2010 Master Card Investment Community Meeting 091510

8/2/2019 2010 Master Card Investment Community Meeting 091510

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September 15, 2010

MasterCard Incorporated


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-

Todays presentation may contain, in addition to historical,

the Private Securities Litigation Reform Act of 1995.

-assumptions, expectations and projections about future eventswhich reflect the best judgment of management and involve anumber of risks and uncertainties that could cause actual results to

er mater a y rom t ose suggeste y our comments to ay.You should review and consider the information contained in ourfilings with the SEC regarding these risks and uncertainties.

MasterCard disclaims any obligation to publicly update or reviseany forward-looking statements or information provided during


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Bob Selander

September 15, 2010Executive Vice Chairman

Change through Innovation


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MasterCards Transformation

We faced ...and responded with ...

Strengthened brands and marketing Launched PricelessWeak Brands

Rewrote core systems Developed Competitively Advantaged Offeri

Dated

Technology Created customer teams Introduced value-added services & MasterCa

AssociationMentality

Created single global entityStructure


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We made mistakesWe learned lessonthat made us

along the way

Mondex

more successful

Listen to customers

Debit in the U.S. A global, top-down doesnt always work

mpor ance o p anndifferent scenarios


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Trends resent both

challenges & opportunities Transformation of payments

Nationalism/regulation

New competition

Secular trends

We continue to deliverinnovative solutions Mobile phone initiatives MoneySend


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Our innovative approach...

weve made over the last decade or thecom etitive solutions weve introducedin recent months

...will continue todrive momentumacross our busine


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Ajay BangaPresident and Chief Executive OfficerSeptember 15, 2010

Looking to the Future


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Unified, global presence

Increas ng y erent ate assets

Strong financial performance

Significant growth potential


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Key Trends Creating Opportunities

on nue ur an za on

Financial inclusion 8-

Growing affluent and middle class

Growing importance of youth


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Other Trends Presenting

Promoting electronification

Regulatory challenges

of Governments

Merchants, telcos andNew Entrantsinto Pa ments

Increasing competition

Product innovationNewTechnologies


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MasterCard Strategy:

BUILDNew BusineBUILDNew Busine

DIVERSIFYGeographies & CustomersDIVERSIFYGeographies & Customers

GROWCore BusinessGROWCore Business

8-10% 3-5%

Long-Term =ar e

Growthrow rom

Strategic Investmentse evenue

Growth

Growt wi come t roug ot displacement of cash and checks


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GROWGROWCore BusinessCore Business

Segmented offerings and

product enhancements

Reinforce strong

position outside New geographies

and customers Increase U.S. ma

share profitably

Public sector, corporated l d bl

Domestic proces


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DIVERSIFYDIVERSIFYGeographies & CustomersGeographies & Customers

Geographies Customers Invest disproportionately in

high growth markets

Grow acceptance, channels,

Relationships with Merchants Telcos

processing Transit Operators


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BUILDBUILD

New BusinessesNew Businesses

MasterCard Labs Ideate, incubate and

e-Commerce & Mobile Drive faster than market

Partner and build paymentsinfrastructure in emerging

Monetize informatiod f d h l

Differentiate the consumerexperience in developed


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DataCash fits our acquisition criteria well

Drive e-Commerce growth in tandem withacquiring relationships

StrategicRationale

products beyond Europe and Asia/Pacific

Enhance fraud management expertise Deliver new products with minimal

merchant integration challenges

Clear fit with e-Commerce strategy Complements and enhances existing assets

DealCriteria


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Striking the right

Driving Strategy

Shar enin our

xecu on

competitive edge Innovation

Thoughtful risk taking Speed to market


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President, Global Products & SolutionsSeptember 15, 2010

