Mastercard Incorporated (MA) Earnings Call Transcript & Summary

All right. We're going to get started today. I'm Will Nance. I cover the payments and fintech space here at Goldman. Today, we are delighted to have Sachin at Mastercard, CFO since 2019. He's been at Mastercard since 2010. Welcome, Sachin. Really happy to have you back this year in person.

Thanks, Will, and thanks for having me here. Delighted to be here.

Great. Well, look, why don't we kick it off on kind of recent events. I wanted to kind of take your pulse on the macro. There have been obviously a very volatile macro situation for the last several months. The update in -- for July was very strong at earnings. Could we maybe start by discussing what you're seeing in terms of the macro environment, consumer spending trends? And then as a follow-up, if you've seen any directly attributable impacts to consumer spending related to the ongoing tariff environment?

Sure. Again, good morning, everyone. Look, I mean, on the macro front, here's what I would tell you, as we see the consumer, as we see it in our data, consumer spending continues to be healthy. This is very consistent with what I shared at our second quarter earnings call. That's very much the case as I look at the metrics even going into the month of August. So we shared with you our metrics through July 28. And what we've seen in August is very consistent with what metrics we saw as of July 28. So the consumer continues to spend at a healthy clip. Obviously, there's a lot of data which comes out on a regular basis. Last week, we had the employment data, which came out, which came out relatively muted compared to expectations. Unemployment still continues to be at record low levels, right? At the end of the day, unemployment levels in the U.S. are running at 4.3% as we saw last week. So the point is the following, which is at the end of the day, right, there's the real facts and then there is how that is translating into -- and real facts being what the economic data is and then how that translates into consumer spending. And right now, as we see it, we see consumer health holding up pretty nicely. We obviously will continue to be vigilant because things could change. And as things change, we stand ready to act as appropriate. But the reality is when I think about -- take, for example, employment, right, if you really parse across the data, which came out even last week, there's the number of jobs created and then there's the supply of labor, which is there. So the number of jobs which have been created in the economy are coming down, right? But the supply of labor is also down, which is why unemployment levels remain at 4.3% in the U.S. And when you think about that and you think about the diversified nature of Mastercard's business, which is we're not just U.S.-centric. We've got a very good presence in overseas markets, for example, in Europe, for example, in Asia Pacific and Latin America, that diversified nature is holding up our drivers pretty well. I'll take Europe, for example. In Europe, there's been a decent amount of fiscal spending, which has been announced, and you're seeing that come through in the nature of how the economy is holding up there. So net-net, I'd tell you, consumer spending continues to be healthy, both from a domestic spending standpoint as well as from a cross-border spending standpoint. Particularly, I know lots of people are focused on cross-border in the context of Mastercard, specifically cross-border travel. Here's what I'd tell you on cross-border travel. Cross-border travel is also holding up consistent to what you saw in our metrics on July 28, right? So the reality is I can tell you what the data is. I can tell you how consumers are actually shaping up and so far, so good.

Very good. Sounds very constructive. So let's maybe stick with some of the more near-term business trajectory questions. Roughly a year ago, I think around the third quarter earnings call, you began pointing out a number of tailwinds in the business. that you would expect to lap throughout the course of 2025. So I think it was several portfolio wins, some pricing updates. We talked last quarter call about the Capital One debit migration coming up. And that said, I think for the third quarter, you guided to the high end of low double digits, which in Mastercard parlance is about the same as your long-term targets. I realize there's a little bit of M&A in there, but it's pretty consistent with the medium-term outlook for top line growth. So I guess the question is, as we look out over the next, call it, 4 to 6 quarters, it seems like things are still chugging along despite some of the comps that you've been calling out. How are you thinking about some of the moving pieces that we should be thinking about for the next couple of quarters?

