M&A Announcement

Jul 21, 2016

Good morning. My name is Sharon, and I will be your conference operator today. At this time, I would like to welcome everyone to the Mastercard Acquisition of VocaLink Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. I would now like to turn the call over to Barbara Gasper, Head of Investor Relations. You may begin. Thank you, Sharon. Good morning, everyone, and thank you for joining us today either by phone or webcast for a discussion about our planned acquisition of VocaLink. With me on the call today are Martina Hund Meijan, our Chief Financial Officer Michael Miebach, our Chief Product Officer and David Yates, the CEO of VocaLink. We have approximately 45 minutes for this call, during which we will provide an overview of the transaction, the strategic rationale behind it and the financial aspects of the deal. We will then have some time to address your questions. Because we are in our earnings quiet period, today's announcement about VocaLink will be the only topic addressed on this call. The press release on today's announcement and the slide deck that will be referenced on this call can be found in the Investor Relations section of our website at mastercard.com. The release has also been attached to an 8 ks that we filed with the SEC earlier this morning. A replay of this call will be posted on our website for 30 days. Finally, as set forth in more detail in today's release, I need to remind everyone that today's call may include some forward looking statements about this transaction based on our current expectations and beliefs. Actual performance could differ materially from what is suggested by our comments today. Information about the factors that could affect future performance are summarized at the end of our press release as well as contained in our recent SEC filings. With that, I will now turn the call over to Martina. Thank you, Barbara, and good morning, everyone. Starting with Slide 3, I'm pleased to announce Mastercard's intention to acquire VocaLink, a provider of world class payments clearing systems and ATM switching platforms in the U. K. As well as in several other countries. The acquisition price is about £700,000,000 after adjusting for cash and certain other estimated liabilities. That equates to approximately $920,000,000 at current exchange rates. It will be an all cash transaction and financed from our existing cash balances. I will get into more of the financial aspects a little later. We expect the transaction to close in the next 3 to 12 months subject to certain closing conditions, including approvals by UK or European regulators. The transaction has been approved by the boards of both Mastercard and VocaLink as well as by VocaLink's shareholders. It does not require a Mastercard shareholder vote. This transaction will be an important component of our strategy to actively participate in all types of electronic payments and payment flows. When you look at all payment flows in the world's top 50 countries, that is you're not just looking at retail payments, but all payments made by consumers, businesses and governments, ACH actually represents about 50% of that total. By leveraging the capabilities of both Master Card and VocaLink, we can expand our ongoing efforts to shift away from the use of cash as well as to enhance the services we can deliver to issuers, merchants, governments and ultimately the consumer, both important drivers of our future growth. Considering that some of you might not be familiar with VocaLink, I'd like to turn the call over to David Yates, their CEO, who will provide an overview of that business. David has been leading VocaLink for almost 5 years and has an extensive background in payments, including executive positions at Western Union and First Data. We are very pleased that David will be staying on to continue to lead VocaLink after the deal closes. So David, over to you. Thank you, Martina. It's a great pleasure to be here today discuss what I think is a very exciting opportunity to bring together 2 leaders in the payment space and to leverage the joint capabilities that we have to drive more enhanced payment choices globally. Let me spend just a few minutes describing VocaLink for those of you on the call who may not be familiar with us. VocaLink provides the technology that drives the majority of the UK's non card electronic payments. This includes the Bakkt traditional ATM's AACH system, real time faster payments and the LINK ATM network. Outside of the UK, we process ACH for Sweden as well as licensing our ACH software in other countries, including Singapore and in Thailand, where this last weekend, we delivered the first release of a new national real time payment system, PromptPay, and loaded 10,000,000 consumers onto our systems. Additionally, we have been contracted by the clearinghouse in the United States to build out a real time ACH payment system for the U. S. Beyond our established products, we've also been investing in a number of new innovative products and in particular, ZAP, which is our mobile payment platform that leverages Fast Face Edge technology. And we've also been investing in data analytics to create deep insights from the significant amount of data we manage within the UK market. Last year, VocaLink generated revenues of GBP 182,000,000 and processed more than GBP 11,000,000,000 transactions across the business. We delivered EBITDA of GBP 77,000,000 dollars at margins of 43% on our established products. Additionally, we invested roughly £50,000,000 to develop