Mastercard embraces nationalism | Payments Dive


Mastercard isn’t shrinking from operating in countries that build more insular domestic payments frameworks. On the contrary, it’s harnessing those situations for new opportunities, CFO Sachin Mehra said this week.

The No. 2 U.S. card network company accepts that some central banks will opt to focus on developing local payment approaches, such as Brazil’s Pix system, and in those cases, Mastercard aims to provide complementary services, Mehra said at the Keefe, Bruyette & Woods fintech and payments conference Tuesday.

“For those people who are interested in Mastercard, you should be interested in what nationalistic tendencies are around the world, because that’s something we’ve lived with for the longest time, and if anything, the nationalistic fervor has only gone up,” Mehra said at the conference.

The rise of nationalism has been evident around the world in recent years, with more governments focused on domestic affairs and interests. That has been true with respect to payments systems, too, with the development of Russia’s Mir system, Brazil’s Pix network and India’s Unified Payment Interface system. 

Mehra explained that following Russia’s invasion of Ukraine early last year other countries might be worried about the impact of such situations on their domestic services, too. “This is where being a global company, but acting locally is going to be incredibly important,” he said.

That includes having a local team that produces local solutions that are tailored to what the domestic government and regulators in that country are trying to achieve, the CFO said. Aside from consumer and corporate card network services, Mastercard delivers real-time payments and has an open banking offering, among other services.

Russia was forced to rely more heavily on its own domestic Mir payments system last year when sanctions imposed by other countries protesting its invasion of Ukraine cut off U.S. and other international payments services in Russia. The country re-energized its own Mir payments system in 2014 after triggering international criticism with its invasion of Crimea. For a time, Mastercard worked alongside the Mir system to build more services.

Currently, Mastercard enables transactions in some 150 currencies and in about 210 countries and territories, according to its annual filing. Extending beyond U.S. borders lets payments companies such as Mastercard and its larger rival Visa build clienteles in economies that are growing at a faster clip than more mature markets.

Purchase, New York-based Mastercard already switches some branded transactions on local networks in certain countries where the government has more control over the payments system. “That is a form of nationalism — we have been living with that for many, many decades,” Mehra explained.

“Part of going down the multi-rail strategy path was to be able to engage on multiple levels with local regulators to provide payment solutions which go well beyond guardrails,” Mehra said.

Before Russia’s invasion of Ukraine last year, Mastercard was operating within the Mir domestic payments system to generate about 4% of the company’s annual revenue

“There will be markets where the local regulator will say, ‘You know what, I want this to be national infrastructure and payments will be something which we will control and we will manage and we will switch,’” he explained. “We’re not going to walk away from that. We’re going to actually be value-added service providers in those kind of instances.”

That is true in Brazil, too, where Mastercard fills in gaps in service even as the country’s Pix system expands with the government’s support, the CFO said. For instance, Mastercard’s debit cards will still be attractive in that they offer dispute resolution terms and chargeback rules that aren’t available with the Pix system, he said.


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