MasterCard sees controlled explosion in Asia plastic

SINGAPORE Wed Mar 7, 2012 5:34pm IST

MasterCard credit cards are seen in this illustrative photograph taken in London December 8, 2010. REUTERS/Jonathan Bainbridge/Files

MasterCard credit cards are seen in this illustrative photograph taken in London December 8, 2010.

Credit: Reuters/Jonathan Bainbridge/Files

Related Topics

Stocks

   

SINGAPORE (Reuters) - MasterCard Inc (MA.N) is counting on responsible spending and rare defaults among its customers in Asia, along with a greater use of credit by the region's young, its chief financial officer told Reuters on Wednesday.

A growing middle class and rising consumption also set Asia apart from the West, the electronic payment giant's CFO Martina Hund-Mejean said.

"We are seeing a change in Asia. The older population are saving first and then they are spending. But when we do analysis on the younger population, we are seeing people using more and more of the credit line," she said in an interview.

"I sure hope that Asia doesn't go the way that the U.S. went, where they had to learn their lesson, but I think at this point, we see responsible behavior in Asia. It could be honour or 'face' that makes them not go overboard."

MasterCard charges fees to process card payments between the banks of merchants and buyers via its global network, its main rivals being Visa Inc (V.N) and American Express Co (AXP.N).

A litigation-related charge took a large bite out of MasterCard's fourth-quarter earnings, but it beat analysts' estimates for the seventh straight quarter as consumers around the world used their plastic more.

Asians tend to spend on items such as travel, dining and entertainment, as well as home furnishings, and this can only grow, as many of these markets are underdeveloped relative to the United States, Hund-Mejean said.

"Population change, more middle class and consumption growth are big characteristics of Asia-Pacific. The other thing that I would say is the women. Women have the purse strings in many Asian countries," she said.

MasterCard has worked with banks in Asia to tailor many products for women, she said, with special cards for women and a marketing strategy to attract women from across Asia to shop at the annual Great Singapore Sale.

GOING CASHLESS

Around 55 percent of the $37 trillion of global personal consumption spending was in cash and cheques, Hund-Mejean said, the rest being via electronic means such as credit, debit and prepaid cards.

MasterCard has invested in a mobile payment technology, PayPass, that allows people to "tap and go" instead of swiping a card or providing a signature. Consumers can make purchases with a PayPass-enabled phone, card or mobile payment tag.

"Cash costs society something," she said. "You have to print it, you have to transport it, you have to count it. There's also tax evasion."

Hund-Mejean said Asia-Pacific was likely to be MasterCard's higher-growth region, with Singapore, Indonesia, South Korea and Australia the key drivers.

But there remain some regulatory or infrastructure obstacles in the company's path.

In China, for example, MasterCard can handle only cross-border, not domestic, transactions. And some developing countries, such as Vietnam, lack the network for electronic payments.

Of 36 analysts covering MasterCard stock, 26 have a "buy" or "strong buy" rating and 10 have "hold", according to Thomson Reuters data.

MasterCard shares closed at $408.34 on Tuesday, having risen around 9.5 percent so far this year.

(Editing by John O'Callaghan and Will Waterman)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Coal Block Allocation

Coal Block Allocation

Government urges Supreme Court to not cancel some 'illegal' coal mines  Full Article 

Modi in Japan

Modi in Japan

Japan and India agree to boost strategic ties at summit  Full Article 

Basel III Norms

Basel III Norms

RBI amends Basel III guidelines for banks  Full Article 

HSBC PMI

HSBC PMI

Factory activity expands at slower clip in August.  Full Article 

Current Account

Current Account

Balance of payments surplus for third straight quarter  Full Article 

India Infrastructure

India Infrastructure

RBI rule handicaps India's infrastructure hopes  Full Article 

Book Talk

Book Talk

Reema Abbasi and a glimpse of Pakistan’s Hindu past  Full Article 

China Economy

China Economy

Retreat in China's PMIs heightens calls for policy easing.  Full Article 

Managing Share Sales

Managing Share Sales

Govt seeks bids from banks to manage PFC, REC share sales   Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage