2016 InvestmentCommunity MeetingSeptember 7, 2016
©2016 Mastercard. Proprietary.September 7, 20162 Mastercard Investment Community Meeting
WELCOME
Forward‐Looking Statements
Today’s presentation may contain, in addition to historical information, forward‐looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
These forward‐looking statements are based on our current assumptions, expectations and projections about future events which reflect the best judgment of management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by our comments today. You should review and consider the information contained in our filings with the SEC regarding these risks and uncertainties.
Mastercard disclaims any obligation to publicly update or revise any forward‐looking statements or information provided during today’s presentations.
Any non‐GAAP information contained in today’s presentations is reconciled to its GAAP equivalent in the appendices at the end of this presentation.
©2016 Mastercard. Proprietary.September 7, 20163
WELCOME
Agenda7:30 a.m. Registration 10:30 a.m. International Markets Panel
Ann Cairns, Javier Perez, Ari Sarker,Raghu Malhotra, Barbara Gasper
8:30 a.m. WelcomeBarbara Gasper
11:00 a.m. Financial PerspectiveMartina Hund‐Mejean
8:35 a.m. Our Strategy in ActionAjay Banga
11:15 a.m. Q&A
8:45 a.m. Growing the CoreMichael Miebach
12:25 a.m. Final ThoughtsAjay Banga
9:05 a.m. Enabling a Digital WorldGarry Lyons
12:30 – 1:30 p.m. Lunch Table Discussions with Management
9:25 a.m. Differentiating with Services PanelGary Flood, Kevin Stanton, Ajay Bhalla, Carlo Enrico, Barbara Gasper
1:00 – 1:30 p.m. APT Breakout SessionKevin Stanton, Anthony Bruce
9:55 a.m. North AmericaCraig Vosburg
1:30 – 2:00 p.m. Europe Breakout SessionJavier Perez
10:15 a.m. BREAK 12:30 – 3:00 p.m. Product Experiences
Mastercard Investment Community Meeting
©2016 Mastercard. Proprietary.September 7, 20164
WELCOME
Product Experiences
Mastercard Investment Community Meeting
Shaping the FuturePayment Through ChatPepper the Robot
Innovating with ScaleSafety NetSmart DataMastercard SendBiometric Identification
Differentiating with ServicesDriving Digital AcceptanceDecision IntelligencePowering Insights with APT360 Rewards and Offers
Enabling a Digital World2KuzeSmart CitiesMasterpass – Powering DigitalGroceries by Mastercard
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September 7, 20165
WELCOME
Lunch Table Discussions
Mastercard Investment Community Meeting
International MarketsAnn Cairns
Ling Hai
Digital Payments & LabsGarry Lyons
ServicesAjay Bhalla
Cathy McCaul
North AmericaCraig Vosburg
Core ProductsMichael Miebach
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International MarketsGilberto CaldartRaghu Malhotra
Ari Sarker
©2016 Mastercard. Proprietary.
WELCOME
Mastercard Management Speakers
Ajay BhallaPresident, Enterprise Security Solutions
Ann CairnsPresident, International Markets
Gary FloodPresident,Global Productsand Solutions
Barbara GasperExecutive Vice President,Investor Relations
MartinaHund‐MejeanChief Financial Officer
Ajay BangaPresident & CEO
September 7, 2016 Mastercard Investment Community Meeting6
Garry LyonsChief Innovation Officer
Carlo EnricoDivision President, Europe
Michael MiebachChief Product Officer
Javier PerezPresident, Mastercard Europe
Kevin StantonPresident, MastercardAdvisors
Craig VosburgPresident,North America
Raghu MalhotraPresident,Middle East & Africa
Ari SarkerCo‐President,Asia Pacific
Anthony BruceCEO, Applied Predictive Technologies
©2016 Mastercard. Proprietary.September 7, 20167 Mastercard Investment Community Meeting
WELCOME
Other Mastercard Management Attendees
Gilberto CaldartPresident,Latin Americaand Caribbean
Timothy MurphyGeneral Counsel and Chief Franchise Officer
Cathy McCaulPresident,Global Processing
Edward McLaughlinChief Information Officer
Ling HaiCo‐President,Asia Pacific
Rob ReegPresident, MastercardTechnologies
Raja RajamannarChief Marketing & Communications Officer
Michael FraccaroChief Human Resource Officer