Global Products & Solutions


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Solutions

Emerging PaymeEmerging Payme

v sory erv cv sory erv c

ProcessingProcessing

MarketingMarketing


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Global Opportunity to

o e wor s ransac ons

are still done in Cash1

o a consumer e

equals $9 trillion

2.5 billion adults worldwideare unbanked 2

Prepaid 3 will grow to$850 billion by 2017

Over $1.7 trillion Commercial 4

opportunity globally by 2015More than $1 trillion ine-Commerce 5 sales

4.6 billion Mobile Phones 6 globally, Opportunity to displace


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BUILDBUILDDIVERSIFYDIVERSIFYGROWGROWNew Busi

Build for theBuild for the

New Busi

Build for the

Income StreamContribution throughexpanded servicesContribution throughexpanded services

Income StreamContribution throughexpanded services

Core BusinessRevenues and market sharein core businessRevenues and market sharein core business

Core BusinessRevenues and market sharein core business

MasterC e-Comm Mobile



Advisory Services Network Products inControl



Credit Debit Prepaid



Remitta Informa Transit



New Customers New Markets New Customers New Markets New Customers New Markets

Commercial Processing Commercial Processing Commercial Processing

8 10% 3 5%L g T


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Sustainable Differentiation

To ay

Differentiated assetsprovide leverage

Near-Term

Innovation supported bykey strategic investments

Longer-Ter

Fully-integratedcontinuous innovati

Integrated Solutions

Unified Global Entity

Prepaid

Information Services

Drive value for:

Customers etwor esponse

and Flexibility

inControl

e- ommerce

Mobile / P2P

MasterCard Labs

erc ants

End Consum

Data Analytics

Smart Data

Open API Consumer Segmentation


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Extended Ca abilities New Channels Integrated Processing Solutions Strategic Payment Services MiGS and DataCash

e-Commerce Mobile Transit

MasterCardGlobal 210 Countries

Local Domestic Pro

Network 23,000 F nanc a

Institutions Currency Rules

Unique Central & Distributed Network

Value-Add inControl


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o v ng ee sDriving Growth

everag ng: Data Insi hts Payments Expertise Problem-Solving Sk

Three lines of Consulting Managed Services


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Marketing Strategy

Emer inEmer inEmer inEmer in Develo inDevelo inDevelo inDevelo in MatureMatureMatureMatureEmer inEmer in Develo inDevelo in MatureMature

MarketsMarketsMarketsMarkets MarketsMarketsMarketsMarkets MarketsMarketMarketMarketMarketsMarkets MarketsMarkets MarketsMarket

Brand PreferenceBrand PreferenceBrand AwarenessBrand Awareness

Consumer & merchant educationand awareness

Fully integrated marketing Product innovation

Acceptance development

Issuance support

Consumer benefit driven fromfunctionality Issuer & merchant strategic


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Australian debit volumeincreased 89% 1

Top of wallet behaviormore than doubled 2

among the target demographic


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< ay eo>


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Tremendousopportunities exist

MasterCards Innovation anddifferentiation are

level insight , alignmenflawless execution dr


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Chief Product Officer, Core ProductsSeptember 15, 2010

Credit, Debit, Prepaid


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Credit:

2Q10 YOY Growth

Volumes stabilizing inthe US; growth in ROW US: -1.5%ROW: 9.8%

Leading innovation in product and card design

Focused on:

Partners ips / assets or t e A uentConsumer-centric value propositions


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Credit:

PartnershipsTurkish

Airlines

Aeroflot

(Russia)

RelevantBBVA Itau

InnovativeDesign

Chase ContinentalOnePass


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Credit:

2Q10 YOY Growth US: 4.3%

ROW: 14.1%

segment in credit

Gaining share in Europe, pursuing greenfieldopportunities in APMEA and LACLeveraging differentiated product assets

CommercialLufthansa


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Recent US Financial Regulation:

Debit economicsImpacts Opportunitie

Brand sales in li h

Network exclusivity

Discounts at POS

network exclusivity

Pre aid for financi Credit min / max


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Debit:

2Q10 YOY Growth

US*: 0.8% / 21.0%ROW: 28.7%

sustained growtharound the world

Leveraging country-level strategies,

Focused on:

Winning pro ita e ea s in ey marWinning domestic switching


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Debit:

IndiaState Bankof India

Createofferinbank in

EuropeTEB (Turkish Next g

Economy Bank)Display Card

debit c


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Prepaid:

processing solution across all categor

Focused on three verticals:

Pu ic SectorCorporate


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Prepaid:

Direct Express DebitMasterCard

Givefasterfunds

ConsumerTravelex and Worl

Ban o C na foreigprepa


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Growth at the

core continues... Credit in focus andeneratin momen

US and around the

Prepaid is the next


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September 15, 2010

Chief Emerging Payments Officer

Growth through Innovation


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,

A strong global network and branwith robust assets / applicationsWhowe are

Building infrastructures and enhanWhat we are consumer experiences around wor ng on

Facilitating commerce by drivinggrowth in new markets and segmeere weare going


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-

Ra id ado tion of the InGlobal Online Sales

(in USD Billions)

continues to bolster onl

Brand lo alt securit

643768 806 3%

18%

45% convenience drive grow

2007 2008 2009

32%

Infrastructure :

Focused on:102%

YTD June 2010 Y/Y GrowthNorth America Europe Asia Pacific LAC + Other

Gateways, payment option Consumer Engagement28%

66%


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Global Mobile Pa ments Volume Mobile hones

250

300 Ubiquitous part of consudaily lives

200

i o n s Overall CAGR

68%

Innovation platform throa partnership approach

Infrastructure : Contac

Focused on:100

B i l l

Payments Gateway Consumer Application

0

50


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MasterCard introducesMobile PaymentsGatewa an m-wallet

First Commercial

platform linkingMasterCard cards

First Market Trial Custom Pioneer mobilehone debit

mo e NFCDeployment

NFC-EnabledMobile Phones

200 phonesa ment ilot in

Near FieldCommunicationand MTA

payments in the UK,using MaestroPayPass

Turkeys first mobilehones, enabled

First MobilePayPass Tagpilot in Canada

partnership withViVOtech

Fully-integrated First trial of PayPass -

Enable customers to

with MasterCardPayPass

-

person-to-personmobile paymentservice

phones for secureEMV paymentspayments via phoneswith MasterCardPayPass


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High volume, faster than cashsystems are cumbersome and in

Transit is an anchor for everyda

Paris

Taipei

New York CitySalt Lake City

Liverpool

IstanbulNewarkCleveland

Miami

Norfolk

Warsaw

Las Vegas Infrastructure

Focused on:

Rio de Janeiro

Kaohsiung open loop netwo

Consumer Expe


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Drivin rowth in emer in

markets, devices and segments

experience tmobility, acc

everag ng an expan ngour infrastructure

personalizat


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President, US MarketsSeptember 15, 2010

US Markets


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Winning deals in the fast-growing Debit space

Well positioned for the impact of the financialreform legislation

-governments, merchants, telcos, others to grow reven


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Strategy to Address Recent

Ensure Fed has a well-informed view

Leverage advantages of MasterCardsignature and PIN debit offerings

Provide financial institutions withnew solutions

Merchant focused innovation


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-

Engaging with merchants,governments, telcos andother players

New U.S. BusinessDevelopment function deto non-traditional players


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Complying with regulationand managing uncertainty

Seeking to replace or en ance revenue streams

p m z ngportfolio economics


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Opportunity

C

More than half of themarket is still using paper

Economic downturn causingDebit

2

C2

consumer s i t to De it

Regulation driving change

in competitive landscape

Strategic Imperatives Levera e stron momentum

Drive product innovation anddemonstrate differentiated value


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Opportunity Will represent a $442B market by 2

Regulation driving the unbanked to

Prepaid

Strategic Imperatives

public sector and consumer reloada


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Opportunity Favorably positioned with secular

Credit cards accounted for one-fiftof PCE in 2009

Credit

Regulation will drive product innov

Strategic Imperatives Protect and row core Credit

Leverage consumer insights to drivproduct innovation


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Opportunity

Double-digit growth in online salesdespite tepid overall retail sales gro

US accounts for more than 30% ofe-Commerce

global e-Commerce volume

Strategic Imperatives Grow share of online card s end ah

of the market Partner with targeted online player


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Opportunity Significant competitive differentiat

Regulation driving changes in Issubusiness models

AdvisoryServices

Economy driving changes in consu

Strategic Imperatives Im rove rofitabilit of Issuer or

Demonstrate predictive capabilitie


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deal activity and momentumExercisin rudence infinancial negotiations

Investing in innovative

US Poised for

pro uc s an so u ons

Focusing on both traditional-

Building, Growing and


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President, International MarketsSeptember 15, 2010

International Markets


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Our Objective...

through Global resources embedded in local execution.MasterCard Net Revenue

55%US International

$5.1B

48%

$2.8B N3.3B CAGR

21%

52% CAGR10%


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Strategic Framework for Capturing

based on size of opportunity andpotential returns for MasterCard

Segmentation of marketsto identify common themes and approach

Countr -level strate iesaround MasterCard strategic pillars of:

Core BusinessCore Business New BusinNew BusinIncome StreamIdentify New CustomersIdentify New Customers

Income StreamIdentify New Customers


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Global Drivers Translate into

-

Secular Trends

Demographic TrOpportunities

Transformationof Payments

Evolving Rolef G t


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Secular Trends:

-

22%

IndiaVenezuela16%

18%

20%

o f

e n

d i t u r e

China

Peru

Nigeria10%

12%

14%

- 2 0 0 9 C A G R

r T o u r i s

t E x

Singapore

AustraliaPoland

Mexico Spain4%

6%

8% 2 0 0 4

C r o s s - B o r d

S. KoreaFrance GermNetherlands

0%

2%


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-

GermanyLeveraging

domestic position

ChinaWon all 9 recent

co-brands toto captureoutbound travel

capture grow ngcross-border inChina


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Demographic Trends:

- 140%

100%

120%2009 Penetration 2004 Penetration

DevelopedCountries

DevelopedCountries

60%

80%EmergingCountries

DevelopedCountries

40% EmergingCountries

0%Banked Population Broadband Penetration Mobile Pe


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Mobile Payments:

- MasterCard introducesMobile PaymentsGatewa an m-wallet

First Commercial

platform linkingMasterCard cards

First Market Trial Custom Pioneer mobilehone debit

mo e NFCDeployment

NFC-EnabledMobile Phones

200 phonesa ment ilot in

Near FieldCommunicationand MTA

payments in the UK,using MaestroPayPass

Turkeys first mobilehones, enabled

First MobilePayPass Tagpilot in Canada

partnership withViVOtech

Fully-integrated First trial of PayPass -

Enable customers to

with MasterCardPayPass

-person-to-personmobile paymentservice

phones for secureEMV payments

payments via phoneswith MasterCardPayPass


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The chan in a ments landsca e rovidesnew opportunities with non-traditionalcustomers and innovative products but

Customer

New Techand Produ


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Strategic Global PrepaidAlliance with Travelex

Co-Brand Partnershi S annin11 Countries in Latin America


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Working with regbodies to drive pos

MasterCard is

actively partneringSupporting finanin emer in marke

with governments

Driving electronic

in rastructure eve


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Russia

,

largest retail bank, to offer customers

Maestro Debit Cards instead of

traditional savings passbooks.