Yes. Look, I mean, we've shared with you guidance for the third quarter. We shared with you guidance for the full year. We've also shared with you at last year's Investor Day what our outlook for 3 years is. And the reality is, like I said earlier, consumer spending continues to hold up at a nice clip. We're executing on our strategy, on the growth pillars of our strategy. The diversified nature of our business is playing itself out in a nice way, and you're seeing that come through in the nature of the forecast we're sharing with you. Specifically to your question around the lapping of wins and some of the pricing and some of those activities, Capital One, for example, happy to talk about those. So the good news is the following. When we talk about the impact on growth as a result of lapping of wins, the good news is you had wins, which means you got more volume, means you're earning more revenue. From a growth standpoint, it's just math, which happens when you start to see the lapping of that come through. The ones we called out in particular, were the larger deals, which we actually started to lap such as the Citizens Bank portfolio, which came on to our books last year, the Wells Fargo small business book, which came on to Mastercard last year. And there are several other portfolios across the globe. And the reality is we're going to continue to win deals. You're going to see the impact of this lapping come through. But the reason we called those out is because they were meaningful enough in the context of what the impact on growth drivers would be. To your question around pricing, we've always followed the philosophy of pricing for value. We have pricing, which we put in place last year for the value we've been delivering. You're going to see the lapping effects of that come through. But we're not just sitting on our hands, right? At the end of the day, we're doing new and different things. We're putting our new capabilities into the market even today for which we can price. And so you're going to see the net result of all of that come through, and it's all captured in the guidance, which I've just shared with you. The last point you raised was around Capital One. I shared at the second quarter earnings call, look, the migration for the debit portfolio of Capital One is something which started in -- I think it was in early Q3 -- late Q2, early Q3. We expect that, that migration will play itself out over a period of time. And the reason is cards need to be issued, cards need to be received by the cardholders. They need to be activated. The old cards, which are the Mastercard cards, still remain active for a little bit before they're turned off, right? Because you don't want to disrupt consumer experience as part of the process. So it's our expectation, and I shared this at the second quarter earnings call that from a net revenue standpoint, we expect minimal impact this year as a result of the migration of the debit portfolio from Capital One over to their network. We do expect a net revenue impact and a volume impact to play out in a more pronounced manner next year. But we'll talk a little bit more about that when we talk about guidance for next year as we go into the fourth quarter earnings call.

Yes. And I guess just on that note, given it's happening late in the year, it's one portfolio in one geography of one card type. So not hugely impactful. Would you expect us to start seeing the impact of those migrations on volume more in the near term as we're thinking about monthly run rates exiting the year in debit or something like that?

Yes. Look, always hard to predict. But yes, I think what will happen is as activation of cards starts to take place and the old cards start to get turned off, you will start to see the impact of volume come through. The real impact from a revenue standpoint will happen next year, which is why I said it will be minimal impact. But certainly, you'll start to see that come through this year and then going into next year.

Got it. That's super helpful. Okay. Let's spend a couple of minutes on each of the strategic priority areas in the business. And I want to start with consumer payments, obviously, the largest part of the business. I was hoping you could help dimension just how you're thinking about the secular shift towards card and towards digital payments over time. How much runway is there? And how specifically are you pursuing that opportunity?

Yes. Look, the consumer payments opportunity still is a tremendous opportunity for a company like Mastercard. Let's talk numbers first, and then we'll come back into -- first, let's seize the opportunity and then let's talk about how we're going after the opportunity, right? So last year at Investor Day, we shared with you that the consumer payments addressable market is order of magnitude about $54 trillion, right? Roughly $11 trillion of that still remains in cash and check. $11 trillion of that remains in cash and check. So a meaningful opportunity, which still remains in cash and check. There's a sizable opportunity from a transaction standpoint, order of magnitude, about 1.5 trillion transactions, which still remain in cash and check. So when you think about the Mastercard model and you think about how we generate revenue, we're generating basis points on the volume, which is the dollar value of spend, and we're generating cents per transaction, both of which matter. And so we're very focused on driving the volume on to digital forms of payment on the Mastercard rails, but also the number of transactions which come on are really, really important. So really important. What this does not capture is roughly a $10 trillion opportunity in China, right? And again, that's something which we've talked about in the past. It will take its time to play out, but that's not something we're giving up on. That's something, in fact, quite the opposite. Mastercard is one of the few networks which has the opportunity to participate in domestic flows in China. So that's something we're very focused on. And then there's another $10 trillion in consumer payments, which happens on account-to-account rails. Just because they're on account-to-account rails, doesn't mean we're not going after them. So it's a sizable opportunity, which still remains for us to go after. Now how we're going after this is a whole multitude of factors. And it's kind of pro stacks of enabling fabulous digital experiences, whether it's the work we're doing from a tokenization standpoint, with passkeys, with some of the work we're doing in Click to Pay, all of this is really important. Expanding our acceptance footprint, super important, right? And opening up new verticals. This is part and parcel of how you tap into the secular opportunities by doing exactly that. In addition to that, the work we're doing with our partners to actually go after the flows from a closed-loop standpoint. There's significant transactions which are there in a closed-loop environment. So I'll give you an example, which is in the transit space, for example. In the transit space, there have historically been closed-loop transactions which have taken place. Mastercard has worked very actively to move them into open loop where Mastercard cards can be used in a tap-and-go environment, where we get what could be previously one transaction to convert to in excess of 10 transactions, just by virtue of the fact that now consumers are utilizing their cards more frequently. Case in point, in the second quarter, we enabled roughly 60 transit systems for open loop. So there's a lot of activity which is going on in this space to tap into that secular opportunity. And last but not the least, I'll say we are spending a lot of time in building out the consumer value prop as well to enable that digitization, which we're talking about. So for example, we launched something called the Mastercard Collection, which is premium benefits to tap into the opportunity with affluent cardholders. So there's a lot of activity, which is going on. And we're seeing the results of that come through. You can see that in the metrics. I mean the reality is our switch volumes and switch transactions still continue to grow at a healthy clip. That's a combination of what you're seeing in the nature of PCE growth, but also the secular trends, which we're just talking about.

