from us many, many times before, because we still believe that every connected device is going to be a commerce device.
Masterpass, MDES, Send, and Mastercard Developers are all device agnostic, and we do enable today, and we're gonna continue to enable simple and secure payments from every device, whether it's a phone, whether it's a tablet, whether it's a fridge, whether it's a washing machine, whether it's a car, we are going to facilitate secure payments from that device. Machine learning is another very, very interesting area, and given all the data assets that we have as a company, I'm hoping it'll come as no surprise to you that we're already leveraging this technology and have been for some time. We're using it to reduce fraud, to predict behaviors, to enhance our product experiences, and generally become more efficient. Blockchain is a technology that's also top of mind for us. Now, we believe that while it's still early days, the technology is interesting.
Similar to other technologies, we're approaching blockchain in an extremely methodical fashion. So far with blockchain, we've invested in DCG. DCG is the Digital Currency Group, and what they do is they invest in early-stage blockchain and cryptocurrency companies. We've also built our own private blockchain inside Mastercard from the ground up, and we're currently testing a variety of different use cases. We filed over 30 patents on the various uses and aspects of the blockchain, and we're also working with a number of blockchain companies that have come to us through our startup engagement activities. We're constantly monitoring the landscape as it relates to these technologies and others, and when appropriate, we will integrate the technologies either into our solutions or into our delivery models.
As you will have seen, just in terms of wrap up, from our recent results, we're continuing to deliver well today quarter- on- quarter, but we're doing so in a way that allows us to simultaneously invest in the future. If I was to summarize, we're upgrading the payment ecosystem with MDES, with Masterpass, with Mastercard Send, with Mastercard Developers. We're partnering with corporations and startups so that we can deliver the best digital experience across every channel and on every device. We're relentlessly improving the security of transactions with the use of tokenization, biometrics, and machine learning. We're extending our reach into new payment flows, P2P disbursements and remittances.
We're making it much, much, much, much easier for others to integrate our services into their solutions, by upgrading the developer platform. We're really alert to the changes that are happening around us, and we're experimenting in a thoughtful, intelligent, and structured way. Finally, we're pushing ourselves to innovate faster and to continually support our customers' innovation and product development activities, particularly as they relate to making payments safer, simpler, and smarter. I'd now like to hand back to Barbara to moderate the session on how we differentiate ourselves with services.
Thanks, Gary. I'm gonna invite my fellow panelists to join me up on stage.
Keep on moving.
Don't take Kevin's chair. We talk a lot about our service offerings and how they derive growth and what they do to help differentiate Mastercard in the market. Gary, I'm gonna start with you since you're the leader of a lot of these groups. We very often get asked about our strategy around services and get asked, are we taking our eye off the ball with respect to our core business? How would you respond to that?
Kind of an interesting question. I kinda look at the services as putting us inside the ball, right? When you talk to clients and you visit countries around the world, you know, you develop an understanding of what their needs are. What you're gonna hear the panel kinda talk about, we're gonna touch on our advisory services, our loyalty services, our safety, security services, and we'll touch on processing as well. All of these are structured to actually. If you go back to Ajay's slide in the beginning where we had grow, diversify, and build, these services, which are on the right, are there to grow the core and enable diversification. Around the world, countries are in different stages of development, markets are in different stages, clients are in different stages.
By having a solution set that solves their problems, you're in a completely different place. Completely different place. Let me give you just a couple of quick examples. Loyalty. Our loyalty proposition includes benefits and insurance, offers and experiences, and technology, right? A client can utilize that end to end, or they can take component parts. One key example, I was looking at the pipeline in preparation for talking to you folks, was we have one large client in a region who actually selected just to take the technology platform. They had enough coverage to actually put all the component parts around their loyalty program in play, design it, analytics, offers, all the other component parts. The fact that we have the technology to actually port to them cut their time to market in half.
That means volume, that means transactions, and that means more revenue for us. Second example. Michael touched on optimization when he reflected on the products and what we were doing. We have another client where we provided an optimization strategy across their entire book of business, all their segments, from mass to affluent. A year later, their revenue's up 10%. That's real money. All right? That's real money. Again, their revenue's up 10%, our revenue is up, our transaction count is up, and our volume's up. Okay? When you take a step back and look at them, we're there to drive the core business, but also to differentiate ourselves. All right? By having the services working hand in glove with Craig in North America and Ann's team around the rest of the world, we put ourselves in a great position.
You solve their problems, you provide the end-to-end solution, you're gonna be in a position to win deals. We drive the core, we drive additional revenue. We charge for these services. We're different than the competition. We've changed the conversation. Barbara asked me, like, "Gary, how do you dimension how important this is to our franchise?" Well, I look at the pipeline every month. I looked at it two weeks ago. There were 3,000 opportunities in the pipeline embedded across these four services that we're gonna touch on. All right? 65% of those opportunities are outside the U.S. All right? The services resonate with our customers. They're important for our client teams. They differentiate us, and they enable us to grow our business. What I'm gonna do now is just stop for a second.
Kevin has been running Advisors for seven years? Eight years?
Seven years.
Seven years.
Dog years.
A dog year. If you could just maybe reflect a little bit. I'm thinking about Santander.
Maybe give the audience a sense of end to end, what's kinda transpired there.
Sure. I'm gonna talk about Santander Brazil. Now, as is usually the case, the services we provided to Santander were multifaceted, and in this case, involved loyalty services, safety and security, and of course, Mastercard Advisors. Now, to touch on some of the points you made, Gary, I'll start with the idea of deepening customer engagement using services. Now, in this case, based on a five-year intimate working relationship and a deep level of trust, Santander Brazil brought Mastercard Advisors in to help define four things for it. One, the strategic planning process around its cards business. Two, card operations, including organizational structures, its innovation agenda, and its loyalty strategy. Now that loyalty work translated into a huge advantage because shortly thereafter, Santander Brazil bid out that business and sorry, well, Mastercard won it.
Now that loyalty platform is embedded with that bank. At the same time, Santander implemented a number of key core safety and security offerings. Mr. Bhalla will expand on that, but I'll just say that that level of intimacy, that level of engagement raises Mastercard status to strategic partner, no mere vendor relationship. That makes a big difference. The other point you made about using services to drive core business performance, I'm gonna give an example. You know, we have something called managed services. Michael mentioned it. Managed services gives advisors the ability not to just make recommendations, but to actually execute those recommendations on behalf of our customers. In this case, Santander Brazil gave us a number of card conversion projects. Now, to be clear about what that means, Santander hired advisors, Mastercard Advisors, to convert competitors' cards to Mastercard cards.
That's not bad stuff. Between that kind of work, other Advisors work, safety and security and loyalty work, I think it's fair to say that services have been key to driving a couple of things. First, core Mastercard volume growth at that bank or Mastercard transaction growth and 8 percentage points of Mastercard share growth with Santander. The last point I'll pick up on that you made is around diversifying revenues because this is actually a nice and tidy thing we do. While we're providing services that grow our core revenues, we are also earning supplemental services fees while we do it. In other words, we are paid for services that we render that ultimately also grow core revenues.
Yeah. so maybe if I can just sum up-
We can kind of move on. We've been at services for a while. We have a very strong compendium. We've been methodical about building them in the right places. All right? Leveraging talent, technology, some organic, some inorganic development, and we're in a pretty special place. We're the ones with an advisory group, a loyalty group, a processing group, and a safety security group that actually can work with clients and either help them build their business or save them money. In both aspects, that helps us over the long term. We've changed the conversation as well, and I think the most beautiful thing is the way we work with Craig Vosburg in North America and Ann Cairns' team and throughout the world. We're in a pretty good place. All right? This is an important component.
Again, if you just take that chart, grow, diversify, build, these things are here to grow the core and enable the diversification with pace.
Kevin, for many years, we've talked about our capabilities with Advisors specifically as being a competitive differentiator. Your business has shown some great growth rates over the past several years. Let's stay focused just on Advisors for a minute, and can you talk about specifically how Advisors provides differentiation when you're out in the market and how it helps drive performance of our core business?
In other words, you want me to explain how we make Michael look so good? Yeah. Okay, Michael, that's how a non-German jokes. Let me start with a little bit about Advisors and differentiation. As you say, Barbara, Advisors enjoys very rapid revenue growth. That's particularly true outside of the U.S. In the rest of the world, we earn more than half of our Advisors revenue. That's a good thing. If you look across the globe, what you have to acknowledge is that growth is coming from heavy demand from our financial institutions, retailers, and others for our Advisor services. Unlike our competitors, we actually do have people knocking our doors for our services. That's an important point.
Now growth is driven by demand is driven by differentiation, and I would say at the core of it, what sets Advisors apart is Mastercard transaction data. We get it when someone uses a Mastercard, and it's embedded in all of our solutions. What's so special about Mastercard transaction data is it will tell our customers about purchase behavior occurring outside their four walls in a way that their own data never could. All right. Add that to the reality that's happening that was described by Gary Flood, described by Michael Miebach, about the other kinds of data coming into the system, our processing data from processing services, loyalty data from loyalty services, and the explosion of data coming from our digital offerings.
Combined with APT, which is our very unique test and learn capability that allows our clients to rapidly and iteratively test and adjust programs to maximize the ROI on those programs. I don't think we can be beaten. That's all great. I think what's important is, though, you asked about how does it differentiate the core. As I've laid out in the past, Advisors combines analytics, consulting, executional capabilities, and now APT to deliver better results for our clients. That's a weapon we have in our arsenal that the others simply do not. In fact, we just did a study using the APT platform, apples to apples comparison of the entire U.S. portfolio. We took a look at the revenue performance of issuers that use one or more of our services versus issuers that use none of our services.
Issuers that use one or more of our services enjoy a 4 percentage point bump in their revenue. 4% might not sound like a lot, but when you think of some of these large U.S. portfolios, it's a significant and meaningful amount. Barbara, at the end of the day, that's how you get people to knock on your door.
Carlo, Kevin talked about differentiation and as one of the regional leads over in Europe, how does this translate into what you see going on on the ground every day in Europe?
First of all, I'm not gonna comment about my accent because we all agree that Italian accent is better than the Irish and the German. Actually I want to give a couple of examples of how we are driving the advisors into our relationships. I work in Europe.
Good.
Very much my job is to get the best of our products of our people and to convey them, to use them to build a stronger relationship and eventually to make money off of our relationships in the long term. The advisors are very much a key, a critical driver for us. Let me tell you a personal experience and a more recent one with Mastercard. My personal experience is back in 2010. I used to run the Italian BancoPosta, a terrific business model, a pretty big one, actually, $6 billion of revenues in consumer banking, distributing financial products and services throughout 14,000 post offices. 26 million customers, so 50% of the Italian population have a relationship with the BancoPosta. Simply at that time, my CRM was not powerful enough.
The advisors reached out. We started talking about targeting data mining. I ended up outsourcing completely my marketing campaign, outsourcing completely the program management of my loyalty, which has been actually a very successful story, probably one of the most successful loyalty programs in Europe, I must admit. In only 18 months, we had a 35% uplift in transaction and a 25% reduction in the churn rate. For a consumer bank such as the BancoPosta, definitely a very, very successful story, a very valuable proposition for Mastercard and definitely a win-win for both. That's a model that we are trying, and we have been replicating across Europe. Let me give you a more recent example.
In 2015, the interchange regulation went live, you know that the interchange on consumer cards went down to 20, 30 for debit and credit, but the commercial cards actually were excluded by regulation. Not surprisingly, we have seen a lot of banks moving and shifting the focus on commercial cards to protect their profitability. We have been helping them with data, with solutions, with products, but we also shaped a proposition for the Visa portfolios to use the Advisors' ability and go after new business. We targeted France and Spain, which are very competitive markets with strong domestic schemes, with a strong pre-presence of Visa, and we pulled together what I think is very much the best of breed of our company. Product solutions, data analytics, but also security services.
Also we went down the line of training the sales force and incentivizing the sales force of the bank to better serve the SME segment, which is a difficult one. In only one year, we could flip four portfolios from Visa to Mastercard with without the help of the advisors would have been extremely difficult to do so. Definitely, I would say a very strategic contribution of the advisors in our relationships and a very substantial contribution to our revenues, of course.
Ajay, let's shift gears a little bit and move into the world of safety and security, your favorite subject. In almost every aspect of life today, safety and security is top of mind. When we look at that in relation to Mastercard specifically, we look at making our transactions more secure. We look at protecting our network and protecting the data that we have. Let's start with securing the transaction. What's going on in your world to help drive that?
Thanks, Barbara. This is a very exciting time for innovation in the payment space. We are seeing a lot of new innovation in the last few months. As an organization, we've continued to add new features, new technologies on our products and solutions and security as the payment system has evolved. If you notice from magnetic stripe to embossing on the cards to EMV chip, contactless, we've upgraded our technologies as the whole payment system has evolved. However, the situation today is getting more complex. With mobile, with devices and every device connected, it is a situation where existing technologies and the older technologies and the newer technologies have all to work together, which creates a complexity for the system from a security perspective. To add to this, the future opportunity with the Internet of Things is very, very big.
You heard Gary Flood talk about it. You heard Michael Miebach talk about it. It's a big opportunity because billions of devices will be connected, and they can all do commerce, and they can all use our Mastercards. We also need to make sure that the system is protected and that those cards can be used securely in this new environment. If you look at security from a stakeholder's perspective, stakeholders are concerned about security. If you look at from a consumer perspective, consumers are constantly getting attacked. You know, there are ransomware threats against consumers. If you look at merchants, leading large merchants have been breached, data has been stolen. If you look at banks, very large marquee banks have been hacked, money has been stolen. If you look at regulators, the regulators are very, very concerned about it.
Most of you must have read about the hack in the Bangladesh Bank, where the hackers tried to almost steal $1 billion. The environment and the stakeholder concern around security is very, very high. As we look at our own strategy for payments, we've got to make sure that while we protect the system for today, we also have to have a strategy in place to predict the threats of tomorrow and have a strategy in place which protects us for tomorrow. We have a very strong multilayered strategy for security. There is no silver bullet. We have multiple layers which protect the overall ecosystem, and we use a simple strategy to explain that in terms of prevention, detection, and enhancing.
