Mastercard Incorporated (MA) Earnings Call Transcript & Summary

Okay. So next up, I'm happy to welcome Sachin Mehra. He is the CFO of Mastercard. He's joining our conference for the first time. So welcome to our conference.

Thanks, Sanjay.

And I'm also really happy that I get to see him face-to-face, and he's worn the CFO hat since 2019. He's obviously also held a variety of roles at the company, and so we're excited to have him.

Maybe Sachin, we start with the situation in Ukraine. It's obviously unfortunate. Maybe you can give us your perspective on how it might impact Mastercard. Obviously, you guys put out some data points yesterday, so -- or day before yesterday, so maybe you could give us some more insight?

Sure. So first of all, thank you for having me here, Sanjay. I would be remiss if I didn't say the last conference we did in person was the KBW Conference in 2020, and this is the first in-person conference we're at. So nice way to open it up again.

Yes let's hope it's the start of a good trend.

Yes, I certainly hope. So look, I mean, on your question, I mean, clearly, the invasion of Ukraine is just having a devastating impact all around as it relates to the people who are impacted. From a Mastercard standpoint, our first and most important priority remains the people we have in the region between the Ukraine and in Russia. We have employees there. We have families of the employees there. We are spending all odd hours of the day every day making sure that they remain safe to the best ability that we have here. The second piece I'd mention is we're very focused from a humanitarian aid standpoint, and we just announced that we're going to make contributions of $2 million to various institutions working with some of our partners to help the cause there. Look, the other thing is around the sanctions. And I know most of you are aware about the fact that there are sanctions being imposed on several financial institutions. I would first categorize at the highest level, what's going on from a sanction standpoint as the following. It's a fluid environment. In some instances, it's very clear as to who the sanction institutions are and what the scope of the sanctions are. In other instances, there are sanctions which have been announced. There's a cooling off period before which to become effective, and there's a lot of interaction which is going on with the various authorities, not only in the U.S. but globally, to try and understand what the scope of those sanctions are and how they're going to impact on a going-forward basis. That being said, where we have clarity, we have blocked access to the Mastercard payment network for multiple financial institutions, where it is very clear that the sanctions are in place. Our principle is simple, which is we're going to do what's required by law, and that's what we've done, right? The other element I'd mention is we're very focused on the integrity of our payment network. And as you can well appreciate, there's always the risk associated with cyber attacks taking place and things of that sort. We're spending a lot of time and energy in making sure what is already a very robust network continues to remain the same. We're interacting with governmental authorities across the globe to make sure we're exchanging, not only insights and what we're picking up, but also the use of our Cyber & Intelligence tools. And as you're aware, we do this as a service. We sell these capabilities. We're obviously using them for ourselves as well, and that's another area. And then last piece I'll mention is around the financial impact. As you mentioned, we put out an 8-K on Wednesday of -- I think it was Wednesday, today is Thursday -- no it was Tuesday of this week. And we tried to give you a little bit of color on what's going on in terms of revenues. So first, I would say that from a global standpoint, the business fundamentals still remain very sound. However, both the Russia and Ukraine are important revenue contributors. And in 2021, Russia contributed or the revenues we derived from Russia were approximately 4% of our net revenues, and this includes revenues generated within the country as well as those related to volumes into the country and out of the country. And on a similar basis, in the Ukraine, we had approximately 2% of our net revenues in 2021. So that's kind of generally on the various facets as to what's going on, on the impact of the whole Russia Ukraine situation.

And just to be clear on that 4% from Russia, I mean, that also includes -- there's offsetting costs related to the switch fees, right, that are in the G&A lines?

That is correct. Yes. So we do pay switch fees, which are in the G&A line and the data processing line more specifically, which we paid to [indiscernible], which is the domestic switch, so that's there as well.

So that would have to be netted as in terms of an impact? Correct?

Yes. That's correct.

All right. Cool. And then from a sanction standpoint, it's a subset of the 4% that are banks under sanctions?

That is correct.

