MasterCard (NYSE:MA) continued to build on its global footprint this week with a 5-year agreement with South African bank, Standard Bank and the announcement of a white-label near-field communication (NFC) mobile wallet service in Japan, in collaboration with C-SAM and DNP.   The company has been expanding operations in these regions MasterCard reported a 21% year–on-year increase in GDV processed from Asia, the Middle East and Africa in 2012. In contrast, the growth was 9% in Europe and the U.S. The developing geographies now account for 27% of MasterCard’s global GDV.
Our price estimate for MasterCard is $659, implying a premium of 10% to the current market price.
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The mobile wallet service in Japan will offer consumers the ability to use their smartphones for contactless transactional and other value added services. As part of a three way deal, MasterCard will offer its PayPass contactless payment solutions. C-SAM provides turnkey mobile transaction services to businesses in the U.S., Japan, China, India, Singapore, and Mexico. The company will provide an end-to-end Mobile Transaction Platform (MTP) on which DNP will develop the mobile wallet service.
The service will help increase electronic payment penetration in Japan. Currently, only 40% of Japan’s $1.8 trillion personal consumption expenditures (PCE) are through the electronic media.  Mobile phone penetration in the country is near 95%, with more than 120 million devices in circulation.  We believe MasterCard is positioning itself to capitalize from the mobile payment revolution in the country.
Standard Bank is one of the leading banks in the African continent with more than 1,200 branches in 18 countries including South Africa, Angola, Ghana and Nigeria.  The bank had more than $184 billion assets at the end of 2012. The African continent is expected to grow in the coming years and South Africa in particular is a lucrative market. Nearly two-thirds of the $146 billion annual personal consumption expenditures in the country are through cash & check. We believe MasterCard can greatly expand its presence in the African continent with the agreement with Standard Bank.Notes:
- Mastercard Inc : MasterCard and Standard Bank Group Sign Agreement, August 29, 2013 [↩]
- Mastercard Inc : MasterCard, C-SAM, DNP to Introduce White-label NFC Mobile Wallet Services in Japan, August 28, 2013 [↩]
- Visa Investor Meeting 2013 [↩]
- List of countries by number of mobile phones in use [↩]
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