Raj SeshadriPresident,U.S. Issuers
Warren KneeshawExecutive Vice President,Investor Relations
Our StrategyAjay Banga, President and Chief Executive Officer
September 7, 20162016 Investment Community Meeting
©2016 Mastercard. Proprietary.September 7, 20169
OUR STRATEGY
Creating Shareholder Value
$5.5
$6.7$7.4
$8.3
$9.4 $9.7
50%
54%
45%
50%
55%
60%
65%
70%
2010 2011 2012 2013 2014 20150.0
2.0
4.0
6.0
8.0
10.0
12.0CAGR%
12%
EPS* $1.41 $1.87 $2.20 $2.61 $3.10 $3.43 19%
* Amounts exclude special items; see Appendix A for non‐GAAP reconciliations of special items
MA Stock Performance vs PeersJan 1, 2010 – Aug 31, 2016
Source: Factset
Mastercard Investment Community Meeting
Revenues ($ Billions)
Operating Margin*
‐50%
0%
50%
100%
150%
200%
250%
300%
350%
Dec‐09
Mar‐10
Jun‐10
Sep‐10
Dec‐10
Mar‐11
Jun‐11
Sep‐11
Dec‐11
Mar‐12
Jun‐12
Sep‐12
Dec‐12
Mar‐13
Jun‐13
Sep‐13
Dec‐13
Mar‐14
Jun‐14
Sep‐14
Dec‐14
Mar‐15
Jun‐15
Sep‐15
Dec‐15
Mar‐16
Jun‐16
MA V S&P 500 S&P 500 Information Technology Index
©2016 Mastercard. Proprietary.September 7, 201610
OUR STRATEGY
Driving Profitable Growth
Enabled by Brand, Data, Technology and People
GROWCore Business
• Consumer Credit
• Debit
• Commercial
• Prepaid
• Physical‐Digital Convergence
DIVERSIFYCustomers & Geographies
• Merchants
• Governments
• Financial Inclusion
• New Markets
• Advisors
• Safety & Security
• Processing
• Loyalty & Rewards
BUILDNew Businesses
Mastercard Investment Community Meeting
©2016 Mastercard. Proprietary.September 7, 201611
OUR STRATEGY
Secular Growth Opportunity Remains High
Source: OECD definitions, BIS statistics, McKinsey global payment data, Euromonitor and Mastercard Advisors analysis
Mastercard Investment Community Meeting
65.1%
58.0%
96.8%
91.5%
85.9%83.7%
50%
60%
70%
80%
90%
100%
2006 2007 2008 2009 2010 2011 2012 2013 2014
Share of Cash Transactions – All Payment Categories
Developed Markets
Emerging Markets
All Markets
©2016 Mastercard. Proprietary.September 7, 201612
OUR STRATEGY
Expanding into New Payment Flows
Strength of Capabilities
Today FutureExpandingCapabilitiesConsumer
(C2M, C2G)
Person‐to‐Person(P2P)
Business(B2B)
Government(G2C, G2B, B2G)
42% Cash/Check58% Electronic
~50% ACH**
> 95% Cash/Check< 5% Electronic
20% Cash/Check80% Electronic
Share of Value*
Mastercard Investment Community Meeting
* Source: OECD definitions, BIS statistics, McKinsey global payment data, Euromonitor and Mastercard Advisors analysis** All payments in top 50 countries based on a proprietary study for Mastercard
©2016 Mastercard. Proprietary.September 7, 201613
OUR STRATEGY
Payments Industry Dynamics
Concerns aroundcybersecurity and privacy
Heightened regulatoryinterest and nationalism
Continuing movement towards electronic payments
Demand foradjacent services
Technologycontinues to evolve
Mastercard Investment Community Meeting
New entrants cominginto payments space
©2016 Mastercard. Proprietary.September 7, 201614
Our Strategy
Grow our core business faster than the market
Diversify with new customers and geographies
Build new high‐growth businesses to deliver competitive differentiation
Anticipate and manage competitor and regulatory risk
Deliver safe, simple and smart transactions across multiple network rails (Card & ACH)
Increase consumer and merchant affection for our brand
Retain and grow our world‐class talent
Mastercard Investment Community Meeting
Continuing toGrow the CoreMichael Miebach, Chief Product Officer
September 7, 20162016 Investment Community Meeting
©2016 Mastercard. Proprietary.16
CONTINUING TO GROW THE CORE
Our Strategy: Driving Enterprise Growth
• Delivering compelling payment products with value‐added services to win deals
• Driving brand and partner preference through consumer insights
• Capturing new revenue and payment flows
MasterCardGATEWAYPROCESSING
MasterCardENTERPRISESECURITY SOLUTIONS
MasterCardLOYALTY
Core Products
Strong progress to date and significant runway for continued growth
September 7, 2016 Mastercard Investment Community Meeting
Digital Payments & Labs
©2016 Mastercard. Proprietary.