the new products that I just mentioned. VocaLink is headquartered in London, and we are currently owned by 13 banks and building societies. I'd now like to turn the call over to Michael Miebach to discuss the strategic rationale for this transaction in more detail. As Mastercard's Chief Product Officer, he's been leading the discussions with us and particularly on how we bring our 2 companies together to most effectively generate future growth. Michael? Thank you, David. And I have to say I'm looking forward to continue working with you and your team. Now moving on to Slide 5. You will see the major points of the strategic rationale behind Mastercard's decision to acquire VocaLink. We want to participate in all electronic payment flows and support broad consumer choice, the most convenient and safest way to pay. This transaction will be the 1st true combination of traditional person to merchant cards business with the clearing business. Once fully developed, this presents an exciting opportunity to continue to shift away from cash and check to electronic forms of payments. As Martina mentioned earlier, ACH currently represents about 50% of all consumer, business and government payments in the world's top 50 countries. VocaLink was interesting to us in part because of their capabilities in fast ACH, which is quickly becoming an important option for businesses and governments to make and receive payments. VocaLink's technology supports products that are quite different from card based payments. These will provide us with an ability to go after a much wider range of payments in B2B, P2B and government flows. The addition of VocaLink will also allow us to play a broader and more valuable role in the U. K. Payments market, a market that is strategically important for Mastercard and 1 in which VocaLink has proven to be a critical player. Beyond the more traditional payment options that VocaLink currently operates related to payroll, bill pay and social benefits, their Zap mobile payment app, which is currently under development, will provide one more consumer option to pay. We anticipate that multiple products and services riding fast ACH rails will emerge, such as data, analytics, gateways and safety and security solutions. These are services that we've been focused on for some time, so it will be an exciting opportunity to add them onto this new platform. Because of the differences in the products that each company's technology supports, we will be able to offer a broader number of payment solutions to bank and merchant partners around the world. Or said in a different way, we will be able to bring our current capabilities to VocaLink's customers and leverage VocaLink's capabilities across our customer base. VocaLink is a proven asset in this space. They have successfully launched a fast ACH technology across multiple markets. Beyond all they do in the UK that David described earlier, they have also launched programs in Sweden, Singapore, Thailand, and they are the primary supplier of fast ACH technology to the clearinghouse in the United States. Owning this technology will put us in a privileged position to launch new payment applications that ride faster ACH rails. And VocaLink have accomplished all of this with a very strong and talented group of people who are very well respected in the industry. We're pleased that David will stay on to continue to lead this business as Chairman and join Mastercard's Management Committee, along with Paul Stoddart, a Managing Director at VocaLink, who will serve as their CEO. Now I'll turn the call back to Martina to discuss the financial aspects of the transaction. Thanks, Michael. The financial considerations of this transaction are relatively straightforward, as you can see on Slide 6. Mastercard will purchase 92.4 percent of VocaLink for about £700,000,000 after adjusting for the items I mentioned earlier or approximately $920,000,000 at current exchange rates. The majority of VocaLink's existing shareholders will retain the remaining 7.6% ownership stake for a period of at least 3 years, at which time Mastercard would have an opportunity to acquire the remaining stake. This provides important continuity for the asset the Wokanenk shareholders built and brought to market. The deal also includes a potential earn out of up to £169,000,000 or approximately $220,000,000 to be paid out in 2019 depending on the achievement of certain performance targets. So as I mentioned earlier, this transaction is an all cash deal and will be financed from our available cash balances. As a reminder, we ended our March 2016 quarter with $6,200,000,000 in cash, cash equivalents and other liquid investments. As to the impact on earnings, we expect this acquisition to be dilutive to earnings for a period of up to 24 months after the deal closes. For example, assuming we close the deal in early 2017, we currently estimate about $0.05 dilution to each of 2017 2018 earnings per share due to the impact of continued similar levels of new product investments that David mentioned, transaction fees and integration costs as well as amortization of intangible assets. And in response to a question that I know many of you will have, we have been restricted from purchasing any stock in the past quarter given the material non public nature of this transaction. However, once our trading window OE opens in early August following our Q2 earnings announcement, we expect to continue our repurchasing activity. We're very excited about this acquisition and the opportunity to build on both companies' considerable payments expertise. And now I'll turn the call back to Barbara to begin the Q and A session. Barbara? Thanks, Martina. We're now ready to begin the question and answer period. And in order to get to as many people as possible during our remaining time, we ask that you limit yourself to a single question and then queue back in for additional questions if time permits. Also as a reminder, if you queued in at the very beginning of this call, you need to requeue into the Q and A as we start the queue when we open the Q and A period. And then finally, as a reminder, we will only address questions related to the VocaLink transaction on today's call. Operator? And your first question comes from James Faucette from Morgan Stanley. Your line is open. Thank you very much. I just wanted to ask a question. I think you indicated that you plan on continuing to invest. But as Vocalink comes into Mastercard, how should we think about the trade off between continued product development and expansion of capabilities versus the opportunity perhaps to introduce more operating efficiencies and get better margin? How are you thinking about the long term profitability of VocaLink? And how should but in the meantime, how should we think about investment in new products, opportunities such? Thanks. So very good question, James. First of all, in terms of what we would be doing with VocaLink, we would be both investing in new product development, obviously, aligned with what we're doing at Mastercard, as well as we would be investing in expansion of, in particular, the faster ACH technology across the globe for any of the countries that would like to have faster ACH rails. Beyond the 2 year investment period, which drives some of the dilution that I have been mentioning, we actually believe that VocaLink can come close to our revenue growth, simply because you have in many countries consumer payments not just being made on card rails, but even made on ACH and on faster ACH rails. So we're truly looking at that on an expansion of capability, expansion to be participating in transactions that we otherwise would be not seeing, in particular in the B2B and into the P2P space. And we also expect that the margins of VocaLink will be expanded, albeit that when you look at the revenues and the year per transaction is lower than the year per transaction that we are getting as well as the margin will probably always be lower. When we fold the property in, we believe that as Mastercard as a whole, we will continue to have at least a minimum margin of 50% plus. That was our long term guidance for the next 3 years. That guidance is excluding any acquisitions. We actually did the analysis when we forward in VocaLink, and we believe that this is still a very good benchmark for this company, I. E, reducing north of 50% margins. Operator, next question comes from Craig Maurer from Autonomous. Your line is open. Yes, good morning. So the acquisition of VocaLink seems to position you guys virtually perfectly for the ramifications of Europe's PSD2 directive? And additionally, when we think globally, it would seem that Mastercard might now be the only entity globally to have the capability to go into a new territory and satisfy basically all the government's needs on benefit distribution, payments and whatnot, while also addressing the retail category. So could you discuss European's regulation the European regulation and how you can address that plus if this was designed to address where governments would like to see you go globally? Craig, it's Michael Miebers here. Very good question. Let me comment on that. PSD2, in our view, creates a regulatory framework that seeks to expand the competitive landscape. And when you look specifically at what is happening in the UK with regards to the push of the PSR and opening up the competitive landscape and access to clearing systems. I think this all goes hand in hand. Opening up this market, I think will benefit overall businesses, governments and consumers. We are very supportive of that. And if you look at the business plans that we have designed together with the team of OkerLink, I think this is going to work out quite well for us. If you look at what governments are looking for, going forward to your second part of your question is, I think we are now positioned as a payments partner that can provide solutions for all types of payment flows. You heard in our remarks earlier that we're specifically looking forward to capture a larger share of B2B payments and especially government payment flows. So I think the acquisition of VocaLink puts us in a good position to do that. Yes. I just want to add one more thing. This is we have not changed our view 1 in any shape or form in terms of what we're doing in our core business, right? Our core business with the kind of trajectory that we have from a volume and from a transaction growth point of view, from a revenue and from a margin point of view, we have not changed our view at all. We really need to be looking at this as an expansion of our capabilities that one, let's us see a lot more transactions in areas that would not be naturally card based transactions. And number 2, this also allows us to add our services not only to the transactions that we see traditionally, but also to the transactions that would be coming through those electronic rails, through the ACH rails. So you should look at this as an expansion of the business and being additive to what we are doing. Next question comes from Bill Cashay from Nomura. Can you speak to the risk that the additional payment choices or if there is a risk that the additional payment choices that VocaLink offers will cannibalize some of the core card based payment transactions, not just in the UK, but in other markets around the world? Look, I mean, a lot of and Mike, you can maybe jump in here too. A lot of the payments and the payments choices are really done by whoever makes the payment or who receives the payments. And when you look at P2P or B2B or P2P payments, even at P2B payments, it's really the consumer of the business that is making the choice. And how we're looking at it is that we are providing now an extra product in order to be able to make that choice. But as you guys know, we are very much a consumer choice and it will allow us in fact to see a heck lot more transactions than we otherwise would have seen. Yes, Martina, I think that is absolutely right. So if we come back to the point of the size of the market, there was the reference point that we gave early on about 50% of the whole global payment landscape can be found in the ACH for the top 50 countries. So it's a large market with the advent of fast ACH is a fast growing market as well as this becomes a really attractive choice for consumers. So we want to be able to provide that choice, provide it to consumers, but also provide it our banking and merchant partners around the world. Now, but it has to be kept in mind for 50 years, we've been innovating and investing and making sure that card based payments is a safe and convenient way to pay. That is not going away. We do see significant growth potential. To the earlier question that we had on government payments, clearly, virtual card solutions and the like are still a highly attractive solution. But still they might not be the most attractive solution for certain types of payments that will just not work in a hard pull type environment. Push payments might be easier done in certain parts of the world through ACH. And now we have the full option, we can be a much more relevant partner as we can provide options for any type of payment. That's broadly our thinking. That's very helpful. Thank you. Next question comes from Lisa Ellis from Bernstein. Your line is open. Hi, good morning guys. Can you just talk a little bit about the revenue model of VocaLink and a little bit of like a compare and contrast to the traditional revenue model for Mastercard? Yes. Thank you, Lisa. This is David. The revenue model for VocaLink is that we process within the UK somewhere around about $11,000,000,000 transactions for the UK banks and for UK businesses consumers. We bill the banks for the services that we provide to them. In general, those services are provided free to the consumer but are billed to business. And that's broadly the majority of our revenue. In the export markets, our revenue has been within Sweden processing. Then within the other markets that we're supplying, we have provided a licensed product to the Singaporeans, the Thais and to the U. S. Our expectation is that in the future, we would look to generate further business of the similar models, either licensing or indeed processing. And then the final business model, ZAP, is a non interchange product that enables businesses to request payments across this real time network from consumers. So it allows governments and businesses to both request payments and push payments to consumers. So Lisa, let me leverage off David's remarks. So what you heard is, VocaLink is 1, a technology provider and that's where they actually get some licensing revenues, but they're also the processor. So that's where they get current transaction fees from a revenue point of view. For us, we typically don't have a lot of licensing fees in Mastercard. We typically are volume based driven fees and transaction based fees. So where this really fits in is in our processing business itself. So you should be seeing most of the revenues generated on a per transaction basis. Terrific. Thank you. Next question comes from Jason Kupferberg from Jefferies. So I was just curious, I think you guys, VocaLink have processed about 6 $1,000,000,000,000 in payment volume last year, if I'm not mistaken. How should we think about the breakdown of that into the different buckets, whether it's business to consumer in the form of direct payroll deposit or the P2P piece or the government benefits disbursements, the B2B? I know you've got a bunch of different segments there. So how could we break down that $6,000,000,000,000 And then can you just give us a sense of which markets outside of the ones you've already mentioned geographically would be most interesting to export the VocaLink solution to more globally? So Jason, the GBP 6,000,000,000,000 of volume across roughly 11,000,000,000 transactions within the UK. That breaks down into really 2 primary buckets, about $3,000,000,000 of the $11,000,000,000 transactions are ATM, but the vast majority of the $6,000,000,000,000 of value flow really comes from our ACH clearing systems. So the largest group of the ACH transactions are really in the UK, what I call direct debits. So these are services where businesses can build consumers on a regular basis, but also where businesses can transmit payroll on a regular basis. So these are extremely regular predictable transactions that go on year in, year out. And in that sense, the vast majority is actually business to consumer, regular transactions for things that are not optional within the market. So salary payments, government payments, regular