Mastercard Incorporated · NYSE:MA
Mastercard — Investor Day (May 2007)
102 slides from Mastercard's investor day presentation, May 31, 2007
Slide 1: Investment Community Meeting
May 31, 2007 Exhibit 99.1 Investment Community Meeting
Slide 2: Forward-Looking Statements
2 Today’s presentations 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 w
Slide 3: MasterCard Worldwide
MasterCard Worldwide
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Slide 6: Strategic Update
Bob Selander President and Chief Executive Officer May 31, 2007 Strategic Update
Slide 7: The Opportunity
2 Grow business with high-potential customers Leverage scalable, global processing platform Expand consumer usage and merchant acceptance Further penetrate fast growing geographic markets The Opportunity Grow business with high-potential customers Leverage scalable, global processing platform Expand
Slide 8: Our Customer-Focused Strategy
MasterCard Worldwide e OUR CUSTOMER-FOCUSED STRATEGY
Slide 9: Delivering Customized Solutions
4 • Dedicated account teams • Advanced Customer Relationship Management • Integrated customer planning • Intelligence/market research • MasterCard Advisors Result: We’re winning new business. Delivering Customized Solutions Approach: Deliver customized solutions for target financial institutions by
Slide 10: Strengthening Merchant Relationships
5 • Dedicated acceptance teams • Merchant Advisory Group meetings • Rules/Interchange transparency • MasterCard merchant connect • Intelligence/data Result: New acceptance channels and numerous co-brand wins. Strengthening Merchant Relationships Approach: Merchants are a key constituent in the payme
Slide 11: Managing Our Reputation
6 • Independent governance • Financial transparency • Public policy group • New Payment Systems Integrity group • Enterprise risk management Result: Building trust with key constituents. Managing Our Reputation Approach: We’re proactively managing our reputation and operating environment.
Slide 12: Key Strengths/Differentiators
7 • Unified global organization • World-renowned brands • Enhanced payment solutions • Advanced processing platform • Strong relationships • Knowledge leadership • Strong management/industry expertise Key Strengths/Differentiators
Slide 13: The Heart of Commerce
MasterCard Worldwide The Heart of Commerce”
Slide 14: MasterCard Worldwide
MasterCard Worldwide
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Slide 17: Delivering on our Customer-Focused Strategy
Alan Heuer Chief Operating Officer May 31, 2007 Delivering on our Customer-Focused Strategy
Slide 18: Strategy Development
2 Market trends Competitive analysis Strategic options • Consolidation & globalization • Increasing regulatory & legal risks • Shift to electronic forms of payment • Changing role/power of merchants • Traditional • Non-traditional • Emerging Players • Historical functions • Price leader • Product in
Slide 19: Affirmation of Customer Focus
3 Build competitive advantage around the way we work with customers and the value we bring them. Affirmation of Customer Focus
Slide 20: What Customer Relationship Management (CRM) is to MasterCard
4 What Customer Relationship Management (CRM) is to MasterCard Competitive Intelligence Cross Functional Alignment CRM Best Practice Information Sales Management Discipline Integrated Planning Customer Value
Slide 21: Customized Solutions
5 Customized Solutions Advisors Marketing Processing Product Technology Customer Value
Slide 22: MasterCard
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Slide 23: It's Not Easy
7 People Capabilities Process Critical Success Factors Alignment It’s Not Easy
Slide 24: Strategic Relationship Scale
8 Strategic Relationship Scale Vendor Business Enhancer Value Driver Business Partner
Slide 25: We're Seeing Results
9 • Relationships are stronger • Mutual commitments have been established • Incremental customer business opportunities have been created We’re Seeing Results
Slide 26: The Heart of Commerce
MasterCard Worldwide The Heart of Commerce”
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Slide 30: The SEPA Opportunity
Javier Perez President, MasterCard Europe May 31, 2007 The SEPA Opportunity
Slide 31: European Card Payments Industry Still Fragmented
2 International Brands with consistent cardholder experience Domestic use only Debit European Card Payments Industry Still Fragmented
Slide 32: Objectives of SEPA
3 • SEPA will . . . – Provide cardholders with a payment card they can use across Europe with the same convenience – Increase competition and transparency in the payments industry – Lower barriers to entry for acquirers, issuers and equipment providers – Benefit European society by reducing the over
Slide 33: SEPA Cards Framework (SCF) Timeline