1H 2016 GDV Growth
Market Share Trend
Consumer Credit +8% +
Consumer Debit +8% +++
Prepaid +22% +++
Commercial +11% +++
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CONTINUING TO GROW THE CORE
Delivering Strong Results
September 7, 2016 Mastercard Investment Community Meeting
©2016 Mastercard. Proprietary.18
CONTINUING TO GROW THE CORE
Winning Issuing Deals by Leveraging Products & ServicesAsia‐PacificLatin America
Caribbean Middle East
Africa
September 7, 2016 Mastercard Investment Community Meeting
NorthAmerica
Europe
©2016 Mastercard. Proprietary.19
CONTINUING TO GROW THE CORE
Driving Preference Through Consumer Insights
ConsumerSegmentation
Consumer ValuePropositions
Value‐AddedServices
ConsumerResearch / Trends
Time starvedAlways on
Zero Liability Automatic Billing Update
Alerts and Controls Concierge
Empty Nesters
Working Moms
MasterCardENTERPRISESECURITY SOLUTIONS
MasterCardLOYALTY
September 7, 2016 Mastercard Investment Community Meeting
©2016 Mastercard. Proprietary.20
CONTINUING TO GROW THE CORE
Delivering Compelling Consumer Credit Enhanced by Value‐Added ServicesOur Approach• Partner‐Driven• Digitally‐Enabled• Flexible / Alternative Ways to Pay• Consumer‐Focused
Value of Services:One‐stop shop• Loyalty – activation, usage, retention• Advisors – portfolio performance / optimization• Security Solutions – fraud prevention, approval rates
Buddy Bank(Italy)
MasterCardINSTALMENT
MasterCardCONTACTLESS
MasterCardBENEFITSOPTIMIZER
Core is Digital&
Digital is the Core
September 7, 2016 Mastercard Investment Community Meeting
©2016 Mastercard. Proprietary.21
CONTINUING TO GROW THE CORE
Continuing to Drive Double‐Digit Growth in Commercial
REPORTING & ANALYTICS
ACCOUNT MANAGEMENT
ENHANCED DATA
SELF‐SERVICE PORTALS
MERCHANT OFFERS
FILE DELIVERY & TRANSFER
Our Approach• Empower Small Business growth• Enable smarter travel payments • Streamline B2B payment processes
Value of Services:One‐stop shop• Enhanced data & reporting• Fraud and business control services• Corporate implementation services• Straight‐through processing
Barclaycard(UK)
Focused wellbeyond the plastic
EXPENSE REPORTING
Commercial Card
Capabilities
$
September 7, 2016 Mastercard Investment Community Meeting
©2016 Mastercard. Proprietary.September 7, 201622 Mastercard Investment Community Meeting
CONTINUING TO GROW THE CORE
Looking Ahead to New Payment Flows: ACH Opportunity
ACH represents~50%
of all payments in top 50 countries*
Access new payment flows, particularly in B2B & P2P
Expand basis of engagementwith customers and consumers
Accelerate cash displacement
Find new revenue streams
Play an expanded role inpayments ecosystems (e.g., the UK)
Participating in the Global Shift to Fast ACH: VocaLink acquisition
* Proprietary study for Mastercard
©2016 Mastercard. Proprietary.23
CONTINUING TO GROW THE CORE
Continued, Strong Momentum
Leveraging products and services to deliver distinctive payment value propositions
Driving consumer and partner preference through deep consumer insights
Displacing cash in all payment flows, winning share and increasing usage
September 7, 2016 Mastercard Investment Community Meeting
Enabling aDigital WorldGarry Lyons, Chief Innovation Officer
2016 Investment Community MeetingSeptember 7, 2016
©2016 Mastercard. Proprietary.September 7, 201625 Mastercard Investment Community Meeting
ENABLING A DIGITAL WORLD
The World is Changing
Industries being reinvented
Expectation of personalized and integrated digital experience
Barriers to entry are being lowered in every industry
Public companies need to continue to win today
while reinventing themselves for the future
Everyone and everythingis becoming connected
The emergence of business as a platform
Regulatory, security and privacy concerns
Democratization of electronic payments and technology
Urbanization and the desire for smarter cities
©2016 Mastercard. Proprietary.September 7, 201626 Mastercard Investment Community Meeting
ENABLING A DIGITAL WORLD
Winning in Digital is Complex
ENHANCINGthe payment experience
SIMPLIFYINGthe integration of oursolutions via APIs
PARTNERINGfor scale
ACQUIRINGnew businesses
DIGITIZINGmore forms of payment
COINNOVATINGwith customers
INVESTINGIn companies and talent
and much more …
SECURINGevery transaction
EXTENDINGbeyond payments
LOCALIZINGfor global relevance
MEASURINGto ensure effectiveness
DEFININGstandards for the digital age
EXPERIMENTINGwith new technologies
REIMAGININGthe purchase experience
©2016 Mastercard. Proprietary.Mastercard Investment Community MeetingSeptember 7, 201627
ENABLING A DIGITAL WORLD
ENHANCINGthe payment experience
80 MILLION Enabled Accountsby End of 2016
Supported by leading global financial institutions
Best‐in‐class consumer experience in‐browser, in‐app and in‐store across all
devices
Faster, simpler, more secure checkout for
merchants and consumers
Easy to integrate via APIs
Live in 33 countries
©2016 Mastercard. Proprietary.