Got it. Perfect. Just wanted to make sure I clarified that.

I will say it's an evolving situation. And the reason we felt compelled to kind of give you what the size of the pie is, is because we don't know how these things are going to play out.

And we appreciate that. It's good to have some sense of what the impact could be. And as far as Ukraine is concerned, I mean, there has to have been some impact for obvious reasons there as well.

So first, I'll say it's a little too early to tell. And I'll tell you why I'm saying that is there is so many mixed signals which are coming out as it relates to what exactly is going on from a domestic environment as well as a cross-border environment. And more specifically, I'd tell you, we can talk a little bit more about this, which is when we look at our most recent data, what we are seeing is in that region, cross-border-related volumes have -- in the last weeks since these events took place have actually spiked. And so I wouldn't make too much of this information only because it's unusual patterns taking place at this point in time. I think we're going to have to give this some time to actually play itself out.

Understood. Okay. Maybe we can shift gears a little bit and talk about cross-border. Maybe you could share some recent updates around volume trends for maybe as it's related to cross-border as well. And I guess, as we think forward and look ahead to the cross-border recovery, I kind of see it as a binary outcome, either the floodgates are going to open up, people are going to travel a whole lot or it goes the other way and we kind of regress. I mean do you see it that way as well?

Yes. So let's put aside for a second the impact of Ukraine and Russia. And the reason I say that is I just think there's a fair amount of unknowns as it relates to how all of that plays out not only within that region, but what the implications more broadly are. But what I would tell you, if you put that aside, our macro outlook in terms of what's going on from a global fundamentals of our business standpoint remain relatively unchanged from what we shared with you at our last earnings call. On your specific question, Sanjay, on drivers, so now we have information through the end of February. And what we're seeing in terms of the drivers is the following. In terms of domestic spending as we see it through our switched volumes relative to our 2019 levels, we are seeing steady improvements take place in switched volumes. And again, this is consistent with our expectations, but we are seeing steady improvement take place there. On cross-border, what we are seeing is also improvement take place relative to 2019. And just to give you a little bit more color on cross-border travel, we are seeing a little bit more of an advanced take place in cross-border travel as we are distancing ourselves from the Omicron variant. It's fairly broad-based. You're seeing this across all our regions. So that's a very encouraging sign. It's actually very much in line with what we had shared with you at our earnings call where we said that as the impact of Omicron starts to recede, we would expect for travel to start to come back. We are seeing that. On cross-border, card-not-present ex travel, that remains steady. Net-net, when I think about all of this, on cross-border holistically, we're seeing, like I said, good improvements slightly ahead of our expectations as we see it right now.

Good. Absolutely.

Just one more point while we're on metrics. I want to kind of just one to point. When you think about the overall picture, there's certainly the operating metrics, but we have to also take into consideration what's going on in the foreign exchange markets as part of this process. And one of the things we've seen is the strengthening of the dollar take place, so we're now anticipating that the headwind from the strengthening of the dollar from an FX standpoint is probably another 1 percentage point more than what we had shared with you at the time of our last earnings call. So when we talked about earnings -- this is for the first quarter. When we had talked about this at earnings, we had said that we saw a 2- to 3-point headwind because of FX in Q1 to our net revenues. We kind of think about that now as more like 3% to 4%.

Got it. Okay. At your recent Investor Day, you guys did a good job of highlighting the diversification of the business model. As it stands today, all your investments in terms of multi-rail strategy that position you to be enabler fintech's versus being disintermediated by them. I'm just curious if -- what do you think the market still doesn't fully appreciate?