We put technologies in place to prevent the overall ecosystem and the products and the solutions so nobody can get into them and attack them. We do realize people will try and attack, so we have technologies which make sure that we can detect if anybody gets in, and we have technologies which will make sure that the payment experience is safe, simple, and smart, so their experience is good. I always like to give the analogy of your own home or your house, where we all look at putting gates and doors and big locks to ensure that nobody can get in. We also realize that some sneaky buggers will still try to get in, so we have alarms and cameras and other technologies to make sure that we can detect it.
Finally, to get into your own home, you have to have it as an easy process. If it takes more than an hour to get in, open your own doors, then you have a problem in your hands. That's the way I look at it. In terms of securing our own product solutions and the ecosystem, there are a few key technologies we rely on, and EMV is a big one that we rely on for the physical and the digital world. You've all read about EMV. In the EMV technology, a unique cryptogram is generated for every single transaction, which ensures the transaction is secure. It's far more secure than magnetic stripe because magnetic stripe can be counterfeited.
In countries where we have moved from magnetic stripe to EMV, we have seen a 60%-80% reduction in fraud. Our plan is that by 2021, globally, all our cards should be EMV. The good news is that the largest market, which is the U.S., it took a long time to get into EMV, but more than 80% of our cards are, in the U.S., are now already EMV. Now, the next battleground is the digital space. You heard from Gary Flood the new technologies that are coming in the digital space and the new kinds of solutions that we have been working on in the digital space. Digital space fraud is big.
More than 50% of our total fraud today is already coming out of the digital space, while the number of transactions that come out of the digital space is relatively much smaller.
Right.
We have introduced digital EMV, which uses the same EMV technology in the physical world into the world of mobile devices. Same kind of cryptograms, which can again ensure that each transaction is unique. We also have MDES, which Gary Flood explained and talked to you about, where you can actually tokenize the card number. If the device is hacked or breached, then that information is useless because only the token will get stolen, and that cannot be used. In the detection world, keeping the analogy of your own home on ensuring that nobody can get in, one of the big areas we've been focused on, and you heard Ajay Bhalla talk about it too earlier, is cybersecurity.
Safety Net is our new tool, which we launched late last year, which is a cybersecurity tool which helps our issuers and banks and processors detect any major cyber hack or a breach that happens. We have had cases where hackers have gone into a bank, changed the limits on a card from, let's say, $1,000 to $1 million, and withdrawn that $1 million in a matter of hours in multiple locations and countries. Safety Net helps detect all of that, and more than 90% of our customers have now started using Safety Net. That's within the last one year of it being launched. That shows the capability of when we introduce a service which can be put on an entire network.
Within a span of 12 months, you can have more than 90% of the banks using that service. Within a span of 12 months-since its launch, Safety Net has been able to save our issuers more than $300 million in attempted fraud with these banks. Safety Net now screens all the transactions, whether it's ATM, whether it is digital, whether it's physical, and we are assisting our banks globally as many times banks are not aware that they are hacked and that they are breached and that there are times when Safety Net gets in and actually blocks these transactions while we work with the bank. That's been a big cybersecurity winning tool for us.
Moving on with the analogy or that you need to be able to get into your own home easily, we do want to make sure that the experience from our products is absolutely great and is superior. One of the big pain points in today's world when consumers shop on the internet, in most parts of the world, they use a password. Visualize you buying a pair of shoe and you like it and you want to pay for it right away, and here comes a password prompt to put in a password. Most people don't remember passwords. They don't like it, and in the meantime, that site hangs. It can be a terrible consumer experience. We want to remove passwords from this experience, and we have been pioneering the use of biometrics.
We have tested and done pilots in Netherlands, Canada, North America, where we've been pioneering the facial recognition technologies. Many of you have heard it as Selfie Pay and the fingerprint technologies. The trials have been extremely successful. We've done extensive consumer research on it, and consumers really like using the application Identity Check to do internet payments. In fact, in research, more than 93% of the consumers find it more convenient, and more than 82% say that they actually find it much more safer than passwords. Biometrics is also much more safer because it's you rather than something you remember. The most commonly used password is 123456. You can imagine how much security you get with a password like that.
Now, while we make life easier and smoother for consumers, we also want to make sure that life is easy for our customers, too. We've been working on advanced technologies, and Gary Flood spoke about it, on advanced machine learning and artificial intelligence technologies which harness the power of all the data that we have. You heard Kevin Stanton talk about it, too. Packaging solutions for our banks with this data so that they can assess the risk on these transactions well. We recently launched a product Decision Intelligence which uses sophisticated artificial intelligence technologies to measure the risk and advise this risk to our issuers. In the product experience area, we have demonstrations on Decision Intelligence, on Mastercard Identity Check and on Safety Net. Please do find the time to have a look at them.
Carlo, let's take a quick minute and build off what Ajay just said, safety and security. How are you seeing that in the European region?
Let me give you a little bit the commercial spin and the commercial effort we have in place. First of all, as Ajay said, we have a very strong demand for security services, a very strong and sustainable demand because of the ongoing shift from face-to-face to eCom shopping. Secondly, as a result, we are continuously growing in security services and we're making more and more contribution to our P&L. Let me give a couple of examples. Actually one which is pretty important, which is Netherlands. Netherlands after the EMV migration still had some significant fraud levels. Netherlands is a very concentrated market with three banks only that used to pay a bill of $40 million of net fraud on an annual basis on skimming. Skimming is exactly what Ajay described before.
Fraudsters are copying the information of the magstripe and using them in typically in non-chip ATMs to withdraw money. $40 million is a big bill. The Dutch banks reached out. We sold them the geolocation service which is basically a tool that allow issuers to activate or de-disactivate each and every card per country and per channel. In only 12 months with a little bit more dynamic fraud management, the fraud levels went down by 85% to a low single digits. Definitely extremely important for the Dutch banks and definitely this turned into better authorization rates, more transaction in the ecosystem for the benefit of everyone and also of course for the benefit of our transaction flow. This is one example. Should not be seen in isolation. It's a very typical example that we copied and pasted in several markets.
Germany, Italy, France are good examples. I think that this focus on security services has been one of the main drivers for securing the European market. Not only after EMV where clearly the transformation was very significant, but also after EMV we have seen in the last three years for instance face-to-face frauds going down by 20% to very low sustainable levels. We have seen also eCom fraud going down by 35%. Still room for improvement, but definitely in the right direction. I would say commercially the security services I would draw the same conclusion as for the Advisors. It is extremely important for the quality and the strategic engagement of our relationships.
Very fast growing, outpacing the core and delivering definitely very contribution to our P&L.
Kevin, you talked about how Advisors leverages data. Can you give us a quick example of how Mastercard leverages data outside of Advisors?
Sure. Well, Barbara, the fact is we leverage it across the enterprise, but I'm gonna talk to you about loyalty and safety and security. I wanna mention three things. The three commonalities across those three organizations. First, it's Mastercard data that underpins the offerings we put on the market. Second, all three of those offerings enjoy a huge advantage, and that's that the data we use is a byproduct of our core business, which means we leverage the same cost base which keeps costs down as we move forward. The third is all three use our data advantage to drive the core business. Now, loyalty does that in a very direct way. They focus on programs and solutions that drive card acquisition, card spend, and card retention. They work with issuers and merchants, so they work on both sides of our network.
When you put their end-to-end solution together with the other services in the portfolio, they truly can't be beat in terms of a single provider, one-stop shop in the payment. Just to put some numbers behind the impact that loyalty has on the core business, you can compare, for example, in North America, the performance of a card holder in a program, a loyalty program, where the issuer of that program leverages Mastercard technology and programs. Those card holders will spend 70% more and spend 50% more frequently than a card holder that isn't in that kind of program. That's why our clients are willing to pay us supplemental services fees to manage over 100 million accounts in 100 countries and more on our loyalty platform.
For Mastercard, that translates into to this nugget, that those cards will generate twice the core revenue. Forget about supplemental services revenue. Twice the core revenue of a card that isn't in one of those programs. Now, that story repeats in safety and security.
Kevin, you raise an excellent point. You know, data is the lifeline for security solutions. It's just so critical, and it is our responsibility to protect this data and the privacy of consumers. In fact, the excellent example which brings this entire data point to a perspective is declines. If you look at declines today in the industry, in the U.S. alone in 2014, $118 billion of volume was declined as false declines. In other words, there was no real fraud, but there was a perception that there was going to be a fraud, and you got a decline. Many of you may have suffered the problem. One in six users in the U.S. experience that problem. That problem becomes even bigger when you look at the digital world.
In the digital world, you know, we see 15%-18% transactions declined, and in some countries we see almost 50% of the transaction declined. I'm sure when you travel overseas, many of you may have experienced that there is a little bit of a issue in terms of getting approvals. The reason for the problem is lack of data. That's the main critical reason. The second big reason is that the issuer does not receive all the data from which they can judge the risk of the transaction and then take a calculated call on approving or declining. We are changing that.
We have re-architected our network to ensure that we can collect more data from the merchants, more data from in using new technologies that we employ internally ourselves, and then we have architected the network to take that information flow into the issuers so the issuers can then make a right risk decision on the transaction. We are doing this with the solution that we've launched called the IQ Series, which works on sending an information flow to the issuer in terms of the segmentation where the card is used and the behavior, and details in terms of device identification, IP address, et cetera, all while protecting the consumer's privacy because all of the data is encrypted and the consumer details are never known to anyone. Also location, because cross-border has been a big issue, as I explained earlier.
Now think of it in terms of an exchange that we are running where we are collecting all this information from merchants through sophisticated APIs, adding all the information that we have, and then taking it on our own authorization network into the issuers. We believe this will change the whole story of decline, and that means that you have higher sales for the merchants because they can get more approvals. It means more volume for banks, it means more volume for us, and it means better experience for the consumers. Now, this is something only Mastercard has done. It's very, very innovative, and we believe this will change the way the decline problem has been in the payments industry.
Carlo Enrico, I'm just gonna ask you for one quick regional example. You can pick. From what they've said, what, which would you draw out?
I think I gave an example on security services, so I would like to a little bit expand on what we're seeing in loyalty. The demand is still very strong, and that's pretty obvious because banks are competing with each other in a natural competition, typically domestic level. Also they're facing the new competition coming from, you know, new business models, new fintech, and certainly regulation in Europe is facilitating more competition. Banks are very focused on building their loyalty even more now because from a profitability standpoint, the interchange regulation has diminished the profitability, and therefore, the importance of growing the volumes is even more significant than before. Definitely a very high level of, you know, very high level of strategic engagements on loyalty.
We tend to use the data into a lot of different programs. We have all kinds of programs you can think of, the good old paper-based, point-based programs, and the more innovative coupon-based digital ones. We engage with 39 issuers across Europe on loyalty programs, I think the approach is shifting, is changing because of the interchange regulation again. From issuer-funded programs, we're moving more into merchant-funded kind of approaches, this is shaping a little bit the loyalty space with the need of somebody in the middle, a trusted middleman that really can put together those cross-industry coalitions. That's the way we are positioning ourselves. That's the way we're using our data, the advisors, and our technology.
By technology, I mean our network and our layer of the network, which is entirely dedicated to loyalty programs. That's the kind of engagement we currently have in Europe on data and loyalty.
Gary, I know we're running short on time, but I'm gonna turn this back over to you.
Okay.
Wrap it up.
I'll wrap it up with my Queens, New York accent, right? We'll get there pretty quick. Processing was another aspect that we wanted to just touch on, all right. We had advisors and loyalty, safety and security, market realities, you know, and things like that. Cathy McCaul, who presented last year to the group, will be hosting a table down at lunch to give updates in terms of where we are in processing. If you remember from last year, we have issuer and acquirer processing. We have prepaid program management, and we have gateway services, all right. Those are all heavy technology-based solution sets that enable us to work with our clients in very, very different ways, all right. Having those and combining those capabilities with advisory, data, fraud analytics puts us in a very strong position to influence brand decisions.
Everything we do on the services side is about driving performance and growth on the core side and enabling that diversification in terms of customer set. What I'll do now is just two quick examples. One would be the gateway services area, where we've opened up an opportunity with Sabre in the U.S., leveraging our gateway services and fraud monitoring tools. By doing that deal, we've opened ourselves up to an opportunity with 225 airlines and 700 other service providers, also enabling the distribution of Mastercard's acceptance. That's an example of leveraging this capacity to help us do some different things and work with clients in some different ways, all right?
If I go back to data for a second, let me go to Turkey, where we had a closed loop transit system that we were able to convert to an open loop transit system leveraging contactless Mastercard and our payment transaction services platform. We see transactions, and we participate in the switching stream, which heretofore we weren't able to. It was all domestic scheme. All right? Processing plays a very, very important role for us, all right, across multiple dimensions. Driving to conclusion. Tightly connected to the core. This is about helping Michael be successful, all of us be successful. We have to drive that core growth. Two, competitive differentiation. We are very different than our competitors. All right? Three, we charge for these services, so we make money at these services. The compendium is real and robust.
The only way I can demonstrate that is by having a pipeline of close to 3,000. All right. Very real. All right. Now, the last bullet. Profitability differs by category, improves with scale. Martina will get into the economics, the financials when she talks a little bit later. What I would like to close on is the revenue profile from this compendium of service is growing faster than our core business, All right, which is important. Okay. With that, key to drive the core. We're driving growth with them, with our clients. Pipeline's robust, and we're spot on, All right. I'd say kinda inside the ball versus outside the ball.
Okay.
Good?
Thanks a lot, guys.
Thanks.
Thank you.
Thanks.
Now we're gonna shift over to the regional focus, and we're gonna start out with Craig Vosburg, who's head of North America.
All right. Okay, good morning, everyone. I was gonna start by saying I'm like the first presenter here who doesn't have an accent. I realize that's kind of a self-centered view of things. It's not me, it's everyone else that sounds different. Anyway, I'm here. I was here last year, stood before you as the Chief Product Officer, the role Michael's in now, and he's doing a fabulous job with. This year, I get to talk to you from a little bit of a different perspective, give you a sense for how we're taking a lot of the products and services that you've heard the morning, that we've spent the morning talking about.
Many of the things that we feel very strongly differentiate our business and set us apart from our competition. This year, I get to tell you a little bit about how we're bringing that to life and bringing it to bear in the marketplace, and I'll do that for North America, and Ann will do the same for our international markets. Excited to be able to do that. I'm eight months into the role of leading the region. While certainly we have some work to do, it would be disingenuous of me to stand here before you and say we don't have anything that we need to do better in our business in North America.
Notwithstanding that, I feel really good about the position of our business and very excited and optimistic about the opportunity that we have before us, and wanna share that with you this morning. Let me tell you why that is. I'll start with a little bit of context, though. First, North America, the U.S. and Canada, markets for us, two of our top five markets globally. Together, they represent a little more than 40% of our revenue and about 35% of our total volume. We've come from, you know, a pretty good place in terms of how our business has performed in North America.
We've been able, over the years, over the last five years, to generate double-digit revenue growth, notwithstanding the fact that these are fairly sizable, what we would think of as being mature economies, and markets where payments, electronic payments, the kinds of things we have been doing, have been in existence for a long time. Despite that, we've had very attractive growth with double-digit revenue growth, and at the same time have done a nice job of diversifying our customer base. We're diversifying in a number of ways. We've expanded our relationships with smaller and medium-sized banks on the issuing side. We have diversified to include more merchants as customers and merchant-driven revenues.
Some of the kinds of things that you heard Kevin talking about, and that's only accelerating now with our acquisition of APT and the things that they can help us provide our merchant partners with. We have diversified with governments. You've heard us in the past talk about our work with the federal government in delivering government benefits through the world's largest government benefits program with our partnership with Direct Express. That continues to grow and evolve and get stronger and stronger, and we continue to get gain traction and gain headway in working with governments at the state and local level as well. Nice diversification of our base.
At the same time, we've also, you know, coming off of the services panel that you just heard about, we've doubled the revenue contribution of services to our business in North America over the course of the last five years. As a percentage of our total revenue, those services lines have doubled, which is nice progress as well. We've also You know, we tend to be our lead market for innovation. The U.S. and North America is where we have introduced many of our own technological innovations first. It's where we rolled out tokenization and MDES first. It's our launch market with Masterpass. We have some of our early activities in safety and security with biometrics that we're piloting in this market. We've navigated through and continue to navigate through a period of change and innovation.
We also have many of the world's leading digital and technology companies domiciled here and have worked very closely and carefully with them over the last handful of years to ensure that we have a tight degree of engagement, that we're working with them and enabling them as they think about incorporating payments into their businesses, to do so in a way that leverages our infrastructure, leverages our products and capabilities and technology, leverages our breadth of relationships with issuers and acquirers in order to bring those things to market. A lot of positive progress there in terms of how we've been managing through the last couple of years.
As I look towards the future, I think there continues to be this tremendous opportunity, which is one of the things I'm so enthusiastic about in having a chance to lead this part of our business. You know, despite the fact that we've been at it for 50 years in the U.S., there's tremendous runway for growth, and the same is true in Canada. Each of the things that you hear us talk about as being growth drivers for our business are as true in North America as they are elsewhere in the world. Consumer expenditures are growing. That will drive growth in our business.
The secular shift from cash and paper-based payments to digital payments continues to work in our favor. In many respects, that'll be accelerated by the adoption of digital technologies, the proliferation of new acceptance technologies that we see with partners like Square. There's cash is hiding in a lot of pockets of our economy and there are opportunities for us to go after that and continue to win. We have opportunities to continue to win share and we'll talk about that a little bit. You've already heard us talk a bit about untapped payment flows, which are substantial and give us a number of important areas to focus on for growth. There's five things that we are highlighting as things that are gonna help us get after that growth. I'll touch on each of these in turn.
Expanding our product distribution, principally through issuers and co-brand partners. Growing acceptance, working on the merchant side to extend the reach of our network. Investing in digital, bringing the kinds of things you heard Gary talk about to life in our marketplace. Scaling our services activities to help drive both revenue growth and growth in the core business. Extending the reach of the network to capture new payments flows. Let me start with product distribution. As you know, our products go to market through partners. You see here a number of partners, important partners of ours in North America, with whom we have renewed or extended or won new relationships with over the course of the past year. Let me start with an area that, as you know, is one where we do have some work to do.
It's consumer credit. We are focused on our consumer credit business in the U.S. in particular. In as much as, you know, there's some things over the course of the last couple of years that haven't gone our way. The U.S. consumer credit business is not exactly where we would like it to be. That being said, we are bringing the products, capabilities, differentiating services into the marketplace to work with partners to help us grow that business. We're seeing positive signs of that in a number of areas. Several of the examples listed here focus specifically on consumer credit. Some of those are co-brand partners, which are an important part of our consumer credit business.
You've heard us announce the renewal, and exclusivity from a network perspective of the American Airlines co-brand going forward, working with our partners at both Citibank and Barclays on that program. Michael touched on the JetBlue program, which we announced last year, but it's gone live in the market this year. The results from that are extremely strong, and we're very pleased with how that program is performing. You heard us a couple of weeks ago announce the extension of our PayPal consumer credit co-brand program. We're happy to have that contributing to our consumer credit growth as well. There are others in the co-brand space.
Sticking with consumer credit, we're also working with our traditional bank partners to introduce consumer credit products, new products, to new segments, to new customer groups, to continue to gain share and win business with partners like Bank of America, where we're introducing credit products with new segments, with Capital One, having credit products available with new segments. Our ongoing partnership with Citibank, where we're seeing good growth in their business and that relationship as well. In Canada on the consumer credit front, we've got nice renewals, extensions of our relationships with MBNA and Walmart Canada, both important partners there. This is an area, consumer credit's one that we're very focused on.
We're committed to driving growth in that part of our business, while maintaining the pricing discipline that we think is right for our company and right for our business. That will continue to be a priority for us going forward. In the debit space, there's a number of partners here as well who are helping us grow our debit business. A number who aren't listed here, actually. We've engaged or brought new partners onto the network, almost 100 new partners in the small bank and credit union segment, which is helping to grow our debit business nicely. PayPal, again, you saw us announce yesterday the extension of a debit co-brand relationship with them focusing on the small business segment.
We announced earlier this year the renewal of our relationship with Huntington, which is a significant debit partner, and that renewal covers all of our various product activities with them. We're growing our debit business with U.S. Bank and others. We feel good about how that business is progressing, as we do with commercial and prepaid. You see a couple of important partners in the commercial space listed here, with FLEETCOR and WEX, two leaders in commercial and corporate payments with whom we've recently renewed our relationship. In the prepaid space, both Netspend and Xerox, important partners that we have deepened our relationship with and are growing our business with them in the prepaid space, serving both commercial and government partners. Overall, a lot of good progress.
Bank of Montreal, I should mention as well, with respect to debit, we did launch our first co-badged debit product in Canada with Bank of Montreal earlier this year, so we're excited about that as well. The approach here is as you've heard us describe earlier. It's working with these partners, bringing the broad array of products and capabilities and services to bear to enable them to execute their strategies and serve their customers and consumers more effectively in our capacity as a B2B partner in working with them. Second area, growing acceptance. Very important aspect of our business transactions start with merchants.
We have for a number of years been investing significantly in our merchant relationships, the merchant side of our business in ensuring that we are driving growth of our network through constructive and healthy relationships on the merchant side across the board. There's a couple of areas where that pays the most tangible dividends, I think. Clearly, expanding physical acceptance is a positive thing for us. Extending the ubiquity and the functionality of the products that we have in the marketplace. We've had good success in opening up a number of new spending categories. We've added, since 2013, more than 2 million new acceptance locations in North America. Some of those are coming through the proliferation of payments facilitators like Square, but many of them are not.
We're posting double-digit growth on a percentage basis, even excluding for the kind of acceptance growth that Square is enabling. We're doing that by working directly with merchants in categories-Some of which are the traditional kinds of cards accepting categories like restaurants and apparel stores, for example. Many are in new areas that haven't traditionally been cards accepting areas like real estate, like healthcare and education. In healthcare alone, in fact, we've added more than 150,000 new acceptance locations just over the course of the last couple of years. We're also working with partners to do interesting things in the acceptance space. Enabling international students to pay their tuition at U.S. institutions through a partnership with Plastiq, for example.
Enabling any of us to pay our parking, pay the parking meter with an app developed with ParkMobile. Other things like that are just extending the reach of our products to be used in different applications. Important to touch on EMV for a minute. Certainly a top-of-mind issue for us in the U.S. as we work our way through the migration. The migration I would characterize overall as going very well. We've got on the card side, almost 90% of our consumer credit cards have been reissued with chips. On the acceptance side, which is where this focus is, we're making good progress in seeing the activation of chip-enabled terminals in the marketplace. We've got about 33% of our U.S. locations now chip active with chip-enabled terminals.
That includes 87% of the top 200 merchants. Good progress. There's still work to do. It's gonna take us a little bit of time to get all the way there, but encouraged by the progress to date with that. Okay. Contactless. Let me talk about that while we're on the subject. You know, contactless is an area that as we see re-terminalization take place in the marketplace, particularly in the U.S., we're encouraged to see many of those terminals being enabled with contactless technology. We think it provides a great consumer experience, whether that is with a digital mobile device or a card that's enabled with contactless capability. A great consumer experience. It's fast. It's secure. It's EMV enabled.
It's all of the things that we like to see in terms of transactions at the point of sale. We've seen the benefit that it provides in markets like Canada, where 30% of our locations are contactless enabled. With that, we're seeing about one third of our total transaction activity taking place with contactless devices. The U.S., we've doubled the number of contactless devices over the course of the last year. Granted, off a small base, but we're at about 600,000 locations, adding to those 6 million worldwide that Gary mentioned earlier. Moving on to digital acceptance. We're working hard to scale Masterpass. We've got more than 170,000 Masterpass enabled merchants in North America. Many leading merchants that you've heard us talk about before are either enabled or are in the process of integrating Masterpass.
People like Walmart, Office Depot, Sears, Neiman Marcus, JetBlue. Yesterday we signed Match.com to be a Masterpass merchant, so you know, your perfect life partner is just one click away. Coming soon for you. We're encouraged by the progress there. Again, there's a lot of work to do. It's a long road to get the sort of ubiquity that we're looking for, but we're making good progress. Digital security is obviously important as well, with the proliferation of tokenization. This is an important area that we're working with across not just our issuer partners, but merchants as well, to enable them to take advantage of t okenization and enhance the security of our transactions. Finally, just more broadly with merchant need beyond acceptance.
You know, a lot of what we work on with merchants focuses on payments, obviously. Making payments secure, making them more efficient, increasing conversion rates. There's an awful lot of things we're doing now with merchants that go beyond payments and extend more towards their core business. If you're an airline, how do you fill more seats? If you're a hotel, how do you sell more room nights? If you're a fast food chain, how do you sell more sandwiches? That's where the things like Kevin talked about with data and analytics and APT and our loyalty solutions enable us to play a very different and value-added role with merchants. Third piece is investing in digital.
Gary touched on a lot of this, I won't repeat what he said, but just to give you a flavor for how this is coming to life in North America. I think we view this, it all needs to start with security. Getting EMV enabled as a means of tokenizing payment credentials is a critical first step in our transition to digital. We're making good progress there with more than 80% of our payment credentials in the U.S. enabled for EMV. By the end of the year, we'll have more than 80% of our credentials in Canada enabled for use on EMV. We're getting scale on that side of the equation in terms of tokenizing credentials. With that, we are creating new opportunities to use those credentials, and that's what Masterpass and the Masterpass platform is about.
To enable those credentials not just to go into the digital pay wallets that you've heard about, but for our partners to develop wallets of their own. You heard Gary Flood talk a little bit about some of the improvements and the strategy and the differentiation we have there. The key in terms of bringing this to market is the path to scale and the pace at which, given our digital by default strategy, we expect consumer enablement and adoption of Masterpass to come. Gary Flood said we'll have 80 million roughly worldwide enabled accounts on the Masterpass by the end of the year. The majority of those will be in North America.
When you've got consumers using the product at that sort of scale, it starts to change the equation and the dynamic in the market, including our conversations with merchants about the need for and the importance of accepting it. It also then creates opportunities for us to take these new use cases that Mastercard Labs is so fantastic at working on our partners to develop and again, get those enabled in the marketplace at a pace that makes them exciting. Whether that's a use case around pay at the table, a use case around a parking application, a use case around a connected car, whatever the case may be. This is how we're using Mastercard Labs with our partners to co-create and co-innovate and bring these things to the marketplace in interesting ways.
That gives you a little bit of a frame. A couple of examples, just to touch on, you know, real commercial examples you saw, in the news yesterday, we announced an enhanced relationship with PayPal. It touches on a couple of these areas that are very important. One, PayPal utilizing our tokenization service to bring payment credentials to the physical point-of-sale in the way that consumers have come to expect a Mastercard transaction to look and feel. Secondarily, PayPal incorporating Masterpass into the Braintree platform, to enable their merchant community to easily avail themselves of Masterpass as an option for consumers to pay. Another very different example of a partnership that we formed with General Motors to focus on the development of connected cars.
A completely different use case, but an example of the kinds of applications that this connectedness of devices and digital technology will enable us to participate in. Connected cars, where the operating system in the car will enable people to do things like pay a toll, buy gas, pay for parking, potentially shop, hopefully not while they're driving, but at least while they're in the car. You know, there's a wide range of interesting use cases like that that we're working on. Fourth area is scaling services. Big revenue pools associated with these service areas that the panel just talked about. Also great opportunities for us to differentiate and drive growth in our core business. Two quick examples of how we're doing that, one with American Airlines.
You know, if you think about the range of things that is on a company like American's mind, you have things like how do I understand my consumer better, my traveler? How do I know more about their travel behaviors, their travel expenditures, so that I can capture more of that within my network? That's something we help them with data and analytics. How do I understand the effectiveness of different marketing activities to win more of their business? That's something we can help them with APT. How do I take what's already a fantastic rewards currency with AAdvantage points and miles and make it even richer? That's something we can help them with our loyalty platform and things like pay with points to enable a broader array of earn and burn opportunities for people who are very attracted to that AAdvantage miles proposition.
How do I make a better travel experience? You know, it's not just about the time that they're in the plane, but people are in the airport, they're in the lounge. Can I make it easier for them to check into the lounge? We've worked with them through Mastercard Labs to bring things like biometrics to bear as a check-in capability or Qkr! platform to make it easier to order food and drinks while you're in the lounge to improve the lounge experience. That's one example of how these things come together to work with a partner in that way.