mortgage payments and so on and so forth. That will be the largest piece of our transaction base. The new stuff that we're moving into around Zap, Fast ACH with all transaction driven. So every incremental transaction drives new revenue in a very similar way to the Mastercard existing business model. And just on the geographic side? On the geographic side, the vast majority of our current revenues come from the UK, so well in excess of 90% today. We currently process only for Sweden, but it would be natural for us to offer processing services into new markets when there is an access to a balance sheet to do that. So Vokling, in the past, has only generated license and implementation services revenues from Thailand, Singapore and U. S, but I would expect that would change. Thank you. Next question comes from Tim Wong from JPMC. Your line is open. Thanks. Hey, it's Tien Tsin. Just I guess just listening to some of the answers, I'm just curious if we had a way is there a way to think about how much of this deal is Mastercard playing offense and getting bigger in P2P versus playing defense against things like UX and faster payment schemes versus your core card business. Is there a way to think about that? Because it sounds like a little bit of both. Hey, Tien Tsin, it's Michael here. Hey, Michael. In direct response, this is all about offense. So we are really looking at VocaLink to say it will give us access to all sorts of additional payment flows across the board, B2B, B2B, everything that we started to play in, that we will have a much more pronounced position in. It is often in the UK from a strategic perspective. It's a market where we have not been perfectly ideal position. VocaLink will make us a very relevant player in the context of the UK. And as countries around the world move into fast ACH, we will be part of the conversation. And coming back to the conversations we've had in previous calls about the services business that we filled out, this will be a perfect opportunity for us to leverage our services. So across the board, offense. Makes sense. Thank you. And Martina, did you give a cash earnings impact, the intangible impact? I only gave an EPS dilution number of $0.05 Assuming that the deal closes by the end of this year, it would be $0.05 EPS dilution impact in 2017 and in 2018. Right. On a GAAP basis. Okay. Thank you. At GAAP basis, yes. Next question comes from Sanjay Sakhrani from KBW. Your line is open. Thank you. Good morning. Just a quick follow-up on Tien Tsin's last question. So when we think about like revenue and expense synergies, are there any contemplated in your guidance, Martina? We have some revenue synergies. But as we said before, the BAC system and the ATM system that VocaLink is running are very stable systems, right? That's where you don't get a lot of growth. Where you get the growth is from the new products, ZAP, the data analytics, some of the fraud products, etcetera, etcetera, and taking steps to ACH around the world. That will take a little bit of time. So you're going to see revenue synergies beyond that 2 year mark and developing it in a much bigger way and we have a really in detailed roadmap on that. From an expense synergy point of view, one thing that you cannot forget is most of the operations of VocaLink are in the UK supporting critical infrastructure in the UK. And we will not make any changes to that. That will stay in the UK. We will support the U. K. Out of the U. K. With the facilities that we have, with the people that we have, etcetera. So that there is not a lot of synergy from that point of view. But where it will be synergistic is VocaLink doesn't really have a team around the world. We have a huge team around the world where we can actually help VocaLink to be selling their products to those kind of countries where we are located in. And in addition to that, we obviously have a fairly substantial core competency on services such as data analytics. And again, that is where we can help VocaLink in a very big way And that's what we're doing and it's folded into the plan. And one quick follow-up. How does Brexit play into the future of VocaLink and kind of just the negotiations that you guys had between yourselves and your counterparties going forward? Thanks. Look, Brexit has really not played into this decision at all. In fact, we started the engagement with VocaLink many months ago. And at the time, we didn't know whether Brexit would happen or didn't happen. But it really had absolutely no impact on our negotiation because VocaLink should be looked similarly to what Mastercard does as an operations. We have to support locally every country. It really doesn't matter whether you're part of the EU or not part of the EU. So the biggest issue on Brexit is always what happens in the economic environment and what happens from a foreign exchange rate point of view, not necessarily where you can actually export your services. Do you have any particular comment on this, David, from a VocaLink perspective? From a VocaLink perspective, I would say that the Brexit issue is one where we're not a business that gets terribly concerned about economic upturns or downturns. So if there were an economic impact from Brexit, it really would have very little impact on the core revenues of VocaLink. And we consider ourselves, and I think we are considered to be the world leader in the biggest rising phenomenon in payments, which is real time ACH around the globe. We've been picked in Asia now a couple of times in Europe and in the U. S, and I expect that