4 Final approval by EPC of SEPA Cards Framework National and international schemes presented finalized SEPA cards framework migration plans by end 1Q 2006 SEPA compliant products available by banks/providers to consumers and merchants No non-SEPA Cards Framework compliant schemes in operation SEPA C
Slide 34: SEPA Options for Banks
5 • Migration to existing international schemes • Extend national schemes pan-Europe • “Co-brand” international and domestic scheme Three different routes (or a combination) to achieve full SCF/SEPA compliance : + or or ? SEPA Options for Banks
Slide 35: Retail Banking Trends in Europe
6 • Consolidation / M&A • Operations in multiple markets – pan-Europe and globally • Developing Global Brand Recognition • Direct Banking leveraging new channels • Consolidation of technology platforms across countries • Europe Region centralization business management Moving Towards SEPA despite Re
Slide 36: Many Have Already Recognized the Benefits
7 1995 • UK – Access to MasterCard 1998 • Austria – Bankomat to Maestro • Sweden – Bancomat to Maestro and MasterCard 2002 • UK – Switch to Maestro 2005 • Switzerland ec Karte to Maestro 2006 • Sparda German electronic cash to Maestro Many Have Already Recognized the Benefits
Slide 37: MasterCard: A Solid Choice as a SEPA Solution
8 • Majority of debit cards in Europe are already Maestro branded, limiting investment required to migrate • Maestro is a proven, pan-SEPA product with broad- based issuance and acceptance • Tried and tested product in market for over 14 years MasterCard: A Solid Choice as a SEPA Solution
Slide 38: The Heart of Commerce
MasterCard Worldwide The Heart of Commerce”
Slide 39: MasterCard Worldwide
MasterCard Worldwide
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Slide 42: Global Debit Momentum
Rick Lyons Global Debit and Prepaid May 31, 2007 Global Debit Momentum
Slide 43: Agenda
2 • U.S. Debit Growth • The Debit Value Proposition • Global Focus Agenda
Slide 44: U.S. Debit Building Momentum
3 103 million 43 million Debit MasterCard cards Brands Switch of First Resort Switch of Last Resort PIN debit Current 2002 Bank of the West/First Hawaiian/CFB Eastern Bank First Midwest/MB Financial/Citadel FCU Washington Mutual Associated Bank BankAtlantic Chittenden U.S. Debit Building Momentum Bu
Slide 45: MasterCard Debit Programs Q107 v. Q106 % Growth
4 28.3 19.8 Cards 30.8 32.0 Cash Volume 40.5 48.2 Purchase Transactions 36.3 45.5 Purchase Volume Worldwide U.S. Double digit growth for 13 consecutive quarters MasterCard Debit Programs Q107 v. Q106 — % Growth
Slide 46: Continued Growth in the U.S.
5 • Grow the business we have • Gain brand preference with current customers • Move debit business to MasterCard Source: First Annapolis Consulting analysis and published sources including CIA World Factbook, Geohive global statistics and The Nilson Report Continued Growth in the U.S. • Population:
Slide 47: Debit Value Proposition
6 • Product Capability and Development • Risk Management • Processing • Economics • Acceptance • Brand Debit Value Proposition
Slide 48: Latin America & Caribbean
7 • Highly varied economies • Industry transactions growing at 30+% annually • Spotlight on Brazil – Unsurpassed acceptance: 100% of municipalities with electricity, phone service and cards Brazil Venezuela Argentina Mexico Source: First Annapolis Consulting analysis and published sources including
Slide 49: Europe
8 • Emerging Markets – Cash is main payment product – Continued economic expansion • Mature Markets – Highly confident use of cards – Switch to Maestro – Launching Debit MasterCard Source: First Annapolis Consulting analysis and published sources including World Bank, CIA World Factbook, Geohive glo
Slide 50: Asia Pacific and South Asia/Middle East and Africa
9 • Market of extremes • Sizable populations, significant cash economies • Segmentation opportunities China Australia India Indonesia Taiwan Source: First Annapolis Consulting analysis and published sources including CIA World Factbook, Geohive global statistics and The Nilson Report Asia Pacific an
Slide 51: Summary
10 • Continue U.S. momentum • Evolve debit value proposition • Global capabilities, local execution Two Global Debit Solutions Summary
Slide 52: The Heart of Commerce
MasterCard Worldwide The Heart of Commerce”
Slide 53: Successful Debit Partnerships
Bill Mathis U.S. Business Development May 31, 2007 Successful Debit Partnerships
Slide 54: Transforming our debit value proposition into real business
Transforming our debit value proposition into real business… Conversion Portfolio Optimization
Slide 55: Associated Conversion: Challenge
Challenge Associated Bank tapped MasterCard to help derive greater value from its debit card portfolio. Key Priorities • A closer relationship with debit card partners • Differentiating products • Customer satisfaction and retention • Card portfolio growth Associated Conversion Solution Results • A