Rogers is another example, looking at the Canadian market, where Rogers, you know, having diversified portfolio across cable and mobile and internet services, media services, sports entertainment with their ownership of the Toronto Blue Jays, is leveraging our loyalty capabilities to create deeper engagement with consumers across their portfolio of assets. Loyalty platform and again, pay with points capability to be able to enable consumers to earn points in one part of the system and redeem them up elsewhere to buy something at a Blue Jays game or buy tickets when you're at the stadium. Also to leverage our data and analytics to understand in more depth how to drive growth in that card portfolio right back to our core business and the centerpiece of our relationship with them. There's a lot happening there.
We could go on with examples, but we've touched on a few here. We're happy to talk about more later in the day. The last piece is around expanding the reach of the network to capture new flows. We've touched on this a lot already. I won't really belabor it too much. With consumer-to-merchant-oriented payments, I think the headline here is despite 50 years of effort in this space, we're about 50% penetrated in North America. There's a lot of upside, again, by working to expand acceptance, increase the use cases for our products into different nooks and crannies where people are still using cash and checks. In the B2B space, despite making nice progress and seeing good growth in our procurement products, our T&E products, our virtual card products, we're still just scratching the surface.
This is an enormous flow of payments that in the U.S. alone is somewhere on the order of $20 trillion. With the kinds of capabilities we've talked about, whether that's a faster ACH capability that we'll acquire through VocaLink, potential deployments of blockchain technology, continuing to hammer away at opportunities with the products we already have in the market. There's real opportunities to grow there in a meaningful way. The last two, P2P and government and business-to-consumer, these are both kind of inverting the flow of the payment where we've traditionally pulled payments, you know, through a merchant-initiated transaction. This is now pushing a payment, whether it's a consumer pushing a payment to another consumer or a business pushing a payment to a consumer. Gary stole all my thunder on this with examples.
Michael was kind enough not to use all my examples. Gary didn't return the favor. He's already talked about clearXchange, Uber, Lyft, Stripe, Green Dot. These are the examples that we're going after, and partnering with real products and real activities in the market that are helping us begin for the first time to attack those spaces in a meaningful way. In summary, just looking ahead, North America continues to present significant opportunity for us. We do have momentum across products, notwithstanding some work that we need to do, the progress that we're making in U.S. consumer credit.
Along with that, we've got a tremendous number of opportunities to continue to displace cash and check by building on these partnerships that we're developing, helping our partners be more successful in executing their strategies by bringing to bear differentiated products, solutions, services, that help them grow their business. That's a quick tour through North America. With that, I'm gonna turn it back to Barbara.
Accomplished a lot at Mastercard over 10 years, but one thing I haven't been able to do, and Warren, this is your challenge, I cannot keep these guys on the time schedule. Once again, we're running behind. We're still gonna take our 15-minute break, but we're gonna start back sharply at 11:05 P.M. For those of you here in the room, restrooms are downstairs. Beverage tables have been refreshed. People on the webcast, no need to disconnect. You can just stay on, and we'll be back at 11:05 P.M.
[Break]
Can we start to sit down so we can try to keep this on our already delayed schedule?
I can read again now.
Okay, we're gonna get started and try to salvage as much of the agenda here as we can. While individual market environments can vary significantly, there are some common themes that touch on the growth opportunities and the challenges that Ann and her team face across the world. We've gathered some of the IMK team here this morning to discuss some of those themes. Those are the themes that you see here on this slide. Ann, let's start with you as the leader of this group.
Thank you.
Talk about the two growth drivers we always mention, PCE and secular shift. As I said, while they impact all markets, their contribution can vary significantly from market to market. Can you give us a quick walk around the world and talk about that?
Sure. I mean, if you look at PCE and you start over in Asia-Pacific, Middle East and Africa, it's around 7% right now. Moving into Europe, it's 3%. When you get down and across to Latin America, it's around 8%. You might expect our volume growth to be mirroring those things. Actually, it's quite interesting because what we're seeing in terms of volume growth, we're seeing 13% in Asia, 14% in Europe. She says, looking at Javier aghast, "What are you feeding those sales people, Javier?" 15% in Latin America. Our head of Latin America, Gilberto Caldart, is sitting in the audience with us today. The PCE is a driver, but there is a strong secular shift driver that's also helping our business grow.
Just to mention, by the way, because I know that cross-border growth rates are very important for the business. You know, just so that you know, the cross-border growth rates in 2015 were 18% in Asia, 16% in Europe, and 15% in Latin America. Very, very good double-digit growth in this area, which is a great revenue generator for our business. The things that are underlying this growth are not just the PCE, not just the secular shift, though that's very important, and I think Javier is gonna talk about that in Europe next. It's also all the fabulous new core products, and the digital conversion that we're seeing, those things combining to actually drive growth across our markets. That's really what's happening, Barbara.
Okay.
Our growth opportunities are being turbocharged, if you will, as digital technology moves into the payment space, as you heard Gary and some others talk about earlier, as well as the movement to open electronic forms of payment to more underbanked consumers. Let's start with the digital Excuse me, I was about to sneeze. Let's start with the digital opportunities. Maybe Raghu, why don't we start in MEA and talk about your area?
Sure.
When it comes to digital and across Middle East Africa, we have almost like a two-pronged approach to digital. One is really around the consumer side of it. I think Gary talked about this, Michael talked about this. It's consumer-centric. It's wallets digitization across that, and I'll give you an example of that. The second side on digital is enablement at a country level, infrastructure enablement that drives consumers to move towards digital products and platforms. Let me give you an example of each of these two sort of approaches that we have across Middle East Africa. The consumer side example is UAE. We've actually tied up with a loyalty provider on the digital side called Beam. They ride off the Masterpass technology that Gary referenced.
With this partnership, we have above a 90% share of the wallets in UAE. This is truly about a converged experience of Masterpass, where you use Masterpass if you go online. If you actually go to physical stores where Beam is accepted, it accepts Masterpass as well, and therefore, the consumers have started to get this converged experience that Gary's talked about. That's then coupled in with the loyalty play as well because they offer loyalty, consumers get loyalty, so it really starts to talk about the services side that Kevin referenced as well. That's one sort of aspect. Very interesting use case, Michael talked about being in the Middle East and it being hot. Fuel stations.
If you actually go to fuel stations in Dubai and U.A.E., you actually sit in your car and actually just say which pump are you getting your fuel filled in, with a single click of the button, you're out of the gas station. That's the sort of converged experience we're talking about. Another very interesting use case on the consumer side is in South Africa, where a lot of consumers actually consume a lot of airtime, we're using Masterpass rails to actually do airtime top-ups. With our current run rate in South Africa, we expect about 25 million transactions on Masterpass alone. Let me shift gear and just talk about this whole country enablement that we were talking about as well. Egypt's a great example.
There, we've partnered with the central switch, the central government, and we now provide the infrastructure at a country level, which is interoperable. What do I mean with that? All wallets in Egypt, whether you're the FI side or the MNO side, get converged into a single system that Mastercard's technology is driving through. Now superimpose what we've done in terms of bill payments, cash in, cash out, and we are now talking about enablement of a whole country's population that actually moves to a digital sort of form.
Let's talk about some of the different digital technologies, let's start with the cutting edge that Garry Lyons talked about earlier with biometrics. Ari, let's start in India. There was a lot of talk a few years back about a biometric program in India. Where does that all stand?
Sure. Barbara, where the India unique ID program is, some of you might remember, this is about six or seven years back, India embarked on this rather audacious program of bringing biometric footprint of its entire citizen base. The good news is that as we speak, they're almost near complete with 1.2 billion citizens already biometric, you know, footprint has been taken onto a database. The first emerging services leveraging that biometric footprint have also started to emerge. A very critical use for financial inclusion and for financial services is electronic KYC. The first application is emerging to provide an eKYC service. You know, we've partnered up with the UIDAI.
We are working with financial institutions partners, the regulators in India have also announced a new set of rules to allow for the establishment of something called a payments bank. The idea really is a payments bank will proliferate much deeper payment services into rural India. The telcos are the, you know, prominent partners in that space. I think the ability for them to leverage the biometric eKYC service to provide an entirely paperless consumer onboarding service and authentication service is going to have a very profound impact on financial inclusion in India.
Yeah, it's for us in Middle East Africa, just using biometrics is really about scale, so it's an e-enabler for us. What biometrics is doing is actually allowing us to scale up our various businesses. Very recently in South Africa, we worked very closely with the Payments Association of South Africa, and we have now set a new biometric standard in the country, which is facial recognition, thumbprints, voice recognition. Now as that starts to come to bear, that common infrastructure will again allow us to scale up. Programs like SASSA, which were a disbursement programs, we can now go to the next level and start to look at other cash displacement opportunities, including pension programs, etc .
Everybody likes to talk about the cutting-edge stuff, but let's back up a little bit and talk about the stuff that's been around a little while longer, like Javier and me. Let's talk about contactless. Javier-
So-
What's happening with contactless?
What's happening with contactless? I mean, like we were talking about digital, right? Digital, there is the issuing side and it's the acquiring side. It's important that in order to have digital in the physical world, you're gonna have to have contactless, right? Contactless acceptance is really important. In the European theater, we're moving really well on contactless acceptance. In fact, we already have countries like Hungary, Poland, Czech Republic, with more than 50% of our transactions are already contactless. We have situations like, for example, in London, where transport does more than 30 million transactions per month contactless. We have a cut date for all terminals in Europe by the end of 2019 have to be contactless capable. Contactless is progressing really well.
As you know, also with the arrival of digital. Don't think just about Apple Pay. Think that, for example, in Europe we have more than 50 different enablements of wallets to be able to pay NFC in a contactless mode. This goes from Pingit, for example, you may have seen that in the U.K. with Barclays, to perhaps others that you are probably maybe less familiar. Let me perhaps touch upon two of them because they're not bankers not banks in the pure sense. One is Yandex in Russia. Yandex is an interesting mix between Google and Amazon. We have with them 25 million wallets already active in Russia which we are converting to our technology to digital capability.
I don't know if you saw in the press we recently signed up Tesco for their 22 million Clubcard cardholders in the U.K. to again be digitally enabled in order to in-store and outside store use that NFC capability so they can tap and go and pay. Barbara, I think, in good old Europe, we're progressing well.
As you always say, it's an evolution, not a revolution, right?
Absolutely.
Despite the strong dollar happening. Despite the strong dollar.
As payments move into, more everyday spend, things like transit and other things, let's talk about that for a minute. Ari, why don't you, start with that?
Barbara, we're making actually good progress on our digital assets and the rollout of our digital assets in the everyday spend categories. If you just see the high frequency merchant categories that we're really focused on in Asia is ticketing, transport, and food and beverage category. To give you an example, on the transport side, those of you who are familiar with travels to Singapore, you'd know that ComfortDelGro Taxi, it is the blue taxis that you see, is a very significant taxi operator in Singapore. What we've done with them is worked with them to build a ComfortDelGro Taxi consumer-facing app which is leveraging the Mastercard platform integrated with Masterpass. We're delivering the Uber-like experience to ComfortDelGro Taxi consumers.
This is early stages of the launch, just to give you a sense of the six months that we've been with the launch, we're seeing about 140,000 bookings per month. Come October we would've crossed about 1 million transactions with ComfortDelGro Taxi. Now this is a journey. This is a process which will take us a few years to really scale up across the region. What we're doing is we are taking that learning from Singapore and applying it to Hong Kong, Taiwan, Malaysia, Indonesia with taxi operators in those markets. Really the idea is if you embed yourselves in high frequency merchants in everyday use categories, it will drive top of wallet behavior and therefore drive greater spend per card.
A good Perhaps if I could contribute to that.
Sure.
A good example, in Europe alone we have 53 different transit opportunities lined up. Let me give you another example. In the U.K., in London to be specific, 32% of single fares are already done on PayPass or on transactions which are tap and go. In Canary Wharf, those of you who are familiar with the center of the financial district in London, 48% of those transactions are done on a tap and go. Why is that? It's important because if you realize that before Transport for London had to have their own application, their own cards, their own software, their own controls. It's hugely expensive and it's complicated.
It makes sense for all those transit authorities to start moving those closed circuit products to standard products, open products that can work not only in transit, but also for the consumer across the board, which is cheaper, easier, and better for everybody involved. That's why we have a strong pipeline of projects.
Javier, you know my famous story about trying to teach a London cab driver how to use a card.
I know. I know.
We'll talk about that later, but-
I have good news for you.
Good.
We fixed that. We fixed that because, interestingly, as Transport for London realized the success of the tap and go and how the consumer's picking it up, they have decided they're gonna make that available in the black cabs as well.
Good.
No problem when you come and visit.
Good, good. I'll be there in November. I'll test it out.
Just continuing on the transit scheme. Really what's driving all of this is increased urbanization. In the next generation there are gonna be something like 4 billion-6 billion people around the world that are actually living in cities. These cities are going to have to become smart cities. When we say smart cities, we mean cities that are easy for people to move around, easy to live in, easy to work in. That's why the massive investment that we're putting into transit and having, you know, Javier mentioned over 50 product projects in Europe. We've got projects in Latin America. We've brought the buses up in Colombia. We've got projects, four big ones going on in Australia now. There's one happening in New York here as we speak.
If you go downstairs, you'll see a technology company that we're working with, Masabi, that actually allows you to buy your tickets through your mobile phone. You know, we started doing that in Athens, and now we're fully integrating the Masterpass technology that Gary spoke about earlier into that experience. That would be something good to see over lunchtime. The moving around part of the smart cities is really important. We keep referring to the London Underground because, of course, it is the biggest mass transit system in the world and quite a world leader. One of the statistics about that is that 35 different currencies are used every day.
That's the point about people flying in from all over the world and just being able to have the ease and convenience of using their telephone or their card rather than have to worry about cash. Now, cash is still very prevalent in our economies. We spoke about secular shift. It's about 77% of transactions in Europe, consumer transactions are still cash. Huge. 89% in Asia. It's 98% in parts of Middle East and Africa. This is telling you there's a massive white space to convert that cash to electronic payments, and many governments are interested in that. They're interested because their city infrastructure has to work. For their city infrastructure to work, the data that Kevin talked about is really important.