ENABLING A DIGITAL WORLD
ENABLINGbetter payment experiences: in‐store, in‐app and online
Fastercheckout online
Book travel and buy from messaging app
Smartercheckout in‐store
Innovativein‐store interactions
Buy from connected devices: fridge, car, etc.
Pay securelywith wearables
Dine and pay without waiting
Cashlessunattended retail
September 7, 201628 Mastercard Investment Community Meeting
©2016 Mastercard. Proprietary.
Issuing Partnersover 550 worldwide
11 countries live, 28 countries enabled
Industry standard
Powering digital wallets
Integrated within Masterpass
September 7, 201629 Mastercard Investment Community Meeting
ENABLING A DIGITAL WORLD
SECURINGevery transaction
MDES
©2016 Mastercard. Proprietary.September 7, 201630 Mastercard Investment Community Meeting
ENABLING A DIGITAL WORLD
DIGITIZINGmore forms of payment
From every funding source ... … to every destination, for any need
Humanitarian Aid
Remittances
On‐Demand Payroll
Insurance Disbursements
Person‐to‐Person
MA Cards
Cash
Mobile Wallets
Non‐MA Cards
Bank Accounts
©2016 Mastercard. Proprietary.
Mastercard Developers (developer.mastercard.com) –gateway to Mastercard services
More than 25 services available for banks, processors, merchants and startups across payments, data and security
Extremely easy to use – providing APIs, SDKs, developer tools and sample code across 6 programming languages
September 7, 201631 Mastercard Investment Community Meeting
ENABLING A DIGITAL WORLD
SIMPLIFYINGthe integration of our solutions
©2016 Mastercard. Proprietary.
MATCHManage risk associated with onboarding new merchants
September 7, 201632 Mastercard Investment Community Meeting
ENABLING A DIGITAL WORLD
Some of Our API Users
Masterpass Merchant APISimplify the online checkout
experience
MDESTo tokenize card numbers
for their wallets
Masterpass Issuer APIIncorporate checkout capability
in their mobile application
Payment GatewayAccept payments and reduce
fraud at online checkout
Simplify CommerceIntegrate payments acceptance
into their Dynamics platform
©2016 Mastercard. Proprietary.September 7, 201633 Mastercard Investment Community Meeting
ENABLING A DIGITAL WORLD
EXPERIMENTINGwith new technologies
IOT/Wearables
Digital Currencies andthe Blockchain
AI & Machine Learning
Biometrics
Chatbots
Augmented Reality /Virtual Reality
Digital Personal Assistants
… and much, much more
Robotics
©2016 Mastercard. Proprietary.September 7, 201634 Mastercard Investment Community Meeting
ENABLING A DIGITAL WORLD
Simply put, we are …Laying down the foundations for a digital future by:
• Upgrading the payment ecosystem• Partnering to deliver the best digital experience everywhere at scale• Relentlessly improving the security of transactions• Supporting non‐traditional payment flows• Making it easier for others to integrate our services in their solutions
Enabling experimentation and looking beyond the payment
Facilitating partnerships with large corporates and startups
Innovating faster and augmenting our customers’ innovation capabilities
Differentiating with Services Panel
September 7, 20162016 Investment Community Meeting
Gary Flood Kevin Stanton Ajay Bhalla Carlo Enrico
Barbara Gasper, Moderator
©2016 Mastercard. Proprietary.September 7, 201636 Mastercard Investment Community Meeting
DIFFERENTIATING WITH SERVICES PANEL
Why Services?
Services tightly connected to and drive performance of our core business
Services provide competitive differentiation and help win deals
Profitability differs by category and improves with scale
North AmericaCraig Vosburg, President ‐ North America
2016 Investment Community MeetingSeptember 7, 2016
©2016 Mastercard. Proprietary.
Strong Performance• Double‐digit revenue growth• Diversifying customers and products• Record of strong innovation
Future Opportunity• PCE growth• Secular shift, accelerated by digital• Untapped payment flows
35% of GDV
40% + of Net Revenue
2 of Mastercard’s Top 5 Revenue Markets
September 7, 201638 Mastercard Investment Community Meeting
NORTH AMERICA
Large, Healthy Market withPlenty of Opportunity
©2016 Mastercard. Proprietary.
Expanding product distribution
Growing acceptance & preferenceat the point‐of‐sale
Investing in digital
Scaling services Extending the reach of our network to capture new payment flows
September 7, 201639 Mastercard Investment Community Meeting
NORTH AMERICA
Five Pillars to Drive Growth
GROWDIVERSIFY
BUILD
©2016 Mastercard. Proprietary.
NORTH AMERICA
Expanding Product Distribution
September 7, 2016 Mastercard Investment Community Meeting40
©2016 Mastercard. Proprietary.