all of those export markets remain absolutely open to us. And bolting ourselves into the Mastercard network makes us even stronger to take advantage of those opportunities. Within the UK, also bolting together the Mastercard acceptance network with our own strategies around ZAP and the provision of digital debit makes us a much stronger company to go and win new volumes in the UK. So I'm both bullish about the potential of the company with or without Brexit. Thank you. Next question comes from Chris Doan from Sandler O'Neill. Your line is open. Good morning. Thanks for taking my question. Just had one on the regulatory approvals. Martina, you mentioned that it's U. K. And European regulators. About 3 months ago, we saw Visa's acquisition of Visa Europe have to change the earn out provision because of regulatory pressure. I'm wondering if European Commission is part of your regulatory approval process or not? So what how this is going to happen is that, we have to first go to the EU or to the European Commission since the UK is obviously still part of the EU. The European Commission will actually decide whether they want to do the competition review at that level. But the European Commission also has a choice to be referring that review to the CMA in the UK. So we don't know what that outcome will be. That's why I said it's either the UK or Europe. It's one of them. And that will be going through all of their normal review practices. So I think the way that we have lined up the deal, including our earn out, I don't really expect much issues from that perspective. Okay. And then just the timing of the closing, you gave a pretty broad window. Does that reflect the regulatory approval process? It does. There are several stages, and it depends which stages we have to go through, and we don't know that at this point in time. Got it. Thanks very much. Thanks, Chris. Next question comes from Moshe Orenbuch from Credit Suisse. Your line is open. Most of my questions actually have been asked and answered. But just if you could, from the VocaLink perspective, talk about what why it makes the most sense to sell now and maybe if Mastercard kind of just comment on how the pricing of the transaction? From the Locum perspective, why sell now? I think that the company, in many ways, has outgrown its U. K. Bank shareholder base. We see our future as being, of course, the continuing provision of great services. And we are a fantastically high quality provider of services to the UK. But our ambition is on a rather wider scale than that. And in order to really make the company fulfill its potential, we were looking for a partner that had fabulous distribution capabilities around the globe. We wanted somebody who really understood and loved the payments business. And we needed to join in with this really sound and solid merchant acquiring network for our services to really fly. And I think from our point of view, Mastercard fitted the bill on all of those scores. So it was a great match. And I think our shareholders really felt, too, from their perspective that it was time to move on. There was also a little bit of regulatory pressure for our banks to actually find a new home for the company. The regulator was looking for a non bank owner. So and Moshe, on the valuation, we did obviously what you typically would do, both from a multiple as well as from a discounted cash flow perspective. This was a rather competitive process, as you can appreciate. The 13 shareholders that own VocaLink wanted to make sure that a real process is being run and that's what they did. And so in the end, we felt comfortable with the valuation based on what the property will be producing or is expected to be producing for us in the future. Great. Thank you very much. Next question comes from Wayne Johnson from Raymond James. Your line is open. Hi, yes, good morning. So my question is, if you could just break out a little bit more about the functionality on the front end that this acquisition brings regarding ACH real time payments versus the back end. And I apologize if you've addressed this earlier. I've been toggling back and forth between other calls. So thank you. Wayne, Michael here. On the front end capabilities, so let's talk about front end to the consumer. What is consumer facing out of what VocaLink does today? Obviously, there's the existing services David referred to earlier in the direct debit space. Now that's been long there. And that is a choice that's totally internalized by people. What is exciting and new is really the opportunity to use account based payments in the e commerce, in the M Commerce space and going forward as we couple our existing POS acceptance network with VocaLink's Zap capability also for a consumer to use the account based push payment at the merchant till. Now that is a choice that consumers might like. If you think about our strategy of enabling our banking partners with a very wide range of choices they can give to their consumers, you should imagine a scenario whereby a consumer can tap on a mobile banking app of their bank of their choice and basically choose a Mastercard card based transaction or use a ZAP transaction, which will go directly to their banking account by the push of a button in the mobile banking app, the payment is made. There's benefits to the merchants. They have the choice to go ahead and say, all right, we'd like to be offering this to our consumers for them. There is a benefit to basically go ahead and negotiate their own kind of commercials with their respective