That data will help the ebb and flow of the services you provide across the city, the way that people move around the city. Of course, it's the key thing that's driving a lot of government thinking is inclusion. They want the people in their countries to be financially included, to be able to be paid, to be able to pay their utilities, their rent, to be able to send money between each other, to create transparency for economies. That's one of the big drivers of our business today. You know that we're committed to projects that will bring in an extra 500 million people into the financial system in the next couple of years.
Let's stick on the financial inclusion topic itself. We very often get asked, "What is financial inclusion really doing for Mastercard? How much revenue, how much volume does it really drive?" There's another aspect of financial inclusion. Ann does really represent the entire world?
Why don't you start with that?
I mean, you know, in terms of revenue, I would say it's not a huge impact today, Barbara, but what we're talking about is as urbanization occurs, as people move into the middle classes, as you create electronic payments, you are creating a new infrastructure for tomorrow. I use the term infrastructure because what we're seeing is countries moving to build completely new ecosystems. The way that they're doing this is through public-private partnerships. The governments want to get rid of cash. They want to create transparency, security. They engage the local technology companies to help to do this. They're also engaging big global networks, such as Mastercard, to actually embed themselves into these new ecosystems to cause everything to work. You know, I told you about the cross-border flows. Well, you know that the Internet is driving those global flows.
It's not good enough just to create an ecosystem in your own country. It has to be linked to the way that the world works. I think we've got some good examples. Raghu, you mentioned, Egypt. That's a fabulous infrastructure, but.
Egypt, in our opinion, is best in class in terms of having an interoperable mobile ecosystem that, like Ann Cairns said, it's a really good example of a public-private government partnership. That together in the whole value chain, you created something that actually enables huge financial inclusion. Let me just tell you what's happening in Egypt beyond that. I kind of did describe to you what's happening. It's interoperable between the mobile telcos as well as the FIs, and it's also got a government leg to it. What we have in Egypt now is a partnership with the government where they're actually talking about all the national IDs, 54 million of them, now being linked into this infrastructure that's been created into the country. Imagine this.
You've got a wallet in with a bank. It's interoperable. You can use it anywhere. If you're with a MNO wallet, you actually get to use it. Now we're talking about having 54 million IDs of the Egyptian population actually all linked into a single interoperable sort of system. That's the sort of massive change that's taking place. Very recently, Vodafone, which had their own mobile wallets, 2 million of them in Egypt, have converted en masse into a Mastercard wallet because they actually want to be part of an interoperable system. The early results all show that their actually usage, et cetera, starts to go up away from a very kind of closed loop sort of solution in there.
I can't help but resist talk about another sort of partnership, which is goes beyond Egypt. It's again about enablement at a country level. It's, you know, very recently we announced a partnership with the Rwanda government. Now that partnership was announced at the World Economic Forum. Again, it's got three sort of legs to it. At the first leg is infrastructure, second leg is inclusion, the third leg is once you actually include the population, you get them access to various services. What we're doing with them is first enabling tax collection, custom duty collections, that's both consumers as well as businesses in there, getting connected in there. The second part is actually moving them to a cashless economy, which is all of the debit cards, prepaid cards, payroll cards coming in there.
We're talking about digitizing school fees as well as health benefits and disbursements. Lastly, we're talking about creating an Egypt-type ecosystem on the mobile side. That's the sort of change that's taking place as we deal with governments and how they're trying to include people into this fold.
You know, Egypt is a great example of an emerging market, but you don't need to be in an emerging market to be working with governments. Javier, you had a good example the other day.
Yeah, absolutely. You know, people wouldn't think about the U.K., right? When you think about inclusion. It's because in Europe, particularly in the U.K., as it's leading in that domain, but the rest are following. They see inclusion, the government sees inclusion, but they also see efficiency and practicality and also a way to enhance the life of their citizens. In 26 out of 32 councils in the U.K. are already using the Mastercard solution in order to disburse welfare benefits. Now why is this? It is really annoying. On top of being on welfare, which obviously nobody likes, you have to go to the post office or you have to go somewhere, queue up forever to receive some money. Sometimes it's more expensive just to go get that money than what you actually get.
What we're doing is we're working with the councils in order to provide prepaid Mastercards so people can get those, that money credited onto their Mastercard so they can then, instead of having to queue up somewhere forever, they can go to an ATM and take their money out, or they can go to a merchant, buy what they need to buy.
they can go on the buses or they can go.
They hop on the bus or whatever they need to do. This is something that every government across Europe is starting to become more and more sensitive to and starting to implement.
Every country manager, every regional head, is now getting more closely involved with dealing with governments and regulators in their area at Mastercard. It's becoming a bigger thing for your team to manage, Ann.
When you look at that whole fear of what people call nationalism, how do you guys address?
Well, you know, I think Ajay mentioned this morning that it's something that's, you know, been with our business probably since inception. I mean, Javier's business across Europe, there are many local payment providers in the different countries across Europe, but that's never really stopped us from really growing, expanding our business, growing at double-digit growth rates because our, you know, the way that we've approached it is very much in a partnership way. For example, in Italy, we started with co-brand cards, working with the local payments company there, and then we migrated to, you know, single-issuer cards. In Russia, we recently have been working with NSPK, who, as you know, have started and built the payment system in Russia for their local payments.
Our business is still growing double digits there because we're all connected up to that. The banks are connecting through us, and we're adding value-added services. In Mexico, the government there was looking at, you know, "How should we actually approach the country? Should we look at the current payment providers?" There was a couple of switches there in Mexico. "Should we kind of keep it a closed loop domestic solution, or shall we open it up?" Well, obviously, from our point of view, we've been talking to the Mexican government and advising them about how much more beneficial it is for the economy to have a fully interoperable, open, competitive system. These conversations are going on, as you say, Barbara, around the world.
I think, you know, we've got regulators and governments who are clients now, and it's really helping them understand our business so that we're not just going in with a regulatory conversation, but we're actually going in with a customer and value-based conversation, and that's also making a difference to the business.
Let's stick with Russia for a minute because that was something that from a nationalism standpoint started out a bit dicey with the sanctions. We worked our way through that and came out in a relatively good place.
We did. As Ann was pointing out, the, you know, at the end of the day, it's about working with the government to understand what's the concern. What problem are you trying to fix? In the case of Russia, the main problem they were trying to fix is their ability to keep their payment systems going, if needed to. At the same time, they understood. When we sat down with, particularly with the central bank and said, "Look, do you wanna have a no competition environment? Do you wanna have a monopoly? Do you wanna have the best possible products for the Russian people? Do you wanna have good technology? Do you wanna see good evolution? Because the worst thing you can do is to produce a monopoly.
That way you will never progress, and you will unavoidably fall behind. By working with them, as Ann was pointing out, we found a nice good compromise. We ended up creating an NSPK in Russia, which is a domestic switch. The domestic switch keeps those transactions going, and we are there to provide all the incremental added value. All the stuff that you heard this morning that we can do that is very difficult for local players to do because they don't have the experience, they don't have the money, they don't have the know-how, they don't have the focus, the coordination that you saw that it takes to produce a superior payment product. Thanks to that, indeed, our business in Russia continues to do extremely well.
Ari, India is another country where nationalism, the term comes up a lot.
Sure, Barbara. I think, if you look at the India story on nationalism, it's been driven with a soft mandate from the government and regulators. It started with going after ATM volumes and then kind of moved towards debit and the point-of-sale volumes as well. While this was what I call a headwind for us to deal with, what was also positive while this was going on, the most recent government has actually announced a very clear intent to go after a more digital and electronic payment-based environment. That's the positive side to the story. What it really required us to do is to change tact and approach in the India context to deal with this lack of level playing field.
What we did, we essentially made sure that we were becoming true insiders in the market with some very credible stakeholders on the merchant side, as well as with respect to the government and the regulator. On the merchant front, we've done a partnership with the Confederation of All India Traders, a heavily influential body which represents 58 million merchants and traders, and really working with them at the grassroot level to really bring financial literacy, the benefits of electronic payments, and how it helps them to grow their business. That is a program that we are driving with them for the last one year, and it has some very important implications. You know, when the Confederation talks about how we've partnered with them to drive such an important national agenda, it puts us in a very different light as opposed to just a commercial enterprise.
On the government and the regulator front, what we realized is the engagement has to be with multiple agencies and departments at multiple levels. This is not just talking to the senior-most guy or someone in middle management in the bureaucracy of government. You really have to attack it at different levels. The way we've really done this is to really espouse the benefits of an open competitive market environment and the benefit it has to internal stakeholders, whether it's the corporates, whether it's the businesses, whether it's the merchants, whether it's the consumers, and really bring the importance that whether it's world-class safety security standards or innovation, all of that won't happen if you don't have an open competitive market environment, particularly when you have an economy which is a 95% cash-based economy.
I think all of these efforts over the last year has gone a long way to ensure that India remains an open competitive market environment. Also, we partnered up with the government and the regulator and the Indian Banks' Association to develop a comprehensive policy framework on encouraging electronic payments in India. I take great pleasure to say that many of our suggestions through our interactions with the government and the banking association have actually been incorporated into a policy note released by the government earlier in the year. I think, Barbara, the strategy really here is that have to get embedded to be a true insider, and how are you seen to be driving important aspects of the national agenda is equally critical and not just the Mastercard agenda.
Hopefully, if you drive the national agenda the right way, you're also serving Mastercard in the process.
Oh, I know we're running out of time, but there's one question that we can't get off this panel without talking about with nationalism, and it was gonna come up in the Q&A anyway, so I'll just eat up some Q&A time. Ann, China.
China.
What's going on with China? Of course, can you give us an update?
Well, I've been going back and forward to China about four times this year. Ling Hai, who is Ari's co-head of Asia and responsible for China, is here with us today in the audience and will be around at lunch. Basically, what's happening with China is that the Chinese regulators have continued to look at the rules of engagement, the rules of operation that they want to roll out to, in the country so that international companies can play in the domestic space. The latest rules that were rolled out were actually on cybersecurity. Those are very recent. We continue to talk to the regulator about what exactly these rules mean in terms of how they operate, how we would comply with that, and so on. That discussion is still continuing.
It's not finished yet, more clarity is coming, you know, every day, I would say. At the same time as we're doing that, we're talking to lots of local players in the market there because the Chinese market is, as you know, hugely influenced by the internet players. You have Alibaba, you have Tenpay. You know, having the capability to do that converged experience is gonna be very important in the Chinese space going forward. That's really the update. We're still waiting for clarity around the rules, we still continue to have very frequent interactions with the regulators there right now.
Ann Cairns, I'm gonna give you 30 seconds to wrap up.
Thank you, Barbara. You're so kind. By the way, I've got a real Queens accent. Queens English accent. It's great for saying things like, "We're out." Okay. Yes, summary. Look, you can't get double-digit growth rate without really having the amazing product set that Gary Flood and his whole team have been developing for us around the world. Using, you know, the enhancements of the core products, the things that we're buying in the future, such as VocaLink, are gonna give us such incredible breadth and depth going forward. We already have great breadth and depth today. We already are rolling out Masterpass and MDES in 33 major countries around the world.
This means that we can ride the wave of that secular shift, and we're really looking at it from the point of view of being embedded in the country infrastructures, working with the governments, being real partners and players with the local technology companies there. Thinking about things such as inclusion to drive that B2B2C business, bringing millions, hundreds of millions more people in the world into the financial system. Whichever way you look at it's a really good picture, as I said, regardless of some things going on around the world in the economy, regardless of the strong dollar, the international business in Mastercard, which is 65% of the volume of Mastercard and 60% of the revenue remains really strong. Thank you.
Okay, thanks. My colleagues here in the panel will be around at lunch. Just a quick reminder, Javier will be back up here in the auditorium at 1:30 P.M. to do a European breakout session. With that, I wanna turn the program over to Martina.
Thank you, Barbara, and hello everyone. It's good to see you here in the audience. I'm glad that quite a few of you are also listening in on our webcast. As the final presenter before the Q&A session, I just wanna cover a number of items. First of all, our 2016 business drivers, quarter-to-date. I'll give you an update on that. I'm gonna give you an update on our 2016 financial outlook, and I'm gonna follow that up by a longer-term financial perspective based on the discussion that you've heard from my business colleagues this morning. Let me start with our 2016 year-to-date business drivers, and let's look at the current quarter data.
The as-reported numbers that you're seeing here for volume and transaction data, that's the numbers that we have re-reported in our prior earnings calls. The last two columns are process metrics, which as you know, is the only data that we have available intra-quarter. As you can see, the current quarter-to-date, through the end of August, global processed or volume is 11%, and that's slightly lower than the 12% that we saw in the second quarter. It's pretty much in line with what we saw through July 21, with double-digit growth in each region outside of the U.S. Our quarter-to-date processed volume growth in the U.S. is down from Q2 and what we saw in July 21 with a slowdown in credit, being partially offset by an increase in debit.
This number will likely continue to be impacted due to the roll-off of one customer that Craig mentioned this morning. Processed transaction growth continues to improve versus Q2, as did cross-border growth. However, cross-border growth was slightly down from the July 21 period as the impact of the Ramadan timing early in the quarter, early in Q3, began to average out over a longer period. Now I'm gonna get to our 2016 financial outlook. We had a little bit of a race this morning between Sanjay Sakhrani from KBW as well as Don Fandetti from Citibank. I'm sorry to say, Don, Sanjay did win at getting the first report out on our investor conference. However, both of you might have wanted to wait a little bit about my words that I will be attaching to this page.
Based on these drivers, our expectations for the full year 2016 have slightly improved on net revenue since our July earnings call. We now expect double-digit growth on a currency-neutral basis for both net revenue and total operating expense. Remember, I was saying at the low end of low double-digit growth for net revenue. We are at the low double-digit growth. We've dropped the low end, okay? We also anticipate positive operating leverage for the full year. There's also a minor change from prior guidance around our tax rate, which we now expect to be in the 28%-29% range for full year 2016. You might recall in our last earnings call, it said slightly less than 29%. It will be a little bit of a lower rate for the year.
We continue to experience moderate foreign exchange headwinds through 2016. It's gonna be about a two PPT impact to both net revenue growth and the bottom line. Now let me switch gears and talk about our capital structure. Our capital planning priorities have not changed, as we want to preserve a strong balance sheet, liquidity, and credit rating to continue to be making the investments that are needed to enable the long-term growth of our business. Given the strong cash flow generating capability of our business, though, we continue to expect to have excess cash even after pursuing our growth strategies, which we would continue to target to return to shareholders. At this point, our bias still remains towards share repurchases as it provides more flexibility for the business overall, but we do continue regularly evaluating the dividend level.