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ocus ngon market trendsThe

Tailoringcountry-level strategies

Engine

Leveragingglobal resources

Adapting innovation


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President, MasterCard EuropeSeptember 15, 2010

Opportunities for Growth


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2009 Global PCE

LAC9%

Canada3%

32%

US29%


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Europes Card Payments Business is

$10T

Spendon Cards23%

MasterCardMarket Share

50%

MasterCardSwitching Ratio

has substantial

t ti l t g19%


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MasterCard is Well Positioned

A starting position of strength

Building for the future withproducts and partnerships

An active force inshaping the industry

Giulio Tremonti, Italy's Mpresents the new Maestr

Global and independent


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SEPA opens competition for 97% of domestic transactions

2006 2009Domestic DebitSwitchinIcelandIceland IcelandIceland

No Domestic DebitSwitching

DKDK

EstoniaEstonia

LatviaLatvia

LithuaniaLithuania

FinlandFinland

NorwayNorway

SwedenSweden

IrelandIreland

DKDK

IrelandIreland

SwedenSweden

NorwayNorway

FF

PoanPoanGermanyGermany

NLDNLD

SpainSpainPortugalPortugal

ItalyItaly

FranceFranceSwitzerlandSwitzerland

SloveniaSlovenia

GreeceGreece

BulgariaBulgaria

RomaniaRomaniaHungaryHungary

Czech Rep.Czech Rep.SlovakiaSlovakia

Lux.Lux.BelgiumBelgium

AustriaAustria

PoanPoanGermanyGermany

NLDNLD

SpainSpainPortugalPortugal

ItalyItaly

FranceFranceSwitzerlandSwitzerland

SloveniaSloveniaHungHung

Czech Rep.Czech Rep.SlovSlov

Lux.Lux.BelgiumBelgium

AustriaAustria

Percent of MasterCard DomesticDebit Transactions Switched3.4% 6.9%

CyprusCyprusMaltaMalta MalMal


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Enhancing the consumer experience

en Domestic scheme:100% of Debit cards and domestic volume

Challenges Nationalist sentiment Cost of migrating merchants to EMV

Now 90% of Dutch Debit cards converted to EMV Maestro Additional securit and features for consumers

e ver a pos t ve consumer exper ence

MasterCard begins processing Dutch domestic Debit transa


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Sparking innovation and choice

en Strong domestic schemes controlled by banks Difficult for non-traditional players

to enter market

Challenges Breaking the market Legacy of co-branding restrictions

Now Carrefour:First major MasterCard-only Issuer in France

Auchan and others follow; unique card propositions emerg 2.5 million PayPass cards within 18 months


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$8T $10T $ContinentalEurope PCE

Spendon Cards 20%

23%

MasterCardMarket Share 46% 50%

MasterCardSwitching Ratio

15% 19%


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-Chief Financial OfficerSeptember 15, 2010

Financial Perspective


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2010 Outlook e a es ncen ves

Capital Structure ConsiderationsLong-Term Growth Opportunity

Updated Long-Term Performance Targets


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Worldwide

Reported P

10.811.9

15%

As ReportedImpact of Deconversions

2.53.410%

l G r o w

t h

8.38.5

0.35.9

5% L o c

0.6

.

0.6

0%

. Processe


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US Credit

Reported 1.2 Processe

-1.5

-5%

0%

-8.0-10% l

G r o w

t h

-13.0-15%

L o c

-17.9-20%


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US Debit

Reported P

22.3 21.0

30%

As Reported

Impact of Deconversions

2.315.3

20.2

12.8

10% l G r o w

t h

5.210.5

7.00.8

0.4.

0%

L o c

-10%

.