acquirers, which is a very different scenario what you have in the world of card payments. So overall, there's a whole set of choices for banks, for consumers and for merchants on the front end, where VocaLink's technology touches all of these stakeholders in the payment ecosystem. That is probably what we have. That's very helpful. I appreciate that response very much. So just three quick follow ups. So how much of this is available? Wayne, one follow-up. One follow-up? Okay. So how do you guys charge for this? What are the economics of that on the front end? Wayne, this is David here. The economics of this are broadly comparable with debit. As Michael just said, this is a noninterchange product nevertheless, which gives us much more pricing flexibility towards the merchant. So we have total flexibility as to how to address the merchant base, but broadly, the pricing is comparable and the incentives within the marketplace remain the same as the current incentives for card payments. Terrific. I appreciate that. Thank you, Wayne. Next question, please. Next question comes from James Schneider from Goldman Sachs. Your line is open. Good morning. This is actually Lara Forman stepping in for Jim. Thanks for taking my question. We were just wondering if there's any restrictions in place that could limit Mastercard's ability to reuse or repurpose the payment status from the faster payments network? And then also if just what's the market share of the linked business, if you could talk a little bit about that and if that's a strategic asset for Mastercard in the long term? Thanks. Nara, this is David. Let me try to answer both of your questions. I'll start with the market share on the ATM side. The role that Focalink provides within the UK is that it links together all of the UK ATMs without exception. There are about 67,000 ATMs in the UK belong to many different banks and non banks. And Book Link makes that network operate seamlessly for the consumer. So we have within that Link ATM interoperability market, we have virtually 100% market share. In terms of your data question, obviously, when you're processing £6,000,000,000,000 worth of payment flows, that is 3x GDP more or less flowing through the system. This is pretty much everybody's salary payment, everybody's mortgage payment, all Social Security payments, all bill payments. The only things that really aren't flowing through the system are those payments that were made at the point of sale or E&M Commerce on card. The data is therefore extremely valuable. You can use it for macroeconomic forecasting. You can use it for fraud analytics. You can work out affordability for households and businesses. There are restrictions on the use of this data, however. There are all kinds of data privacy rules. The banks who wish to use it and government who wish to use it have to obtain consumer or business permissions for using it. So we're working on making sure that permissions landscape is fully put in place so that we can extract the maximum value from those data assets. And that is working quite well. So we're on the road to really making proper use of very valuable data. And as you know, Laura, given that we are running a fairly large information services business with data analytics, we are very familiar with what you have to do from a governance point of view in every country and how we anonymize and aggregate the data so that it can be used properly. Operator, I think we have time for one more question. Next question comes from Tom McCruin from CLSA. Your line is open. Thanks for squeezing me in. You went over a lot of grounds. I'm trying to maybe summarize what you talked about and make sure I got it right. So it's a very UK centric company today. You have licensing agreements with companies or other countries, I should say, like the clearinghouse. And you also have a presence in P2P in a big way. Can you give us a little sense, number 1, the total volume that is P2P, are you supporting something like Swish in Sweden? And how much of this acquisition is to support Mastercard's long term goal to support financial inclusion globally kind of more on the government side? Thanks. Look, first of all, the P2P payments volume is still fairly small, okay, so including Swiss and Sweden. So that is something that we are really looking to build out with the faster ACH rails. In terms of how it fits into Mastercard strategy, I mean, as we said before, this is a real additive way to be looking at transactions that we otherwise wouldn't see on our card that we otherwise wouldn't see on our card rails. And so it will help in for sure in the financial inclusion bit, but we are not making this acquisition just for the purpose of financial inclusion. It's really for the purpose of what you see going on in a number of countries and what consumers and businesses would like to do and you're just not going to be able to reach that just with card rails. So you need to look at this as an overall expansion opportunity in terms of us being right in the payments flow of every transaction and also being able by being in this payments flow and seeing the data to be powering our services business. Martina, any closing comments? Well, first of all, I would like to thank you all for dialing in on such short notice. It's a very exciting opportunity as you can see. Barbara and her team are ready to be obviously fielding more of your questions. But thank you very much and I guess talk to you next Thursday morning. This concludes today's conference call. You may now disconnect.