With respect to our debt-to-equity mix, we continue to access the public debt markets as evidenced by the EUR 1.6 billion bond offering late last year. That brings our debt-to-EBITDA ratio to about 0.6 turns currently. However, keep in mind that we continue to need to preserve our strong single A rating, which is an important consideration for both issuers and acquirers as evaluating the settlement counterparty exposure risk of their payments network partners. As you heard from Ajay, since 2010, we have returned more than $14 billion to shareholders, either through dividends or through share repurchases. As you can see on this slide, over the past three years, we have actually significantly increased the level of return of capital to a level of $4.2 billion in 2015.
We have continued this strong trajectory this year. We have returned so far $2.7 billion through the end of August, despite actually not being able to execute on our share repurchases for some time earlier this year because of our pending acquisition and the announcement for VocaLink. This includes the 19% dividend increase that we announced back in February, and that actually represents the fifth consecutive year of dividend increases. We have about $2.4 billion of share repurchases remaining under our current authorization. That this current trajectory, we will likely be returning even more to shareholders this year than we did in 2015. At the same time, we continue to invest back into the business, so either organically or through M&A activity.
Since 2013 to the first half of 2016, so just the first two quarters of 2016 we included in this period, we have spent about $1.8 billion organically through capital expenditures or through incremental P&L investments, as well as another $1.8 billion on M&A activity. That includes both the purchase price of the property as well as what we need to spend in order to incorporate the properties into our business. You know, these investments, I mean, these are very significant investments, but they allowed us to expand our suite of products and services, allowed us to expand our geographic reach, as well as working with many different customers which we didn't use to work before, increase our presence in the digital economy.
Yes, you know the name Chief Innovation Officer, I think Chief Investment Officer might have been the right name for you, Gary. Build out our adjacent areas that allow us to serve our customers better. None of this would happen if we would not do these kind of investments. Now, I have to tell you, we do prefer organic investments, but there are certain areas where we're willing to do M&A investments, such as acquiring critical capabilities, skill sets, or just, as I said, expanding into adjacent areas. Now we often get asked about our M&A strategy, so I feel the need to spend just a few minutes on that. We're looking for potential M&A opportunities, focused on finding those that would be a good strategic fit. Here you see some of the strategic areas that we're really after.
It's in the data analytics side, it's in the safety and security side, in the processing, in the loyalty side, as well as many investments in the technology arena. Quite a few of my colleagues today have actually talked to you about some of these things to make them come live about why we're investing in these areas. We also consider whether the target company would provide us with critical capabilities, and you see some of them here listed. Of course, you know, we would only be interested if they're expanding or strengthening our current set of products and services offerings. You know, whether they bring differentiated technology assets, new distribution channels, and whether we can actually broaden our geographic reach.
Finally, we consider the criteria of financial attractiveness, that's where we really look at M&A acquisitions having a return above our weighted average cost of capital, which is around 10%. Also we look at an acceptable risk profile. We look at the ease of integration and other considerations such as management strength as well as cultural fit. You're starting to see the value of these investments coming through, especially when you look at the growth of some of our services, which I will talk about in a minute. Many of you actually know this chart extremely well, and even having infused it for many, many years in a row, are still relevant.
Looking forward, when you look at our core business. It continues to be driven by personal consumption expenditures of PCE growth and the secular trend from cash and check to electronic forms of payments. Globally, we continue to expect PCE growth to be about 5%. Now, that is different in any different, you know, economic environment as well as different by country. While we cannot really influence PCE, we have been and continuing to do a lot of work to be driving the secular trend, as you have heard this morning.
Ajay talked about all payments categories earlier, but when you just look at the consumer portion of that, the number of transactions done in cash and check is still about 85%, and that's after years of doing an enormous amount of work in the market so that more and more consumers can use electronic forms of payments. You heard all these many different examples by the presenters, such as seamlessly enabling the transit systems for card or mobile payments, working with different partners like governments, MNOs, airlines, to reach millions of new consumers or to provide consumers with new ways to pay, making products safer through biometrics or our In Control feature functionality. All of that is actually helping driving the secular trend.
After adjusting for markets where we cannot compete with domestic schemes or switches, the combination of PCE and secular growth results still in an estimated 8%- 10% growth opportunity. You can see that here on this chart. In addition, we're obviously working every day to see more transaction and to grow our share of our core business. Beyond that, you have heard my colleagues elaborating on the additional services that we're providing to our customers, resulting from this suite of capabilities in which we have been investing. Putting all of this together, we continue to believe that this will allow us to continue to grow our business in the low to mid-teens revenue growth ZIP code. That is when you look over a long period, 5+ years.
All of these different services that we have talked about are very tightly connected to our core business. They're based on our core competency of being a payments network and doing a lot of things with data, having wonderful data capabilities and analytics. If you add all of these different lines of services together, they represent about 25% of our total net revenues today. As demonstrated by many examples that my colleagues mentioned this morning, these different services provide us with a competitive differentiation that lets us win in the marketplace. Additionally, they're further diversifying our revenue stream. These are value-added services, many of which are priced separately, and the client can actually decide whether they would like to add it to our core service product or to our core products that we're already providing to them.
Some of the revenues show up in transaction processing revenue line because they're based on a per transaction basis. You know, some of the things that Ajay Bhalla was talking about, from a fraud product point of view, but also our eGateway services are based on a per transaction basis. Most of the revenues for these related services actually show up in the other revenue lines, and they are priced in a different way, not on volume, not on services. They're priced on like an individual standalone engagement, for instance, for our consulting engagement or on a per card basis for a loyalty program such as the travel concierge program.
When adding the revenue from all of these different services together and excluding the impact of acquisitions that we made in 2014 and 2015, this is growing about 18% per annum. This is excluding the acquisitions. The acquisitions would add another 6 percentage points, as you see on the chart. If I compare this to our core business, our core business is growing at around 10%, and that, you know, you can relate very much back to the prior chart where I showed to you the 8%-10% growth opportunity. All of these growth rates that I just quoted to you on the net revenue side are on a currency neutral basis. Because these services are vastly different, you can also see on this chart that they produce different margins.
They're listed in rank order on the right side of the chart. If we were to take an aggregated look at these services, they have a combined margin of roughly 40%, that's excluding things like corporate allocations. That's very consistent with the number that I had quoted to you at last year's Investor Day. As we scale these services, we are expecting to see some margin expansion beyond the 40%, some of which we are already seeing as we go through 2016. I'll come to my final slide. You know, I wanna close out here with our three-year performance objectives, there's no change from what we first presented to you here last year. The underlying business fundamentals remain strong and our investments are showing results.
We continue to expect that our business can deliver a net revenue CAGR in the low double digits during the 2016, 2018 timeframe. That combined with a minimum 50% annual operating margin will result in earnings per share CAGR in the mid-teens. The objectives include no significant amount of net pricing as well as the tax rate declining down to about 27% over the three-year period. Also our objectives are on a currency neutral basis and exclude the impact of our pending VocaLink acquisition and any other future M&A activity. With that, let me turn the program back over to Barbara and invite Ajay and some of my colleagues to the stage, to the dais. Thank you.
Whatever you call it. Okay, we're now ready to begin the Q&A session. For those in the room, please wait until you have a mic before asking your question, and also remember to state your name and affiliation for the benefit of our management here. For those of you listening in, remember we will intersperse your submitted questions from those that we receive from the audience. In order to allow as many participants in the time period, we ask that you limit yourself to one question and one very brief follow-up. Okay, let's start here in New York. Matt, you want to give the mic to Lisa?
Lisa Ellis from Bernstein. This one is probably either for Ajay or Craig. When it comes to the VocaLink acquisition, and what you see as your expansion into the ACH world, I guess including the Send products as well, as you're discussing that with governments, how are you seeing that market evolve? Are you envisioning that many governments will actually cede control of their ACH networks over time, or that you'll have essentially a parallel like real-time ACH type of infrastructure? How are you seeing that play out?
Right now we aren't actually talking to any governments about it because we don't yet own VocaLink. The till the actual closure of the transaction, there's very little we can do in terms of actually getting involved with having these conversations. We've been discussing ACH as a principle with many clients and governments over the years. I think if you were to talk to Michael Miebach, who's the guy who's driving the VocaLink acquisition over lunch, he would tell you that most governments, VocaLink itself is present in a number of countries. Their model is different in some countries. In the U.K. they are both a software provider and an operator. In places like Singapore and others, they're only a software provider. With The Clearing House in the U.S., they're only going to be a software provider as of now.
There's different models for them. There's different opportunities. I think the one trend that applies everywhere is that the concept of having faster payments is something that most regulators are gonna push on. Therefore, whether they do it through their own systems or they do it through technology brought from somebody else, or they allow people like VocaLink or us to become operators of that in different countries, it'll be a different model. Just the way our current model is different in different markets. In some markets we process everything. In some markets we do only cross-border. In others we do part domestic, part cross-border. It's gonna be like that even in ACH. I think the landscape will become clearer over the next few years.
We're not allowed to right now go and talk to anybody in any detail about what we're doing with VocaLink.
Catherine,
Having said that, don't lose track of the fact we're all very excited about it, because you saw it in my commentary, you saw it in all of us. It's a large opportunity of growth, and there's going to be ways to fit into it. My principal interest in ACH, aside from the fact that it's a large user base that's there, is that I believe ACH today is principally a cost center for the banks. There is no reason why that should be the case long term because it actually delivers great value and great service to merchants and consumers.
Therefore doing it the right way with the right kind of tools built into it, with the right fraud protection and cyber protection built into it, I believe you can make it go over a period of time from being purely a cost center and a commoditized service to being a value-added, differentiated priced service over time.
Hi, Don Fandetti at Citi. Craig, you said something interesting in your presentation.
Only one, I guess.
One thing.
Something about, you know, now that you potentially have 80 million customers on Masterpass, the discussion's different with merchants. Then you layer in that you struck the PayPal deal. Can you talk a little bit more about how that discussion has just feel like it's lower rate, the cost less for you?
Yeah, it's a good question. The first part of it with respect to the 80 million worldwide, majority of whom will be in North America consumers that we see coming onto Masterpass over the course of the remainder of the year, that changes the dynamic in as much as if I'm a merchant and we're out talking to merchants all the time about, "Hey, Masterpass is a great option for you to enable on your site, to accelerate checkout, enhance conversion rates," all the things that Masterpass will do. It's one thing to tell them and sort of promise that it's coming. It's another thing to be able to show them that there are tens of millions of consumers actually using it.
Part of the, frankly, part of the challenge that we've had, and I think others have as well as we're sort of moving through this migration is a little bit of a disconnect in the timing. You gotta get merchants to start to enable sites to accept. You gotta start to get consumers on board. Until both sides of the system start to hum a little bit, where consumers see places where they can use it and merchants see lots of consumers wanting to use it and using it actively at their site, till you get to a level of critical mass on both sides, it doesn't become a self-sustaining sort of proposition.
I think as we get to the level of scale where we've got tens of millions of consumers using it addresses in a meaningful way that issue of helping to make it a self-sustaining proposition, where I think merchants will be much more interested in making sure that they have that option available to their consumer. The PayPal piece of it, part of our agreement with PayPal that we communicated yesterday is enabling the Masterpass to be incorporated into the Braintree technology stack so that all of the various merchants who are using Braintree through their relationship with PayPal, can easily avail themselves of Masterpass as an additional payment option on their site. It's pretty seamless.
We're aligning the APIs to make it a fairly seamless and simple integration for the merchant, and it just will help us be able to extend the reach on the acceptance side with Masterpass that much more quickly, given Braintree's role in the digital ecosystem.
Seth, I'm gonna ask you to hand the mic to somebody back in the back. The lights are too bright. I can't really see.
Hi, thanks. It's Chris Brendler from Stifel. I just wanna follow up on your presentation, Craig. Ajay can chime in as well. I didn't quite get the sense of, you know, what the strategy is when it comes to the U.S. credit business. I heard a lot of discussion of services. I wanted to get your perspective, you know, as you took over this role about a year ago, what are you looking to change? How do you differentiate yourself from your big competitor on the West Coast? Is it services, or is it something else? I think last time we had this discussion, it was, you know, pretty intense competition out there, a lot of very sharp pencils on pricing.
Just wanted to see where do you stand as we go through the throes of the major customer loss and help us think about the longer-term trajectory of U.S. credit. Thanks.
Sure. You want me to take that one first? I'll take that one first.
It's yours.
All right. It's fine. There's two pieces. Services are a piece of the overall answer. It's a combination of the services capabilities we talked about, the products that both Gary and Michael talked about, the way we combine those into solutions that are going to help us compete effectively in what is recognizably, it's a competitive environment. There's no question. In order to succeed in a competitive environment, we need to be able to differentiate, and we think that combination of products, services, enable us to put differentiated solutions into the market that are going to help us win in two areas that will help improve our position with respect to consumer credit. We'll continue to pursue opportunities in the co-brand space as we have and as we continue to do.
We will continue to work with the largest issuers in the marketplace to find opportunities for us to work with them, bringing these capabilities to bear, put new products in the marketplace to deliver new solutions to segments that they're interested in serving as means of growing our business with them. We'll continue to use these capabilities as ways to work closely with our partners, whether it's a, you know, a large bank issuer or a co-brand partner to optimize the performance of these portfolios.
There's an enormous amount of value that we can drive for both ourselves and our partners by bringing some of these capabilities to bear to get more, more performance, higher acquisition rates, higher activation rates, lower fraud rates, higher approval rates, lower attrition rates, all the variables that we can help them work through that drive growth in the portfolio. Yes, competition is intense. I don't expect that to change, but I like, you know, I like what we have to fight with, and I like the way that we're positioned to be able to do that in working with these partners to help them execute on these strategies that are so important for them in deepening their engagement with their consumers and growing their businesses as well.
Can you give me an example of a place in the services side that differentiate you from the competition at this point? You seem like you have invested heavily in services. I'm just wondering what the other guys have where you're better.
Well, I think if you look across the breadth of the portfolio, there's, there are a number of areas that are differentiated.
Certainly, you know, if you start with the premise that data has value as a means of deriving insight around market opportunity, around means of deepening engagement with consumers, around deepening share of wallet with consumers, data as a fundamental kernel and a big part of what our Mastercard Advisors business is built off of, I think we've invested a lot in what we think is a very differential way in being able to capture that data, cleanse the data, warehouse the data, make it accessible for use in a variety of different use cases, many of which Kevin touched on when he was up here on the panel, and have continued to supplement that with different.
You know, if you think across kind of the value chain of taking data from the derivation of an insight to the formulation of a hypothesis and your ability to then test that hypothesis and see what kind of a return you get on it, and if it's the right kind of hypothesis that generates the right return execute at scale, we've been sort of filling in pieces across that continuum.
The APT acquisition is a perfect example of filling in a piece of that, of those steps that enable us to really test hypotheses in a rigorous and sophisticated and meaningful way across a variety of different applications that we think that's differentiated.
Also-
We hear from our customers.
Yeah. I think the investment in the advisory services and the people we have worldwide, but specifically if you think about Craig, that's where we kind of started that business years ago. I think that group of people in partnership with his account teams and leveraging the products the way Michael talked about them and then the services as a component to differentiate is key. The way we use data, the way we cleanse it, the way we operate is different, which is foundational. You go to the optimization space that Craig talked about. The fact that we have the advisory capacity and the way Kevin describes it, the information, the consulting capability, design solutions, and managed services to actually execute, the ability to activate accounts, to optimize accounts, will open up big opportunities for him.
I also think having a loyalty platform in play here will help us work with different sets of clients. I mean, Craig has segmented his client universe. You have the really big ones, you have the regional players, and then you have a long tail of very small players that add up quickly if you get after them and get it done the right way. The way he's kind of going about it, leveraging the products and the services on the segmented aspect, I think will put you in a pretty good place.
How about somebody up in the back?
Hi. Good morning. Wayne Johnson from Raymond James. My question is for Craig, please. Walmart North America, or in Canada in particular, at some point won't be accepting Visa, and you guys are, and you guys highlighted that, you know, an important customer for you guys going forward. What were some of the parameters that went into that? You know, why do they like you?
Match.com question.
-leverage in the future? Not about you, but about the company.
Yeah.
What's not to like about you?
We could have the first one too, because I could give you some insight on that one.
Yeah.
It's a Match.com question.
We're for the Match.com question. Parts of your question, I mean, to be honest, you have to ask them. I can tell you our approach with them has for, you know, for many years we've had an, obviously an active and ongoing dialogue with Walmart. There have been, as is the case with our merchant partners broadly, there are generally a lot of areas where we have a lot of alignment. There are some areas where we have less alignment, and we have discussion around those areas as well. If you think about, you know, you think about the business that they're running and the areas where our businesses kind of intersect and overlap, we've got a lot of common interests.
I think we've taken over the years a constructive and a proactive approach in trying to resolve areas where we might have had some differences of opinion while maintaining the integrity of the network and the franchise model that we operate, that we need to do for the integrity of the system. Making sure that we had a close level of partnership on the areas where we had a lot of alignment. You know, they've been a co-brand partner of ours in Canada for a number of years. That's been an important part of their business model there. They're a co-brand partner of ours in the U.S. with the Walmart and the Sam's Club program. Also important parts of their business model.
I, you know, I just think it's part of the way we approach the businesses, recognize that there are going to be some areas where you don't necessarily see eye to eye on everything, but try to engage in a constructive way to work through where we can find solutions. I'm not sure what more to say about it other than that. You know, to give more specifics on why they like us, I guess you have to check with them. I feel pretty good about our relationship with them.
Okay. I promised to take some questions from the phone, so I'm gonna take this one from one of our West Coast investors who wasn't able to travel and join us. It says, "Pressure on interchange from regulators or merchants appears inevitable over time. This potentially drives faster transaction from cash to digital, example Europe, but limits the ability of banks to pay for loyalty programs or other services. Any comment?
I think I'll take that to start off with. My view is that this pressure on interchange has been going on for a long time. It's not a new thing. It ebbs and flows depending on what's going on in different regions. Australia has had, for example, specific pressures on interchange going back 2002 or 2003. There's no doubt that in banks' revenue streams, interchange is a substantial part of their card payment revenue. They get revenue from different places.
They get it from fees, they get it from interchange, they get it from revolving, and they get it from all series of combinations of these. What I've seen over time in different markets is that as interchange regulation comes in or ebbs or flows, the combination of their revenue stream that comes from the different levers that they have to pull to get at their revenue changes. There's no doubt that's kind of how they manage through their P&L. There's also no doubt that it's a competitive environment. When banks' revenue streams are compressed, everybody who deals with them and provides them with a service will feel the pressure of pricing coming back at them. We've dealt with that over the years. It's not a new thing.
Despite that, our net revenue yield as a company has continued to progress because of all the various actions we take across pricing, mix of business, geography, and selling services. There's no silver bullet in this. It's not a black or white kind of answer. It's a mix of how you manage through your business using all the levers that you have, that you've got to play with.
I think the in Europe, for instance, the evolution of the product set. I mean, Carlo, when he was speaking about a rewards program looking one way, issuer-funded, as interchange kind of worked its way through, it became merchant-funded, right? You also think about feature functionality, the introduction of installment payments in Europe, which is another feature function that provides issuers with an opportunity, perhaps, to engage with their customers in a different way. I think the ingenuity applied definitely on stage in Europe.
Yeah. We also have a merchant-funded rewards program in Brazil. Huge. One of the biggest in the world with Surpreenda. That's another example of, you know, how things can change between the issuer and the merchant.
We have here, Matt.
James Schneider, Goldman Sachs. Maybe you touched on the growing importance of B2B and P2P payments to the, to the growth rate of the company going forward. Could you first touch on, number one, how critical is the P2P part of that for your future growth rate? Then secondly, over what timeframe do you think those two combined could be a substantial part of your core revenue base?
To be clear, in all the forecasts we've given you for our revenue growth rate and our EPS growth rate that Martina has talked about, there's almost no assumption there for P2P revenue. P2P revenue is actually a business case that I still don't know how we'll completely get made. I get the cross-border one with foreign exchange fees. I think domestic P2P is a business case that yet has to be established in almost any market. We have not assumed any of that in the commitments we've made to you. All we were trying to show you was that while today our strength has been in the consumer side and to an extent in B2B, we think the opportunity for participating in all the payment flows goes beyond just that consumer side and B2B, but also into the government space as well as into the P2P space.
Even in the B2B space, our current suite of products and our current capabilities have only begun to get at the opportunity that exists. ACH and Fast ACH will be helpful to get deeper in there. None of that incremental stuff is factored through Fast ACH in our targets we gave you. When we gave you our targets last year, we had no clue we were going to acquire VocaLink. None. Zero. It is not factored in.
Just a quick follow-up. In terms of the commentary you gave Martina on the leverage ratio, you said normalizing over time, or normalize levels or something to that effect. Can you maybe talk about how much of that normalization is reflected in terms of M&A and whether you lever up to do more M&A or how much of that is a statement about repurposing capital?
Right. I think, the trajectory that we had over the last five, six years, I think it's safe to say, you know, given that we don't really see any change in the business model, that you should be seeing a very similar trajectory going forward. I can't comment at any point in time what kind of M&A activity we would be making. Of course, we have a pipeline, but that doesn't mean that these M&A opportunities come to fruition. I can't give you a specific, you know, how much is actually earmarked from an M&A point of view.
All I can say from a philosophical point of view and from a strategic point of view, we will continue to have the wherewithal, together with raising some of the debt, and we have still enough headroom from the S&P and the Moody's ratios, we will be able to do all three things. We will be able to organically invest. We will continue to do that. We will continue to selectively do some M&A acquisitions, and we will continue to return capital to shareholders.
Jason Kupferberg from Jefferies. I just wanted to start with a question building on all the digital theme of today. I mean, if we were to try and size this within Mastercard, I mean, what percent of your volumes are now coming from online? I mean, if we look across all these channels, whether it's mobile or desktop, whether it's in-app or in-browser, what percent of GDV is now online? How fast is it growing?
What we have not said what percent of GDV is online. It's obviously a much smaller percent than, you know, POS. What we did say is that it's growing depending which quarter you're looking at, either in the high tens or in the low twenties. You know, it depends which quarter you're looking at over the last five years.
Just as a follow-up, to build on some of the comments around interchange. You talked about ongoing pressure globally and the fact that that's nothing new and may continue. I mean, would those comments apply to U.S. credit interchange specifically if you try and look out three to five years? I mean, whether it's related to the Brooklyn litigation or competition, just any thoughts there?
I don't have any reason to believe that, U.S. credit interchange is currently under any kind of pressure of that form. You never know. With litigation, everything depends on the judge and how the arguments are made. I'm not the kind of person who's gonna speculate on what happens there.
I think on the political and regulatory side of credit interchange in the United States, there is a relatively clear comprehension in Congress, as well as among the bodies who make regulation, that credit interchange plays a very different role, and that it has been helping, in many ways, to also balance the factor between the merchant and the bank. After all, you buy a television from a merchant, and the merchant made that sale. You don't pay it back to the bank, and the bank's carrying that bad debt. The merchant's made that sale.
If you were to look at the cycles over the last 20 years of bad debts for banks on credit cards, and you were to put that together, you would find that the most likely scenario would be that interchange does not in fact fully cover the cost of losses that banks have incurred over many cycles. Therefore, I think that comprehension does exist to a much deeper extent than people give it credit for in the U.S. That doesn't mean you shouldn't be thoughtful about it or cautious about where it goes. It's just that I think it's a different circumstance.
Thanks. It's Darrin Peller from Barclays. You know, Martina, when you guys, you know, maintained your guidance last time around earnings, you had said, obviously, like you just changed the nuance of it. It was previously the low end of the double-digit range. Now just low double digits. I guess I'm just wondering, you know, if anything has changed, or was it just conservatism at that time given the macro? You know, I recall APT, USAA, American Airlines incentives having been drivers of the decel. Any update?
Yeah, there are a couple of things. First of all, this is for 2016, right? Where we had made this change. We're not changing anything for the three-year guidance. On 2016, what we have seen, and you're seeing this in the latest update on the drivers, we've seen some tremendous drivers, you know, in particular on transaction processing, right? Processed transactions has really gone up. We did win, and this is Craig, you know, actually his group won actually a number of deals, in particular in PIN debit, which is adding to some of that volume. Then we had a number of other things that we're doing in the other businesses that is really driving significantly our processed transaction count.
That processed transaction count is actually higher than what kind of forecast we had, at the end of last year, earlier this year, and even going into the first six months. The second thing that has changed a little bit better, is really some of the services that we had talked about. I think over the last couple of quarters, I've been calling Ajay Bhalla out a few times. You know, he's always been a little bit tough to get numbers out of him, but he's performing pretty good at this point. I took a little bit of a leap of faith on what he's gonna be able to produce in the next four months of the quarter. That did add actually a little bit more to our net revenue growth rate.
As I said, you know, it's a slight change. It's from the low end to just in the low double digits.
Okay.
Yeah.
Quick follow-up. Just for Ajay, on the services side, obviously that was a very successful focus here for you guys. Is there any target in your mind over where, what percentage of total revenues you want that to be, and where that margin? You said 40%, Martina, that margin may want.
Obviously internally we have a target for where I want that to go, but I'm not gonna give it to you. That was a good try, but it ain't gonna come. It's well north of where it is today. How's that? For over five years, it will be higher than where it is today. Well, more so. The reason for that is, my belief is that the clearing, authorizing, and settlement business will continue to have many forms of competitive pressure in it, as we see already. My belief is that the competitive differentiation that these services give you when Craig Vosburg and Gary Flood were talking about the differentiation. We didn't even mention the differentiation that comes from some of Ajay Bhalla's products, which by the way, I don't believe my competitors have. 'Cause if they did, they would be out there selling them.
They don't. A product like Safety Net, which has now gone out to 90% of our banks, and by the way, in some countries is even being used to process other people's transactions as a way of providing security to that country's payment system, is a competitive differentiator. To me, those kinds of investments and products will give us an opportunity to grow over the next few years. My belief is that over a period of time, being reliant only not on transactions but also on fee-based revenue is a good revenue system to build for our company. I'm not talking three to five y ears. I'm talking the next decade. Over the next decade, I'd like to see the company having a greater mix between fee-based revenue and transaction-based revenue. That's where we're headed.
Well, look, I mean, the different lines of services that we have, these are not businesses, right? They're lines of services. They're run by many different people. It really depends on what our people in the sales force are doing in order to sell them on top of the core products, right? That's why it's actually really tough to be putting out an external target in terms of saying, you know, "Five years down the road, this is where we are going to be." The second issue is that you asked also about the margin. Again, you have to see this is an aggregation. This is a culmination of many different services.
While I'm giving you an aggregate margin, when you looked at my chart, you can see that every service, and by the way, every service within these different lines in which we have grouped them, these four groups are at a different margin level. It's actually relatively hard to be predicting where we would be coming out other than that we're obviously doing our darnedest to increase that and make sure that we have more profitability from this.
I remain relatively confident that we can meet that 50% operating margin even with the mix of these different businesses because the form in which we can see the different lines of business and different platforms contributing to our total. You know, my whole objective has been I have been very optimistic about the business opportunity, but I believe that the right way to get access to this opportunity is to focus on clearing, authorizing, and settlement payments for sure, win, share in them, and we're gonna have ups and downs. You've asked questions about U.S. consumer credit. That currently is not where we want it to be. On the other hand, international consumer credit, we're booming on share. On commercial, on prepaid, on debit, we're growing handsomely.
We've got a mix in our own business as well, some of which we're doing better, some of which we're not doing as well. On the whole, that focus, growing share in our core, very much locked on. The second step we've got to do is make sure we play really hard with digital, and we're doing that as well as we can. Seven years ago, if we met in this room, your questions would have been about the survival of our company in the digital environment of today. That, I think, has faded a little to being, okay, these guys have a role to play. Will they play it as well? Will they extract as much value from it over time?
Those are good questions, and nobody knows them for sure, but we are playing, and we're playing hard, and we are playing at the front end of this stuff. The third aspect of it is to build out how do you use the data you get from that core system and build something else from it that not only builds you a fee-based revenue, but also gives you a competitive advantage. That's what the services angle is all about. What today was about was this thing has developed over three, four, five, six years, and we've been building out our capabilities in this space. Today was an attempt to make to bring some transparency to all of you, since it's your money that we're investing. That's what we're trying to do.
In the back.
Thank you. Andrew Jeffrey from SunTrust. Ajay, specifically with regard to the processing strategy, I'm wondering if you can elaborate a little bit on your competitive position, and I'm thinking about Europe in particular as it pertains to VocaLink as an extension of processing share gain efforts as well as just the general regulatory environment, and what you think Mastercard has to bring to bear competitively that will advantage your share versus either banks processing internally or some of your competition in the region.
Well, you know, processing, it has got multiple things inside it. It's got kind of one word we use, but it's got what we're doing in the gateway business, which is all for digital. It's got what we are doing with prepaid program management, which is really not just processing, but it's also program management of the prepaid businesses. Then it's got the traditional issuer and acquirer processing space, which includes our IPS debit services, but also others, what they call, now you call PTS. We've got a whole lot of abbreviations, even I don't keep track of it. Those three businesses inside of processing, or three lines of platforms inside of processing, are all mixed up when we talk about it.
My general view is that the digital gateway services aspect of the platform will be very helpful around the world over the next 5 to 10 years because I see the opportunity of growing in the digital space as being greatly enabled by having the access to merchants and having access to them through this gateway system, which also has fraud management tools built into it, and through which Ajay Bhalla could deliver further fraud management tools over time. I consider that to be an enormous opportunity for the future. I think the acquirer and issuer processing side of what Cathy McCaul runs, that one depends a little bit on the approach that banks take. It varies over time towards wanting to process themselves versus not wanting to process themselves.
In the U.S., for example, we all went through a cycle when the consumer banks pulled out of acquiring and out of acquiring processing. A couple of them have since gone back into it. Smaller banks have pulled out of it. Overseas, the trend is mixed in different markets. I don't know how to answer that for you well for Europe in particular or any region. It kind of varies over time. It does give us an opportunity to go and have very deep discussions and embed ourselves with a number of those institutions.
Even one of the that large client, USAA, whom we lost the business of in the United States, we are still providing them with processing services, and we're still providing them with other services which I believe allow us to retain a relationship with them because the wheel will turn around one day, and we'll get another chance to get into that trough. My view is that our portfolio of products and our portfolio of services goes beyond just changing only the transaction. It goes and enables us to become a far more complete player, including in the case of processing. I don't know if that's a complete answer to what you want, but I don't have much more to tell you.
Just one more thing I would add there.
Oh, there you go. She's got more to tell you.
I would add one more thing, just on the issuer and the acquiring processing. Outside of the U.S., we're really interested in that in those countries where we don't get to switch. Remember, you know, we wanna see the data of the transaction because that allows us to do so many more things from what you heard about from an advisor point of view or from a safety and security point of view or loyalty point of view. There are quite a few countries in the world where we cannot switch the transaction. Then our next play is to either do issuer or acquiring processing or both of that in that particular country. There's a very focused strategy, and in some countries in Europe, we would be doing something like that.
In some other countries in Europe where we can actually process, we wouldn't be doing that.
David?
David Togut with Evercore ISI. Mastercard's put up very strong GDV growth rates in U.S. debit this year, better than your West Coast competitor who called out dynamic routing decisions as slowing their growth. Can you talk about the dynamic at the merchant level that's allowed you to put up differentiated growth in U.S. debit, and how do you see that evolving over the year or two?
Well, we've got, you know, we have a strong presence with PIN debit. A lot of large issuers have Maestro or our PIN debit network on the back of the card. It's a part of the market we're engaged with actively in expanding the presence of Mastercard as a routing option for PIN debit transactions, in addition to signature debit transactions, which we're also obviously pushing hard. We're engaged on, you know, now that routing decision-making for debit transactions rests on the merchant side of the equation. We're actively engaged with merchants and with acquirers to maximize the volume of activity that we see coming across our network.
We've had some good success with important counterparts both in the merchant community and with acquiring and processors to encourage them to have more of their volume coming our way. There's not much more to it than that. There's no secret sauce, I don't think. It's just out there kinda working it and making sure they see what opportunities they have to work with us and what the value of doing that is of sending transactions through our network.
Just as a follow-up, you called out, a couple of your partners in your presentation, in particular Fleet and WEX. I'm wondering what you see as your best growth opportunities in virtual card over the next years, whether it be existing verticals that you're in now or new verticals that you plan to enter.
Yeah. I don't know that I would distinguish necessarily between new and existing. That's still, it's still a relatively nascent product that has, I think, a lot of opportunity to grow, both in the verticals where it's being used today and in completely new verticals and new use cases. It's, it's growing, you know, nicely with nice percentage growth rates off a relatively small base in the grand scheme of things.
We're not necessarily limiting the view from a vertical point of view, but more working with partners like FLEETCOR and WEX to understand how we take this product capability and functionality and work with them to help them solve challenges or problems that their customers might have, whether it's in a fleet or a healthcare or, you know, some other sort of vertical that has the right kind of needs that a virtual payment product can solve.
That kinda gets to the relatively early stage in the B2B kind of space that I was referring to in response to an earlier question. I think there's an enormous growth runway built for the future decade in that space. I think what the tools we have today, virtual cards, corporate cards, fleet cards, lodge cards, all that stuff, combined with the ACH capability, could be really interesting in the coming years.
Craig?
Craig Maurer with Autonomous Research. Thinking about your overall transaction yield and how that drives company margins, you talked a lot today about ACH faster payment services. If we see migration toward ACH and faster payments globally, how does that affect overall payment yields or opportunities, margins? Can you offset that to a degree with growth in services? How does services margins stack up against overall corporate margin?
Craig, I mean, you are asking kind of a really difficult question, but I can give you a little bit of a data point on how we're thinking about it, especially as we got our head around the Voca Link acquisition, right? The VocaLink acquisition, when you look at the ACH platform itself in many of the countries, that's, you know, that's an infrastructure play, right? It's relatively low cost, right? Even though some of the costs are hidden. But that is typically not priced at a very high price point. What happens is that the ACH infrastructure is being utilized to put certain feature functionality on top of it. For instance, in the U.K., the feature functionality that is being developed and being deployed is called Zapp, okay?
Which is really more like a debit-like product. When you actually look at the pricing of this product, it's very much like a debit-like product. If you, actually for all parties, okay, in the ecosystem. If you were to think about that we are really interested not only what the infrastructure itself can give us, but in terms of how we can actually build up the feature functionality and then price that in the right way in the market without, by the way, the word interchange. This is not even priced from an interchange point of view. This is actually priced directly to the merchant via the acquirers. We find a very interesting proposition.
In that context, you know, if you were to just look at that example, all I would be seeing that we might be seeing more debit-like transactions. Then it depends again, in terms of, you know, where the pricing in each of the countries is. It's very difficult to be extrapolating from that to where it's gonna go, our transaction yield going down the road. What we're looking at is, no matter where the yield is going, how do we continue to drive revenue growth overall with the right kind of investment and at the right kind of operating margin? It all comes back to the overall P&L.
We've got time for one last question. Cathy, I'm gonna let you pass it to somebody. I can't see from the lights.
Tien-Tsin Huang from JP Morgan. Let me just really quickly congratulate Barbara for retirement. I've really enjoyed working with you.
Thank you.
Wonderful job. A big applause, bigger than the intro.
Hey, it's you.
Come on. Come on. I wanna ask also about, like Craig just asked about, on the ACH. Just can you elaborate on why you're confident that it's not going to cannibalize your card-based business? I understand the concept of going towards multiple rails and owning ACH. Why are you confident that it's not going to steal share from cards? Is it because you're going after a non-cardable opportunity, or? Just trying to better understand that.
I don't think anybody can be confident it won't steal share from cards over time. You have to believe that, when multiple payment choices come out in the marketplace, they will compete. It's just that, first of all, in the U.K., we have a very low debit share. In the U.K. is where VocaLink exists. I think I'll cannibalize the other guy if I do it well, right? I'm not sort of thinking about my card share there. Your question goes beyond the U.K. It's to ACH as a whole. I think ACH versus card payments have been very different feature functionalities for consumers, for banks, for merchants, for acquirers. Faster payments, fast ACH, begins to reduce some of the differences between the feature functionalities anyway. You can see regulators moving that way across the world.
Over the next decade, they will do so. What we're trying to do is to get in there, so that over that next decade, as those regulators move in that direction, we can be a constructive participant in how those rules are framed and created. We can use that to keep our business growing the right way. That's what I'm trying to do. I think that you could always take the view that you could ignore that and hope that your business will keep going, but I don't take that view. I think that that's a trend that'll happen, and I'd rather embrace it and learn how to cope with it, and drive that change with me, and then make my money out of that.
You know, our services businesses can add a lot of value into the ACH sort of space as well. I don't yet know enough of that to tell you how that'll impact the revenue yield or how that'll impact margins, because we don't yet own VocaLink. I have faith that the kinds of things we do with safety and security or we do with advisors and data analytics, can you imagine the amount of data that'll flow to us from the ACH systems, which will enable those businesses to be even more quality predictive using their tools? That's the kind of thing that I can see coming down the pipe. I don't know the answer yet as to exactly what that'll mean for our business. That's why I'm hesitant to make statements about where I want to take it.
I will in a couple of years once I've had VocaLink in our business for a while, and we can understand what the scope of that runway is. I want to be knowing that runway by standing on the runway. I don't want to stand on the field outside and hope I'll figure it out. That I'm not gonna do.
Okay. As I said earlier, management's going to be around this afternoon. I apologize, we've run over. I'm cutting the Q&A session short, people will be around. Before turning the program back to Ajay for just a couple closing comments, boxed lunches will be available as soon as Ajay stops talking out in the back room. I don't want anybody to leave until.
Tien-tsin, what were you saying again?
Downstairs we've got the product experiences and the lunch tables. Pages four and five in your book have maps of both of those. I'd point you to those. Page 61 in your book starts the descriptions of the 14 stations in the product experience area, so you can pick and choose where you wanna go. Don't forget, these are the people who are manning these booths, who are the experts. They live and breathe this stuff every day. Here's your chance to talk to them. The breakout sessions, I'm gonna make an executive decision and push the start time on those a little bit. APT will start up here at 1:15 P.M. Europe will start up here at 1:45 P.M. I think we've got a packed 2.5 hours left to go in the day.
Hope you take advantage of it, and thank you very much. Ajay?
Yeah. I've got a very short and quick summary to put together. It's all here, but I probably won't speak down in that strength. The first point is, our operating fundamentals, our business strength remains strong. We've got good revenue growth, good profitability dynamics. We've got line of sight to growing share in our core business across the different product categories. We've invested in digital, and we will continue to keep Garry Lyons as our Chief Investment, you know, Officer of some type, right, so he can keep using our money. I think that delivery of that is still in early days because the fact is that consumers, as a proportion of their total payments, are still spending a small amount through digital. The war is being fought now. You can't fight that war 10 years from now. It'll be too late.
We are fighting that war now by trying to be at the cutting edge and not the bleeding edge of all these technologies. Doing it in a way that's partner centric and partner focused, as compared to somehow trying to become a B2C company in the process of the digital transformation of the payments ecosystem. We know what we do well, we know how we do it, we know who our partners are, and we're very focused on making them succeed and navigate their way through this digital transformation. I believe that the secular growth opportunity for all the reasons of those 85% of transactions, et cetera, still remains very strong. I think the B2B is a real opportunity that's not fully factored into our thinking. P2P is not factored at all.
I don't know what the revenue dynamics of P2P will be yet, but it's a space that we have to be willing to play in actively and aggressively on. I think that the industry is such that the fact that the industry has woken up to the aspect of cash being not appropriate, rather the regulators have woken up to the aspect of cash not being the best way to run an economy means that they will provide us with more guidance on their regulations. I think that's the nature of this industry. It's been this way for a while. It's gonna have some nationalism coming in some markets, going in the others.
We've gotta be sure there are teams on the ground in this company, led by Ann and Craig, are willing to engage constructively and positively with regulators in advance so that they can be seen as thoughtful partners in building out thought leadership on how payments should evolve in a country. That's what we're trying to do in every single marketplace. We are participating in cybersecurity dialogues. We are participating in the growth of federated identities, which are something like what India has done with a unique identity program. This is all part of what we are trying to do. It's not a hobby. We're doing it because our future will be determined by how the digital payment space evolves and how the regulators look at the role of cash versus our electronic payment space. It's not today, it's the future over the next decade.
That's what we are focused on. Meanwhile, we will continue to use our core payments business to build out these services platforms, so we can use that to generate fee-based revenue. In places like what Bhalla does or what Kevin Stanton does with Advisors, we actually think we have good margin businesses. Some of them are higher margin than our core business. You have businesses like processing, which aren't going to have the margins of our payments business because they're more an O&T shop than they are a real business from the front. They're a critical enabler to see the data that enables the other ones to deliver the kind of revenue we're looking for. That's the business we're building.
It's very focused on the core, but it's focused on taking advantage of the data that we've built in our core over the years that we've built it, and then using artificial intelligence and techniques of that type to keep going with this. That's our business. You guys have been enormously supportive to all of us. It's 10 years of our IPO. The company has done well. It doesn't do well only because we sell and we market and we create good products. It does well because investors care about where this company is going. I'm very grateful to you for that, so thank you for your support. I have one last thing to do, which is to get Martina to come back here with Barbara Gasper. Martina.
We just wanted to thank Barbara. She has been so instrumental in Mastercard for our shareholders. She has been shaping a total IR industry 40 years and doing many different jobs.
She started when she was 2.5 .
in finance-
Yeah, after the child prodigy.
I just wanted to do a special thank you in front of you because you're a very special community to her, and she cares deeply about it.
Okay.
She has been bringing all of your thoughts into our company and really helping us shape and reshape the company, and we will miss you.
Thank you.
Hello, hello.
Thank you.
Hi, Barbara.
Well done.
Thank you, Tina. Thank you, all. Thank you, all. It's been a great pleasure. I really do care about the investment community. The guys here will tell you that I'm constantly pounding on them, saying, "We need to do this. We need to do that. They wanna know this. They wanna know that." I hope over the 10 years that I've been at Mastercard, I've been able to drive a lot of that. I know we don't give you everything you want, but hopefully we've been able to deliver and give you a lot of what you want. Again, thank you all so much for your support, and I will be around till the end of the year.