Yes. Look, I can't really tell you whether the market appreciates or doesn't appreciate it. What I can tell you is why we believe the fundamentals of our business are as strong as it is and why we feel confident in terms of what the longer-term prospects for our business are. It all comes down to the basic blocking and tackling. When I kind of think about the core payments capabilities that we've got, this still remains a very sizable opportunity, which is there in -- just in terms of carded volume growth. And there's a huge underlying opportunity there. We've talked about this at our Investor Day, and we continue to believe that we're very well positioned to tap into that. The second piece is the recovery of cross-border. The reality is we've been through a couple of years, which have been tough from a COVID standpoint. There's a sizable opportunity. We remain fairly bullish about the fact that cross-border from a fundamental standpoint remains relatively unchanged once the COVID impact passes. In fact, if anything at all, we've only invested more in our business to position us well when cross-border does return, do we actually participate in that trend as we go forward. The third piece I'd mention is market share, and we've seen a significant amount of improvements in terms of how we've been driving market share. This is true across all regions. This is true across all products, and we continue to win share, and we think that's an opportunity. And the last 2 points I'd make are around our services capabilities, which have continued to stay in very good demand. They've grown at a very healthy clip. And we think about that from a prospect standpoint, and then the opportunity in new payment flows. And when we talk about new payment flows, I think you're quite familiar with it. There's a sizable addressable TAM which remains in that space. We are well positioned with products and capabilities we have in market right now as well as those which are in a fairly advanced stage. So we think when you add all of that up, it provides for a pretty good trajectory in terms of what the long-term future looks like.

Well, maybe we can drill down to some of the specific threats like Buy Now Pay Later. I think it's one of the top ones that I hear about from investors you've been working with several Buy Now Pay Later fintechs last year. You announced Mastercard Installments program that helps connect merchants and lenders at scale. Maybe you could talk about sort of the value proposition in your words and why you feel strongly about the opportunity. Also, maybe you could talk about the global rollout if you've signed up anyone there.

Sure. So look, we think about Buy Now Pay Later as a very interesting space. It's one where we do debit, we do credit. We kind of think about Buy Now Pay Later as another version -- another product capability, much like we do about credit. The reality is we think there's tremendous power in the open-loop network model. When you have more than 80 million acceptance points, and these acceptance points have been growing at a healthy clip at close to about 15% CAGR over the last 5 years, that's pretty powerful. On the other side, you've got close to 3 billion cardholders, and so this open-loop model works really well. So what are we doing in the Buy Now Pay Later space with this open-loop model? What you are doing is effectively saying, we are enabling our merchant footprint to be able to offer, and they will be enabled for Buy Now Pay Later across the board. And we'll roll it out by market. And on the other side, we are onboarding lenders, and I call them lenders deliberately because they're not necessarily only issuing -- traditionally issuing banks. They are lenders, largely speaking, to be able to come through our network to gain access to be able to provide Buy Now Pay Later to their consumers across our merchant acceptance footprint. And when I think about that, I think about that as an incredibly powerful proposition as opposed to having to go bespoke one by one where as a lender, I'm trying to tie up a merchant or a network of merchants. And so that's kind of at the highest level where the opportunity lies. We like it. We've got our virtual card capabilities and our technology, which works well, which is the methodology, which we use to make payments to the merchants in the Buy Now Pay Later space. And on the lender side, there will be the option for the lender to be able to recover the proceeds in the pay-in-full model from the consumer, either through a card proposition or through ACH, whatever the case might be. From a rollout standpoint, we're on track from a rollout. This is the year for it. We're going to actually get into the market soon. And so what I'd say is stay tuned, there's a lot of activity going on in the space, and we're very encouraged by the prospects there.

So why do you think like the investment community feels the Buy Now Pay Later is a disruption tool? I'm curious of your view because like it doesn't seem like the Buy Now Pay Later companies are saying that.

Yes. Hard to answer. I think one of the theories which at least I've been thinking about is the view that maybe there's the opportunity for someone who is a lender to also tie up a network and create a more of a -- tie up a merchant and create more of a closed-loop network environment. And our view really is we want to democratize the availability of Buy Now Pay Later across our merchant community. And I think that's important, and that's the reason we feel like it's important. I think a little bit of the nervousness around this as it relates to why it might be a disruptor for Mastercard probably preceded when we talked about Mastercard Installments. And I think it's important to understand that we've always had this in the works, so this has been something which we have been kind of working towards. We believe it's important to do things at scale as opposed to having to create these bespoke arrangements piece by piece.