NORTH AMERICA
Growing Acceptance and Preferenceat the Point‐of‐Sale
• Opening new spend categories• Accelerating EMV and Contactless
• Scaling Masterpass acceptance• Enhancing digital security
• Addressing merchant needs with more efficient payments, as well as new products and services
PhysicalAcceptance
DigitalAcceptance
MerchantNeeds
September 7, 2016 Mastercard Investment Community Meeting41
©2016 Mastercard. Proprietary.
NORTH AMERICA
Investing in Digital
September 7, 2016 Mastercard Investment Community Meeting42
Mastercard Digital Enablement Service
MDES
©2016 Mastercard. Proprietary.
©2016 Mastercard. Proprietary.
NORTH AMERICA
Scaling Services
Services are a powerful differentiator and an attractive source of revenue
Analytics
Processing Loyalty
Safety &Security
Consulting
September 7, 2016 Mastercard Investment Community Meeting43
©2016 Mastercard. Proprietary.
U.S. Payment Flows
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NORTH AMERICA
Extending the Reach of Our Network toCapture New Payment Flows
Carded
Other Electronic
Cash & Check
Exciting opportunitiesto bring greater efficiency to payments
Consumer (C2M)
Person‐to Person (P2P)
Business (B2B)
Gov’t / Business (B2C)
September 7, 2016 Mastercard Investment Community Meeting
©2016 Mastercard. Proprietary.
Differentiatedoffering
NORTH AMERICA
Looking Ahead …
Strong customer partnerships
Momentumacross products
New opportunities to displace cash and check
Significantmarket opportunity
September 7, 2016 Mastercard Investment Community Meeting45
International MarketsPanel
September 7, 20162016 Investment Community Meeting
Ann Cairns Javier Perez Ari Sarker Raghu Malhotra
Moderator: Barbara Gasper
©2016 Mastercard. Proprietary.September 7, 201647 Mastercard Investment Community Meeting
INTERNATIONAL MARKETS PANEL
Common Global Themes
Close engagement with governments and regulators andaddressing nationalism
Opportunities turbocharged by digital technology andfocus on financial inclusion
Financial inclusion helps build out electronic paymentsinfrastructure in countries
Secular trend and PCE continue to drive growth opportunities
Financial PerspectiveMartina Hund‐Mejean, Chief Financial Officer
September 7, 20162016 Investment Community Meeting
©2016 Mastercard. Proprietary.
FINANCIAL PERSPECTIVE
2016 Business Drivers
Processed
Q2 QTD Thru Aug
12% 11%
9% 7%
14% 14%
14% 18%
10% 12%
As‐Reported
Growth (local) Q1 Q2
Worldwide GDV 13% 11%
U.S. GDV 10% 8%
Rest‐of‐World GDV 15% 13%
Processed Transactions 14% 14%
Cross‐Border Volume 12% 10%
September 7, 2016 Mastercard Investment Community Meeting49
©2016 Mastercard. Proprietary.
Positive operating leverage
FINANCIAL PERSPECTIVE
2016 Financial Outlook
Low double‐digit growth on a currency‐neutral basisOperating Expense*
Full‐year rate of 28‐29%Tax Rate
2 ppt net impactFX Impact
Low double‐digit growth on a currency‐neutral basisNet Revenue
September 7, 2016 Mastercard Investment Community Meeting50
* Amounts exclude special items; see Appendix B for reconciliation of non‐GAAP measures
©2016 Mastercard. Proprietary.
FINANCIAL PERSPECTIVE
Capital Planning Priorities
Investments in organic opportunities and M&ALong‐TermBusiness Growth
Continue to return excess cash with biastowards share repurchases
Return Excess Cashto Shareholders
Gradual and disciplined migration to more normalizedmix of debt and equity over timeCapital Structure
Preserve strong balance sheet, liquidity and credit ratingsStrong Balance Sheet
September 7, 2016 Mastercard Investment Community Meeting51
©2016 Mastercard. Proprietary.September 7, 201652
FINANCIAL PERSPECTIVE
Return of CapitalHistorical Perspective
$2.4 $3.4 $3.5$1.8 $2.1
$0.3
$0.5 $0.7
$0.4$0.6
$2.7
$3.9$4.2
$2.2$2.7
2013 2014 2015 1H 2016 ThroughAugust 2016
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$ in billions
Share RepurchaseDividends
Mastercard Investment Community Meeting
©2016 Mastercard. Proprietary.September 7, 201653 Mastercard Investment Community Meeting
FINANCIAL PERSPECTIVE
Selective M&A Investments Add Value
• Data Analytics
• Safety & Security
• Processing
• Loyalty
• Technology
AddressStrategic Areas
• Products / Services
• Technology
• Distribution
• Geographic Reach
ProvideCritical Capabilities
• Financially Attractive
• Acceptable Risk Profile
• Manageable Integration
• Management Strength, Talent, Culture
Selection Criteria
©2016 Mastercard. Proprietary.September 7, 201654 Mastercard Investment Community Meeting
FINANCIAL PERSPECTIVE
Long‐Term Revenue Growth
Global PCE
5%Secular Growth
4 ‐ 6%
IndustryPurchase Volume
Adj. forAvailable Market
(1%)
MA Market Opportunity
9 ‐ 11%8 ‐ 10%
Revenue
Low ‐MidTeens
Volume
Core ProductsServicesMix
PricingShare
©2016 Mastercard. Proprietary.
Core~75%
Services~25%
% of 2015 Revenue
Margin Level
Processing
Loyalty
Advisors
Safety & Security
Margin Expansion with Scale
Mastercard Investment Community Meeting
FINANCIAL PERSPECTIVE
Driving Growth Beyond the Core
September 7, 201655
Revenue CAGR* (2013 – 2015)Core ~10% Services ~24%
18 ppt ex‐acquisitions6 ppt acquisitions
* On a currency‐neutral basis; see Appendix C for reconciliation of non‐GAAP measures
©2016 Mastercard. Proprietary.
FINANCIAL PERSPECTIVE
Longer‐Term2016 – 2018 Performance Objectives*
* On a currency‐neutral basis and excluding VocaLink & future acquisitions
** See Appendix D for pro forma EPS
Minimum 50% annuallyOperating Margin %
Mid‐teensEPS CAGR % **
Low double‐digitsNet Revenue CAGR %
September 7, 2016 Mastercard Investment Community Meeting56
Question and Answer SessionSeptember 7, 20162016 Investment Community Meeting
Final ThoughtsAjay Banga, President and Chief Executive Officer
September 7, 20162016 Investment Community Meeting
©2016 Mastercard. Proprietary.September 7, 201659
Some Final Thoughts
Secular growth opportunity will continue for years to come
Movement to digital payments creates new market opportunities and will help drive our growth
Industry dynamics include new entrants and evolving role of governments
Diversifying our business to provide differentiated capabilities and new revenue streams through various services
Operating fundamentals remain strong
Product ExperiencesSeptember 7, 20162016 Investment Community Meeting
©2016 Mastercard. Proprietary.
Safety NetSafety NetWhen Safety Net was introduced to investors in 2014, Mastercard was just kicking off global rollout efforts. Today, 90% of issuers around the world are enabled for the service and being protected by the network level monitoring that Safety Net brings. Safety Net has helped us establish a credible second line of defense for our banking partners, while also increasing credibility with regulators around the world and driving Mastercard business success.
Smart DataSmart DataManaging expenses is a universal activity. It’s equally challenging if you’re a small business or a global company. Mastercard has the tools to help companies do this well. With our global, proprietary Smart Data platform, Mastercard supports over 200 issuing banks and more than 200,000 companies across 130 countries. Since we first introduced this solution more than two decades ago, our customers have relied on us to provide them with streamlined card controls and expense management tools, combined with global data and analytics.
Mastercard SendMastercard SendIn May 2015, we launched Mastercard Send, a first‐of‐its‐kind service that our customers can use to facilitate the delivery of funds quickly, securely and conveniently to consumers. In the U.S., our customers can reach virtually all U.S. debit card accounts and send and receive funds typically within seconds. Since its launch, Mastercard Send has been gaining traction and our volume has grown more than 400%. We have secured key partnerships, as well as continue to increase our customer base and scale by serving organizations in multiple verticals within the disbursements, P2P and remittances areas.
Biometric IdentificationBiometric IdentificationMastercard is committed to replacing passwords and continues to be one of the leaders in biometric adoption in the payments space. With the previously introduced Identity Check now in successful commercial trials, we are continuing to innovate with new technologies such as eye verification and biometric cards. We believe, that in the near future, the success of payments will involve treating the digital consumer as a human, not a memorized password, an account number or a phone. Biometrics is a critical element in helping us lead the way to make payments safer and more simple.
September 7, 201661 Mastercard Investment Community Meeting
PRODUCT EXPERIENCES
Innovating with ScaleWe know that our customers and partners look to us to develop solutions which add value to their business. Building and launching products using a disciplined approach, while quickly scaling them around world into new markets and with new customers has helped drive our mutual success. Many of the products and solutions we’ve showcased at ICM since we first introduced them have been very successful in the marketplace and have translated into differentiation, as well as incremental revenue, for Mastercard.
©2016 Mastercard. Proprietary.
Driving Digital AcceptanceDriving Digital AcceptanceMastercard Payment Gateway Services was formed by integrating our acquired assets, DataCash & TNS Payment Gateway, with our own technology to create a unique digital gateway solution that enables us to touch and influence more digital transactions and payment experiences. Our tools enable acquirers and partners to seamlessly provide the latest digital payment acceptance methods, including Masterpass, as well as other value‐added capabilities to their merchants. As a result, thousands of merchants can provide their customers with a safe, simple and smart payment experience across all digital channels.