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Rest of World

Reported P

11.6

14.8 14.516%

12.5 Processe

7.48% l G r o w

t h

4%

L o c

0%


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Worldwide

15%

As Reported

Impact of Deconversions

7.61.6 4.8 9.8

8.2

9.4 9.910%

l G r o w

t h

6.6

5% L o c

4.6

0.10%


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Worldwide

-

15.214%

18%

10.910%

l G r o w

t h

3.5

2%

6% L o c

-0.5-2%


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-

a se cqu rer ross- or er ssessment ee nQ4 2009, with corresponding rebates

All rebates will be collapsed into gross revenue

with no impact on net revenue As-reported Acquirer Cross-Border Rebates were:

Q1 2010 = $65 million

Q2 2010 = $62 million


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-

Debit Portfolio losses Rebates & Incentives trajectory

NetRevenue

Operating

Modest decline

1-2 ppt tailwind from Euro/Real FXExpenses Reinvestment in the business in Q3 A&M spend higher in second half o

Net Income Achieve at least 20%


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*

% of Rebates& Incentives

Volume / Transaction Based

~

New / Renewed Deals

anCustomer Marketing ~


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Capital Structure Considerations

Preserve strong balance sheet, liquidity and creditStrong $3.5 billion net cash with remaining litigation pay

$0.6 billion as of June 30, 2010 Available debt capacity, though to be used sparing

Balance Sheet

Investments in organic opportunities and M&A

transactions

Long-Term

Primary focus in technology, processing, prepaid,e-Commerce and mobile

Will target regular cadence depending on use of cthe business

Excess Cash


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62.0 3.0

$5

3.5

1.0$3

$4

B i l l i

o n s

0.5

$1

$2

$

Cash Balance Revolver Operational Share DataCash$0


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PCE Growth and Secular Trend

Personal Consumption Expenditure (PCE)

2010 2Cash & CheckEFTCredit / Debit

$48 Trillion

Global PC

Card Purc18%

29%$27 Trillion

$36 Trillion

Secular G

65% 56% 46%

12%15%


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-Estimated 2010-2015 CAGR

~10% StrategicInvestmentsSecularGrowth+4%

6%

~MA Mix

(1%)

d d d d


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Updated Longer-Term

On a constant currency basis:

Net RevenueGrowth Rate 12-14%

Margin

m n mumannually

Earnings Per Share 20% +


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APPENDIX

-Simplified structure with no Net Revenue impact

As B/(W)

Q1 2010 $ % growth $

Adjusted View 1

Gross Revenue 1,683 12.7 1,74

Rebates & Incentives (375) (11.3) (4

Net Revenue 1,308 13.1 1,30

Rebates & Incentives % of Gross Revenue 22.3% 25.2%

Q2 2010Gross Revenue 1,766 8.7 1,8

Rebates & Incentives (401) (16.6) (4

Net Revenue 1,365 6.6 1,36


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Group Executive, Research & DevelopmentSeptember 15, 2010

Innovation Experience


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MasterCard Drives Growth

been a payments innovator.And will continue to be a keycontributor

of species that survive, nor the most

Change is happening fast.

Needs of merchants and cardholders

one most responsiveto change .

Charles Darevo ving aster t an ever

We must leverage our.

To stay ahead or react quickly asopportunities emerge


99/105

Make MasterCardfaster at innovation

disruptive breakthrosolutions for the n

n as er ar s gro

The temptation of business isalways to feed yesterday and to starve tomorrow


100/105

Be open and diverse from anywhere

Share everythingFail smart

Dare to dreamDefine success metrics early

Labs is a stepping stTimeliness trumps perfection


101/105

ccess o new eas,

even better experien

Companies revolutionopening up prove

This is just the begin


102/105

Providing personalized spendingcontrol and peace of mind.

Spend management tohelp companies work smar

MasterCard MarketPlace

MoneySend . ,

in person-to-person payme

Prepaid SolutionsLeading the conversion from cash Integrated Processing SThe globally integrated pro


103/105

Ajay Banga

President and Chief Executive OfficerSeptember 15, 2010

Closing Remarks


104/105

New BusineNew BusineGeographies & CustomersGeographies & CustomersCore BusinessCore Business

Capturing opportunities while addressing challenges

Striking the right global / local balance


105/105

Documents

2010 Master Card Investment Community Meeting 091510