Slide 56: Associated Conversion: Solution
Solution custom conversion process team of experts jointly created a conversion and communications plan a unique product Associated Conversion Challenge Results Implemented a Assembled a MasterCard and Associated Designed
Slide 57: Associated Conversion: Results
Results • Converted entire portfolio within 6 months • Conversion enabled Associated to achieve brand differentiation within their market • Our relationship with Associated continues to expand • Exceeded all acquisition, activation and usage targets A flawless execution with significant cardholder s
Slide 58: BECU Portfolio Optimization: Challenge
Challenge Key Priorities • Deeper connection with its cardholders • Simplify processes, greater control • Continued flexibility, convenience and security • Differentiation through targeted programs and offers BECU asked MasterCard to help optimize its debit card portfolio. BECU Portfolio Optimizatio
Slide 59: BECU Portfolio Optimization: Solution
Solution CRM, Debit Product Sales, Customer Marketing MasterCard Debit Brand Exclusivity MasterCard Advisors BECU Portfolio Optimization Challenge Results Dedicated support Data analysis and intelligence Consolidated network participation
Slide 60: MasterCard Worldwide
MasterCard Worldwide
Slide 61: The Heart of Commerce
MasterCard Worldwide The Heart of Commerce”
Slide 62: MasterCard Worldwide
MasterCard Worldwide
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Slide 65: Merchant Initiatives
Gareth Forsey U.S. Commerce Development May 31, 2007 Merchant Initiatives
Slide 66: Merchant Initiatives
2 • Protect & Grow Core Acceptance • Enhance Merchant Relationships • Expand Presence in Rapidly Growing Categories • Extend Merchant Value Proposition Merchant Initiatives
Slide 67: Protect & Grow Core Acceptance
3 • “A seat at the table” – Core component of Customer Focused Strategy – Merchant Advisory Groups – POI Advisory Group (Issuers, Acquirers, Merchants) • Transparency • End-to-End Product Development • Operational Excellence • Security & Risk Protect & Grow Core Acceptance Underpin the Foundations
Slide 68: Enhance Merchant Relationships
4 • Sales Process Discipline – Adoption of tailored CRM approach • “Feet on the Street” – Moving resources out to the merchants/acquirers – Regional acceptance teams – Global co-ordination, local execution • Co-brand development & optimization • Leverage full suite of MasterCard assets – Marketing &
Slide 69: Expand Presence in Rapidly Growing Categories
5 • Drive increased acceptance into new categories – Healthcare – Bill Payment – Cable & Telecom – Insurance – Utilities – Rent/Property Management • Leverage cross border flows to drive preference and spend Expand Presence in Rapidly Growing Categories
Slide 70: Extend Merchant Value Proposition
6 • Merchant Preference Partnerships • New Product Development • Decision Analytics – Commerce Intelligence TM – Commerce Coalition • PayPass • Priceless.com TM TM Extend Merchant Value Proposition Enhance Revenue Streams
Slide 71: MasterCard Worldwide
MasterCard Worldwide
Slide 72: The Commerce Coalition Program
8 • New consumers • Increased revenue • Increased transaction size • Preference and usage • Loyalty Spend Targeted Opportunity Best Customers Low Opportunity Prospects High Opportunity Prospects Do Nothing Attract Reward Convert The Commerce Coalition Program Integrated Campaign Management TM
Slide 73: PayPass: Driving Speed and Convenience
9 “For a large pharmacy chain such as CVS…the potential payoff is a 20% to 30% up tick on purchases…” “It’s an issue of speed and convenience. The contactless card can cut 30 seconds to 45 seconds off a person’s wait in line, depending on the circumstances.” Sources: Smart Card Alliance 2005 Annual
Slide 74: Priceless.com: Linking Consumers with Merchants
10 • “Priceless Picks” • Promotions • Sponsorship activation • Integration of assets Priceless.com Linking Consumers with Merchants
Slide 75: The Heart of Commerce
MasterCard Worldwide The Heart of Commerce”
Slide 76: MasterCard Worldwide
€ MasterCard Worldwide
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Slide 79: Financial Perspective
Chris McWilton Chief Financial Officer May 31, 2007 Financial Perspective
Slide 80: Revenue
2 • Secular shift from paper to electronic payments • International volume growth • Competitive wins • Pricing Revenue
Slide 81: Direct and Indirect Business Drivers
3 Direct Drivers • Gross Dollar Volume: – Cross-border activity • Processed Transactions • Currency fluctuation (US$ versus euro) • Global events that impact travel • Pricing Indirect Drivers • Retail Spending • Consumer Confidence • Inflation • Gas prices Direct and Indirect Business Drivers
Slide 82: Volume vs. Retail Sales Trends in the U.S.
4 U.S. GDV U.S. Purchase Volume U.S. Retail Sales 0% 5% 10% 15% 20% Source: U.S. Census Bureau Volume vs. Retail Sales Trends in the U.S.
Slide 83: Expenses
5 • Hiring will continue through at least 2008 to focus on customers and strategic initiatives • Professional fees likely to increase as a result of litigations • Shift in A&M spend to later quarters in 2007 Expenses
Slide 84: Modeling Considerations
6 • Corporate tax rate: 36% • Diluted shares outstanding: approximately 136.6 million* • No changes to 3-5 year, long-term performance objectives: – One year as a public company – Competitive landscape is evolving *As of Q1 2007 10-Q filed on May 2, 2007 Modeling Considerations
Slide 85: The Heart of Commerce
MasterCard Worldwide The Heart of Commerce”
Slide 86: MasterCard Worldwide
© MasterCard Worldwide
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Slide 89: Driving Product Innovation
Wendy Murdock Chief Product Officer May 31, 2007 Driving Product Innovation
Slide 90: The Global Payments Opportunity and Growing
1 $80 Trillion + Source: WEFA Study $1.4 Trillion The Global Payments Opportunity and Growing…
Slide 91: Market Shifts Present Opportunities
2 • New ways to make payments are continuously emerging • New kinds of partners are at the table • Cash and check payments are migrating to electronic payment types • Regional variations add complexity • Under-served and affluent consumers are driving specialized solutions Market Shifts Present Oppo
Slide 92: U.S. Debit Continues Expansion
3 Source: The Bank of International Settlements U.S. Debit Continues Expansion Surpassed Credit in 2004 17.5 18.0 16.7 22.5 20.7 19.1 22.2 19.7 25.1 16.2 13.4 10.5 2001 2002 2003 2004 2005 2006E Credit Debit
Slide 93: Debit and Prepaid Projected to Become Dominant U.S. In-Store Payment Methods
4 Planned change in usage over next two years. Source: Dove Consulting, 2005/2006 Study of Consumer Payment Preferences Debit and Prepaid Projected to Become Dominant U.S. In-Store Payment Methods Projected Change in Use of In-Store Payment Methods in the U.S.
Slide 94: National Payments Systems Reflect Significant Diversity
5 Source: Capgemini analysis. 2006. ECB Website: Blue Book - 2004 Figures. Release: April 2005, MasterCard Advisors analysis, BIS CPSS payment statistics. National Payments Systems Reflect Significant Diversity Payment Options
Slide 95: MasterCard's Product Mission
6 MasterCard “Heart of Commerce” Franchisor Processor Advisor To develop and grow compelling product propositions for issuers, acquirers, merchants, consumers and corporations that capitalize on current market opportunities, leverage the company’s assets and create a sustainable competitive advantag
Slide 96: Our Value Chain Focus
7 Consolidation Product expansion Cross-selling Cost management Customer retention Margin improvement Geographic expansion POI innovation Product relevance Rewards New travel experiences Online/Mobile Working capital optimization Supply chain management Operating efficiency Our Value Chain Focus
Slide 97: Product Development: A Consistent, Repeatable Process
8 Product Development: A Consistent, Repeatable Process Over 100+ New Product Development Initiatives Ideate Evaluate Develop Deliver Monitor 20% 35% 45 % Strategy Optimize
Slide 98: Product Innovation at MasterCard
9 Product Innovation at MasterCard Foundational Elements • The Brand • Technology Infrastructure • Cardholder Services • Franchise Rules • Acceptance Network Payment Device Design • Packaging • Form Factors Intelligence • Data Analytics • Portfolio Insights Features • Rewards • Benefits and Enhancem
Slide 99: MasterCard and Issuers Partner to Create Unique Payment Solutions
10 MasterCard and Issuers Partner to Create Unique Payment Solutions We create and package “ingredient” product components • Features • Device Design • Intelligence • Foundational Elements • Systems • Features • Marketing • Economics • Customer Service • Risk Management New Payment Solutions Issuers
Slide 100: Customer Needs
2 GS a % Bs 2 Customer Needs
Slide 101: What's Next?
12 Advancing Commerce Through Emerging Consumer Spend Ed McLaughlin, Bill Payment and Healthcare The Affluent Segment Jeff Portelli, Global Consumer Credit Products Commercial Products – Leveraging Information Technology Steve Abrams, Global Commercial Products MasterCard Mobile – Mobilizing Commerc
Slide 102: MasterCard Worldwide
MasterCard Worldwide The Heart of Commerce”