Yes. And I guess, like as we think about an open banking backdrop, maybe people are thinking there's other ways to sort of fund it outside of Mastercard. But talking about open banking and digital identity, I mean these are some of the newer rails that you've added to your multi-rail portfolio. And it's one of the key priorities that you outlined at Investor Day. Maybe you could talk about the value proposition. What excites you about the growth potential? What's the TAM there and how investors should get comfortable that open banking payments is not a threat?

Yes. So you touched upon open banking. One of the things I forgot to link back to in the Buy Now Pay Later discussion is we've got to remember, oftentimes, people worry about the fact that they say, what is right now a pay-in-full model, which gets paid by cards will become an ACH payment in the future. It may be through open banking. It may be direct from the bank account, whatever the case might be. But it's really important to actually dissect this Mastercard Installments flow. And I'll come back to your open banking question in a second. Is there are 2 legs to that transaction. There's the leg where the payment gets made to the merchant that happens to be a regular card transaction. It's going over virtual cards. There is the other leg of the transaction, which is where the consumer pays the lender. That could be on cards or that could be on ACH or through open banking. While it's on cards, we think about that. If you did a side-by-side comparison between that and a regular credit card transaction. In a regular credit card transaction, there's a leg which goes to paying the merchant, which is a card transaction. And typically, you end up paying back your credit card bill through a bank transfer. So the reality is, if anything, BNPL is an opportunity and it's accretive to the extent people are using cards to repay what they're borrowing on BNPL. You're not losing the payment to the merchant from a card transaction standpoint. I wanted to bring that back because sometimes there's a misnomer that, "Oh, by the way, you are getting the benefit of card payments being used to -- by consumers to pay back the lender, and that's going to go away." Sure, it could go away, but that's no worse off than what happens today with a debit card or a credit card transaction, where we don't necessarily see those card flows when those payments take place.

Oh, it's interesting, the BNPL providers are actually utilizing you to settle out with the merchant, right?

Correct.

And I guess like people think the BNPL providers is going to take control of all of that, and they're not even [ attending ] to that at this point.

Right. So back to your question, sorry, on open banking. We are very excited about the prospects from an open banking standpoint. As most of you probably know, we acquired a company called Finicity in late 2020. They are the premier player -- one of the premier players in the open banking space. Through Finicity. What we've got is coverage of approximately 95% of the bank accounts in the United States of America. And by that, I mean, if you think about what goes on from an open banking standpoint, it's about establishing connectivity at the infrastructure level, where you have access to the bank tons of consumers and small businesses to start with. And really, why we think about this as an opportunity is because you have the ability now to participate in a new network, which is a data network. And the data network here is about what you can do by being in that space to enable fintech players to be able to gain access with consumer consent to consumers' data to allow them to deliver applications on that. And we are participating in that space through what we've got in our open banking capability. So what do we do? We not only have the infrastructure level, we've got the applications. And on the applications piece, what we are doing is we've created use cases around credit decisioning, credit scoring and then certainly around what would be account opening or authentication of accounts as part of that process. Going forward, there will be use cases around payments as well because we see this as an opportunity to open up new TAMs from a payment standpoint. So that's kind of largely what the open banking space is, and it's not just about the U.S. We acquired a company in Europe. It's called Aiia, which is also in the open banking space. They've got tremendous connectivity in the European context, which is important, right? If you don't have connectivity, you can't even get bone on this. So why do -- the reason this is interesting is because you opened up new revenue flows as it relates to charging people for the movement of data to enable these applications while also at the same time being able to generate revenue from the applications, credit decisioning, credit scoring. And in the future, there will be other applications which will come around. And then on top of that, delivering services. So one of the use cases, just tying it back to BNPL, is when a lender ties up for Mastercard Installments, they have the ability to use Mastercard's open banking capabilities. to enable them to gain access to consumers' data to allow them to do better credit decisioning, to enable them to allow -- or to establish what kind of credit limit they want to offer under the BNPL proposition. So it all kind of ties together when you think about the network effects of what we're trying to bring out here.