Decision IntelligenceDecision IntelligenceMastercard Decision Intelligence pioneers a new approach in authorization decision‐making, shifting from risk‐based decisions to those that evaluate both the risky and positive aspects of a transaction. It combines technology, data and information from the Mastercard network to create a single transaction score, delivered in real‐time, which helps issuers fine‐tune their strategies to approve more genuine transactions, without increasing risk, thereby driving more revenue for themselves and for merchants.
Powering Insightswith APTPowering Insightswith APTMastercard has been focused on building competitive advantage through innovation and services, and APT is a key component of this strategy. Last year we introduced APT and their proprietary “Test & Learn” analytics platform. This year we would like to highlight how anonymized and aggregated Mastercarddata has been integrated into the platform. The new offering, APT Engage, is geared towards driving value for merchants and issuers, while increasing Mastercard transaction volume.
360° Rewardsand Offers360° Rewardsand OffersBy integrating and scaling our acquisitions of Pinpoint and Truaxis, the Mastercard Loyalty platform is now able to power a breadth of solutions that gives issuers and merchants across the globe the ability to design loyalty programs to meet their exact needs. Whether it is merchant‐funded or issuer‐funded, cash‐back or points, domestic or cross‐border Mastercard is uniquely positioned to deliver a rich, digital user experience which ultimately leads to enhanced engagement and preference for Mastercard.
September 7, 201662 Mastercard Investment Community Meeting
PRODUCT EXPERIENCES
Differentiating with ServicesWe’ve been successful at growing our business through organic investments. However, we’ve also been expanding by building new, high‐growth scalable services through in‐house development and acquisitions to further grow our core business and extend our presence across the payments value chain. We started getting into services more than two decades ago with Advisors and have since expanded into other areas such as Processing, Safety and Security, Data Analytics and Loyalty, all ofwhich have helped us to differentiate ourselves from the competition and win new business.
©2016 Mastercard. Proprietary.
Smart CitiesSmart CitiesWe expect Cities to spend $100B by 2018 on services, data/analytics and personalization – all areas that we can address through our capabilities. Mastercard is partnering to build more efficient cities that enhance the consumer experience and support urban development. Reducing cash usage in habit‐forming daily spend categories, such as transit, helps us to drive the secular shift from cash to electronic payment. By integrating our technology, data and solutions, such as Masterpass, into smart city services, we are changing how people access public transport by making the process simpler, quicker and more convenient.
2Kuze2Kuze2Kuze is a platform that helps small farmers grow their business through a mobile marketplace. It connects farmers, agents, large‐scale buyers and banking / micro‐finance institutions to provide mobile tools that enable transparent, cashless payments. The solution is designed to help farmers plan well for the future, manage risks better and engage the financial ecosystem more efficiently. 2Kuze has been actively developed as part of Mastercard Labs for Financial Inclusion, which was established in 2015 with support from the Bill and Melinda Gates Foundation, to promote financial literacy and inclusion.
Masterpass:Powering DigitalMasterpass:Powering DigitalMasterpass is delivering on our digital strategy by enabling consumers to rely on their own trusted bank for fast and simple digital payment solutions across all devices and channels. It is the only payment service that can be customized by issuing partners for use by consumers anywhere they want to shop – in‐store, online and in‐app – using their smartphone, tablet or PC. Now live, the addition of NFC contactless capability to the Masterpass service enables consumers to use Masterpass in‐store at more than 6 million merchant locations in 77 countries where Mastercard contactless payments are already accepted.
Groceries by MastercardGroceries by MastercardGroceries by Mastercard allows consumers to order food/items directly from the Samsung Family Hub refrigerator and is the first grocery shopping application that is being delivered through a connected fridge. Fridge owners will be able to move back and forth between Fresh Direct and ShopRite “grocery aisles” to shop for their favorite brands and pay via Masterpass, a simple, single‐checkout experience that accepts all credit and debits cards from U.S.‐based financial institutions. The Samsung refrigerator and companion app enable seamless integration to allow you add items to your shopping list, even when you’re on the go.
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PRODUCT EXPERIENCES
Enabling a Digital WorldThe world is becoming more connected, technology is evolving at an incredible pace, industries are being reinvented and consumers have heightened expectations of what technology can do for them. We are invested in digital and working to enhance the consumer payment experience, making businesses and governments more efficient and securing all transactions, whether they took place in‐store, in‐app or online, as well as across all devices.
©2016 Mastercard. Proprietary.
Pepper the RobotPepper the RobotMastercard unveiled the first commerce application for SoftBank Robotics humanoid robot, Pepper. Powered by Masterpass, the Pepper application is designed to help merchants make in‐store experiences more engaging for guests, while driving real business value. A guest can simply greet Pepper and then pair their Masterpass account with just a tap on a Pepper icon in their wallet app. After pairing, Pepper assists guests with taking orders, providing recommendations and offers, sharing product information and enabling checkout with Masterpass.
Payment Through ChatPayment Through ChatPayment Through Chat shows how Masterpass enables simple and secure digital payments through popular messaging channels like Facebook Messenger. We are partnering with JetBlue on a concept to demonstrate how commerce can now be delivered through a messaging app using a chatbotto simulate human interaction, allowing consumers to transact with merchants without ever having to leave their favorite messaging app.
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Shaping the FutureIn an increasingly digital world, the way consumers make payments today will be very different than they do tomorrow. We’re focused on delivering value beyond the payment and providing solutions by experimenting with new technologies. By partnering with those who share our vision, we can create fast and secure digital payments to enable unique and highly‐personalized, customer experiences which will change the way consumers shop in the future.
AppendicesSeptember 7, 20162016 Investment Community Meeting
©2016 Mastercard. Proprietary.September 7, 201666 Mastercard Investment Community Meeting
APPENDIX A
Non‐GAAP Reconciliation($ in millions, except per share data)
1 Excludes the euro and Brazilian real translation for the 2010 results at 2015 exchange rates2 Represents the impact of U.S. Merchant Litigation Settlement (2011: $770 million ($495 million after‐tax or $0.39 per diluted share); 2012: $20 million ($13 million after‐tax or $0.01 per diluted share); 2013: $95 million ($61 million after‐tax or $0.05 per diluted share); 2015: the effect of termination of the U.S. employee pension plan of $79 million ($50 million after‐tax or $0.04 per diluted share) and the U.K. Merchant Litigation Settlement of $61 million ($44 million after‐tax or $0.04 per diluted share). See Form 10‐K SEC filings for the respective year for a further explanation of each of these items
3 Adjusted Operating Margin reflects the impact of excluding special items
2010 2011 2012 2013 2014 2015 CAGRFX‐Adjusted
CAGR 1
Net Revenue 5,539$ 6,714$ 7,391$ 8,312$ 9,441$ 9,667$ 12% 13%
Operating Income ‐ As Reported 2,752$ 2,713$ 3,937$ 4,503$ 5,106$ 5,078$ 13%Special Items 2 ‐ 770 20 95 ‐ 140 Adjusted Operating Income 2,752$ 3,483$ 3,957$ 4,598$ 5,106$ 5,218$ 14% 15%
Operating Margin ‐ As Reported 49.7% 40.4% 53.3% 54.2% 54.1% 52.5%Adjusted Operating Margin 3 49.7% 51.9% 53.5% 55.3% 54.1% 54.0%
Earnings Per Share ‐ As Reported 1.41$ 1.48$ 2.19$ 2.56$ 3.10$ 3.35$ 19%Special Items 2 ‐ 0.39 0.01 0.05 ‐ 0.08 Adjusted Earnings Per Share 1.41$ 1.87$ 2.20$ 2.61$ 3.10$ 3.43$ 19% 21%
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APPENDIX B
2016 vs 2015
Revenue Operating Expenses
Non‐GAAP Currency‐Neutral Forecast Growth Low double‐digit Low double‐digit
Special Items 1 ‐ (1%)
FX 2 (2%) (2%)
As‐Reported Forecast Growth Low double‐digit High single‐digit
Non‐GAAP Reconciliation2016 Full‐Year Financial Outlook
1 Impact of U.K. merchant litigation provisions (2016: $107 million; 2015: $61 million) and U.S. employee pension plan termination in 2015 of $79 million2 Impact of foreign currency is calculated by remeasuring the prior period’s results using the current period’s exchange rates for both the translational and transactional impacts
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APPENDIX C
2013‐2015 CAGR
Core Revenue Services Revenue
Non‐GAAP Currency‐Neutral CAGR 10% 24%
FX 1 4% 2%
As‐Reported CAGR 6% 22%
Non‐GAAP Reconciliation2013‐2015 Revenue CAGR
1 Represents the impact for transactional and translational impact of foreign currency. Translational impacts are calculated by remeasuring the 2012 results using the 2015 exchange rates. Transactional impacts are estimated by remeasuring a proportional amount of the 2015 exposures at 2012 exchange rates
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©2016 Mastercard. Proprietary.
2015 Diluted Earnings Per Share GAAP $3.35
Significant Tax Items2 (0.31)
U.S. Employee Pension Plan Settlement Charge3 0.04
Provision for Litigation Settlement4 0.04
2015 Diluted Earnings Per Share Non-GAAP $3.12
1 Proforma 2015 EPS utilized to measure 3‐year EPS target performance (2016‐2018)2 Represents effect of discrete tax benefits and the tax impact of non‐recurring repatriation benefits3 Represents effect of the termination of the U.S. employee pension plan4 Represents effect of the U.K. Merchant Litigation Settlement
Note: Figures may not sum due to rounding
APPENDIX D
FY2015 Pro Forma EPS1
69 September 7, 2016 Mastercard Investment Community Meeting