And maybe you could just touch on the unit economics of that, right, like versus trying to build it on your own for someone. I would assume it's much cheaper to do it through you than to build it out yourselves.

To build out the open banking?

Yes, the open banking capability.

It's not only cheaper. It is years and years of work to establish the connectivity we're talking about, to gain access to 95% of the bank accounts in the U.S. and for that matter, on the -- all the globe. It's about not only gaining access, but getting access in the right way. And when we say right way, this is not about screen scraping. This is about doing this through API connectivity with consumer consent, respecting data privacy. There are lots of issues which go along with actually creating this business model. And so yes, there's the cost element about why people would want to use this. But if there's someone who's in the business of creating applications, they don't necessarily want to be bothered with having to establish the infrastructure level, right? Because they want to leverage your infrastructure to be able to deliver applications. So if you're doing a private wealth management application, you want access Sanjay's -- Sanjay wants to give access to the app provider to be able to gather information but Sanjay to provide a consolidated view of all your financial information. Well, guess what, there's an app provider who's leveraging the equivalent of Finicity to be able to gain access to that?

Absolutely. So maybe we shift gears, talk a little bit about crypto. We've had full session -- bunch of sessions next door here, a lot of rowdy people over there talking about how crypto is going to be quite disruptive. And obviously, people view it as a long-term risk for Mastercard. Maybe you could just talk about your philosophy around the investments you're making and the partnerships you're signing.

Yes. So at the outset, I'll just say, we're not picking winners and losers, we're going to be involved in any and all, right? And we are involved in the crypto space. And the way we are involved is through the underlying technology, and I'll explain a little bit more about what we're doing out there. So when we think about crypto, I kind of like to think about this in the context of what is the underlying technology, the distributed ledger technology. And what are the use cases which that can be put to work for, right, one of which could be the equivalent of cryptocurrency, which we think about more as an asset class. Or it could be private stable coins, it could be CBDCs. It could be a whole range of things. Let's talk about the first category, which is the asset class called crypto. Our involvement in that is to be there in the nature as an on-ramp and an off-ramp. And by that, I mean, people want to buy crypto, they utilize card products, Mastercard products to be able to buy crypto. We generate revenue today from that. We generate revenue across the globe wherever there are wallet exchanges where people are actually loading their crypto wallets utilizing Mastercard card products. That's what I call the on-ramp. The off-ramp is people have crypto balances in their wallets. They want to use those. They have to have a place to use them. We have 80 million merchant acceptance points. So we are partnering with players to give the equivalent of card products to allow people to be able to utilize their crypto balances at everywhere Mastercard is accepted. Now just to be clear, we don't take delivery of crypto the asset class as part of that. We take delivery of fiat currencies with the partners we work with to the conversion over and bring it to us. So that's kind of bucket number one, where we see the opportunity. Bucket number 2, which is around, let's call it, private stable coins and then there's a subset of that, which goes with CBDCs. The reality is if there are private stable coins, which are compliant with law, which follow our principles around respecting consumer rights, respecting data privacy, respecting things which are really, really important to our franchise, we will enable them over the network. In fact, we are working actively to enable the settlement of private stable coins over our network. And that's important because remember, whether it's a private stable coin or it's a CBDC, it's a form of a currency, which is not too dissimilar than any other currency, which we settle over our network today. So we settle U.S. dollars, we settle euros, we settle the Malaysian ringgit. And tomorrow, it could be a private stable coin or a CBDC, which is there. The reality is today, what our role as a network is to be able to take what is your money, which is sitting in the nature of fiat currency in your bank account and allow you to have electronic access to that at 80 million-plus merchants. Fast forward tomorrow -- today, it happens to be sitting in U.S. dollars. Tomorrow, it could be in the nature of a private stable coin or it could be in the nature of a CBDC. You still need to be able to use it somewhere. And to be able to use it somewhere is where we can actually play a big part because at the end of the day, just like we've created that connectivity for fiat. We could do likewise for private stable coins and for CBDCs. So we're very actively engaged in that space, as we are with the underlying technology, which is lots of investments made in the underlying technology to enable governments -- and we're working with a lot of governments at this point in time -- to help them to utilize our sandbox to be able to actually experiment as to what the nature of the CBDC might be. And this is all at the, what I would call the infrastructure and application layer. There's a separate revenue stream which is very much in play on the services side. We are generating revenue today through some of the work we do in our data and services practice where we are consulting with governments on their CBDC desires to help them think through what's the best way to do that. So that would be an example of a service. I'll give you another example. Cipher Trace, a company we acquired just recently is effectively all about helping various crypto exchanges, other participants in the crypto space identify where there might be compliance issues, where there might be AML issues, and that's the services revenue opportunity we see there.

So when people think about the risks associated with crypto, is it when if a pure DeFi scenario happens? Or do you think even in that situation, you play a big part in it?

Look, I mean, I think there's an opportunity for us. The most important thing, Sanjay, I would say is the following, which is the biggest mistake I think we can make is not participating in a trend and assuming it's going to just go away. That is not the philosophy at which we operate. It's about trying to find what is the best angle we can bring to whatever is being launched. And it goes back to my point about not picking winners and losers. It's about saying, we bring value, what can we do? And whether it's in DeFi, or it's in crypto or it's in stable coins, I think there's a real role for us to play there.

Great. Maybe we could talk about value-added services. Obviously, important driver of growth. This business line saw 18%, 20% growth through the pandemic. Why has it been so resilient, number one? Maybe then you could talk about the strategic value and its importance to the degree that you're winning new deals with issuers and merchants. Like maybe you could just talk about what the key priorities are inside of the services buckets.

Sure. So first, let me just define services so that people have just a general kind of understanding. So we have services and the vast majority of the services fall into 2 buckets. Bucket number 1 is our Cyber & Intelligence capabilities, which are our fraud management capabilities. And the second bucket is what we call D&S or Data & Services. which is our consulting capabilities, our data insights and analytics, managed services, things which we do in that space. This constitutes -- between these 2, this constitutes the vast majority of this roughly $6.5 billion of services revenue, which we had talked about at Investor Day in November. And you're right, it's growing at a healthy clip. The strategic thinking around this has always been across 3 facets. One, we would like to see services generate growth at a pace faster than our core, and that's been happening. Number two, we think it's a great way to diversify our revenue streams, and that actually played out in speeds through the COVID environment, back to the point you made, when we saw a big down graph take place in terms of our cross-border volumes and domestic volumes during COVID. Services held up pretty nicely. So it gave us a nice little hedge there. And number three is it is integrally tied to what we do from a payments network standpoint and in the future, what we do for open banking and what it will do for digital identity and things of that sort in terms of helping us solve real customer problems and hence, win share. And that's been a big, big accelerant. So the question really is why is it so important and why are we doing what we are doing there. There's huge demand in these spaces. If you think about cyber this is the topic du jour. I mean the threat around cyber is something which is not going away anytime soon. We continue to actually evolve the capabilities we've got in the space. There's huge demand, not only across the issuing footprint of Mastercard, but now across acquiring and the merchant footprint, and we're now advancing into the government space, and we're just expanding with our existing set of capabilities, the proliferation of those capabilities to our broader customer base. While we're doing that, we're expanding the nature of services we're providing. So these have been all accelerants of growth. And in the future, the idea would be to actually take these same capabilities and do everything we're doing over the card rails to move it over to the ACH rails, which we've been doing for some time now, but keep going down that path. And then as we get into a scale play on some of the new networks such as open banking and digital ID, to be able to leverage and grow it there as well.

Can you talk about the margin profile of the services business? I mean, how do you see the margin profile changing over the course of the next couple of years?

Yes. So look, I mean, you and I'd say -- again, you have to think about what we do from a services capability, not just a purely in the nature of, "Okay, here's the amount of revenue they generate and then what's the costs associated with that." Because when we show you the revenues for services, what we're not taking into consideration is the accretive impact which comes when you win share. I want to kind of get that out there first. But on your question, different services have different margin kind of looks. And when I think about margin, I think about this on an incremental cost basis. I don't necessarily think about this on a fully loaded basis. And the reason I say that is because let's take something like consulting, right? It's people-heavy. We have more in the nature of incremental costs. So that's a little different margin profile than if I think about something like our Cyber & Intelligence capabilities, which are embedded at the network level. And as transactions grow, and we see the secular shift take place, which we've been experiencing, you get the leverage effect of that come through and the incremental cost to that is less. So it kind of varies depending on the servicing question. We still like -- in fact, if anything, over the last 5, 6 years, that profile has only improved partially because of the mix and the mix being you've done more in the nature of growing your Cyber & Intelligence capabilities, which come with lower incremental cost, and then partially because we've just done a better job in controlling what those incremental costs are across the globe.

And do you see like workforce comp inflation affecting the scalability of that business, assuming it's people intensive?

Yes. So I do see workforce-related inflation, generally speaking, across people. I mean, we've got a big amount of our cost base, which is there from a personnel standpoint. We're in the same market where everybody else is. We're competing for the same talent everybody else is competing, and we are going to have the same inflation effect, which is going to come through there. But remember, the leverage of what we talked about was around there is lots of stuff we do from services, which are not necessarily aligned with people? When you embed things at the network level once you build them, then there isn't much in the nature of people who are kind of involved as part of that process.

Got it. So B2B, very exciting opportunity there, new payment flow potential, obviously, AR, AP automation, maybe you could just talk about how you're building the distribution capabilities there? And what's resonating more near term? I think AP automation is definitely seeing more tailwinds than AR automation, where it seems like there's a little bit of a longer tail, but maybe you could just speak to the dynamics there.

So we think the way to tap into the sizable B2B opportunity is to create the same open loop effect that we have created in the consumer payments opportunity. I want to start there because -- and look, I've spent some time in this part of the business. I used to run our global commercial products before I came into the current role. The one thing which I learned as part of that process is the following. There are lots of small islands, which are currently in play. By that, I mean there are lots of people who are providing bespoke accounts payable and accounts receivable solutions in what we call a closed-loop environment. So the practical point is the following. Let's say, I'm an accounts payable provider. And I am trying to solve certain problems in use cases there. The first question -- if I am providing a service in that instance to somebody who wants their accounts payable processing to be done by me as a provider, I'm going to ask, but what is your coverage universe on the accounts receivable side for this to really be -- because the last thing I want to do as a corporate is send you half my accounts payable filings to somebody else and have a full-on process [ sent ] from my accounts payable file, which doesn't go to you because you don't service the [ other side ], which is why we feel like it's important to go open-loop here. The way we're doing that is by being exactly what we are in the consumer payment space in the B2B space, which is be the central player, tie up distribution agents, what we call buyer paying agents and supplier paying agents, who will be the -- the people who will reach out to the endpoints, the payers and the receivers. And our role in the middle is around making sure we have a supplier directory and a robust supplier directory, which has payment preferences along with the rules engine and the rules engine is all about enabling through our B2B capabilities, payments across, not only card rails, which would happen through virtual cards, but through ACH and any other future forms of payment going forward. So the idea of being buyer paying agents would be the ones who are actually interacting with corporates who need to make payments to their suppliers, getting those accounts payables files, being able to take those accounts payable files hit it against the supplier directory to see what the payment preference of the supplier is and enable those payments out to those suppliers, right? The seller paying agents are the ones who are bringing in the receivers of the money. So think about them like issuers and acquirers, you have buyer paying agents and supplier paying agents. And that is what Mastercard Track BPS is all about. That is what we're doing. That's what we're rolling out. While we're doing that, delivering services much like we do on card base. So the question you're going to ask, I know is, well, so how far along are you in the process and -- yes. So let me preempt that. So the point is you have to build the technology. The technology is something we've -- it's done, it's launched. We're kind of in play. We've got the directory. We've got the rules engine. We've got the payment capability across multi-rail. We started to sign up the buyer paying agents and the supplier paying events. Sitting where I do, the most important thing for me is, yes, I can get really enamored by the technology in the buyer and supplier paying agent because I want to see it flow, and I want to see revenue. And that to me is where the rubber will meet the road. This takes time. Mastercard's payment network was not established in 2, 3, 4 years. It's -- the scale of this will come through once you hit that inflection point on a vertical-by-vertical basis when you start tying up people where you can create a critical mass on both the buyer and supplier side. And that's what our buyer paying and supplier paying agents are on the journey of doing right now.

So is that like a 5-year journey, 10-year journey or...

No, I don't think it's a 10-year journey, but I certainly think you should think about this as -- it's a multiyear journey from here on out. So it's is not something which is necessarily going to hit scale in the next few years as well.

And then in the interim, a lot of these fintechs are creating their own sort of sets of directories. You think ultimately, they just utilize you guys.

So a lot of those fintechs are actually tying up with us as buyer and supplier paying agents. Because at the end of the day, when I have a directory with, call it, 20,000 suppliers or 200,000 suppliers, and I don't have the universe I want, this is a nice way for them to get connected. Now just to be clear, that is not an easy discussion because that is also their prized asset. That is the thing they care most deeply about. So the call they've got to make out there is, do I want to leverage -- It's no different than the BNPL discussion, by the way we had, which is there will be BNPL players who will tie up to Mastercard Installments and say, "I'm happy being a lender, I want to gain access to that 80 million acceptance footprint. And this is no different there.

So I guess, has the pandemic actually driven an acceleration in this business? Or do you think that there's more work to be done here?

I think there's a lot more interest in electronification and better user experiences and more safe payments in the B2B universe. I don't think there's necessarily been more in the nature of action that has quite happened yet. There's been dialogue. There's been a discussion, but I don't see -- just like in consumer payments, you have seen a step-up in terms of digital payments per se. Here, there's been a lot more discussion and talk, and you still got to see the rubber met the road as far as I see.

Yes. But we had WEX here, and they said that the companies are willing to have that discussion now, whereas before, they were a little bit more reluctant. So it seems like that validates what you just said. So maybe my final question before we open up to the audience is ESG-related. Obviously, investors are very focused on ESG more so today than before on their investment process. Maybe you could use these next couple of minutes to highlight what Mastercard is doing around those factors?

Sure. This is a very important part of what we stand for as a company. It's been something which we, as a company, embraced many, many years ago. I think you're all aware about the financial inclusion efforts that we as a company set out on the path of, I would say, maybe 6, 7 years ago. And we've only re-upped since then. We had made commitments at that point in time as to how many people we want to get included into the digital economy, and we met those targets, and we've re-upped our commitments on that. So we think that's a very important facet of what we're doing. On the E element, if I'm not mistaken, I think we were the first payments-related company, which adopted Science Based Targets. And we're very actively pursuing that, driving hard on that front in terms of what we want to do. We think that this is not something which you do on the site. This has to be in your DNA. This has got to be what we stand for as a company. That's how we've embraced it. That's what we're doing. And there are several initiatives underway. I mean we've got what we call the Mastercard Impact Fund. There's a bunch of work which goes on through that. There's a lot of work which we're doing at different levels. And what's most important, by the way, is as we are developing and executing on our strategy, it is becoming a little bit more around ESG by design. And by that, I mean making sure we're embedding the thinking from an ESG standpoint when we're getting into developing products and services from the get go. That is, again, early days on that piece, but there's more to be done there.

Great. So we've like just under 1 minute. I figured I'd open the mic to the audience. If any one has a question please raise their hand. All right, then we're going to let Sachin off easy then. All right. Cool. Thank you.

Thanks a lot, Sanjay. Appreciate it.

Thank you, everybody.