Right. Yes. One of the things you mentioned there was on tokenization. So I was wondering if you could talk more broadly about the growth in tokenized transactions and how you're thinking about the outlook for tokenization and how you think about the monetization model over time?

Sure. So tokenization is something which we've been very focused on as a company for, I'd say, order of magnitude close to a decade now, right? And we've made some significant progress in this space. So what is tokenization? At the end of the day, really what you're doing is you're replacing a straight-up card credential with a token. And the real benefit which comes through with this is a much safer and a more secure payment transaction. So you might say that's great, but how do you generate revenue as a result of that, right? I mean because at the end of the day, how does this impact your bottom line? There are a few ways in which Mastercard derives the benefit of tokenization. Point number one, what we have observed is when transactions are tokenized, you tend to see anywhere between a 3 and a 6 ppt, percentage point lift in spend take place for a tokenized transaction versus a non-tokenized transaction. What that effectively means is there's a happier consumer because there are fewer decline transactions for the consumer. There's more volume going over our system. More volume going over our system means more revenue from Mastercard, point number one. In addition to that, what we as a company have been doing is building a set of services around the tokens, which we've been building out. And these services are everything from life cycle management of the tokens, validation of the tokens. There are services which we deliver, which allow us as a company to charge for them, and that's what we're doing. We have been pricing for these services over the last, I'd say, order of magnitude about a year now in several markets across the globe. Not in every market, and there is a road map in terms of how we will go after it in different markets. But the reality is we are seeing great appetite for tokens across the merchant community, across the issuer community because of the value we're delivering, giving you the opportunity to actually price for the services we deliver around this. So very excited about this. This is an important part of what we do. There's actually a great example of tokenization driving value in something which we recently announced, which is Mastercard Agent Pay. And we can talk a little bit more about that if you have an interest as well. But the reality is there's a lot of good work which is going on, which is driving significant value in nature of increased transactions, increased revenue from a tokenization standpoint for us.

Great. I will come back to Agent Pay. But sticking with the strategic priorities for the moment, your second strategic priority is commercial and new payment flows. I've got a two-part question on commercial. So first, why do you believe that there's an unlock now? What are you seeing that kind of suggests that the time has maybe come for -- to drive an inflection in some of these flows? And then second, I was hoping you could break down your approach across both commercial point of sale and on the invoice payment side.

Okay. So let's just first size up what we call commercial and new payment flows. In the commercial arena, again, at Investor Day, we shared with you what we see the addressable market to be, right? We see that addressable market at roughly $80 trillion. That $80 trillion is across point-of-sale and invoiced payments. The carded component of that $80 trillion is roughly -- and I'm talking for the industry, not for Mastercard. The card component is order of magnitude about $3 trillion. So the most important question is, how are we going to actually break through to make that $3 trillion as an industry go at a rapid clip going forward. And the reality is commercial has been growing at a very healthy clip for Mastercard. In fact, just another data point for you. Last year, in 2024, commercial volumes represented roughly 13% of our GDV. That number was approximately 11%. And for the size of the base of our GDV, that's a pretty meaningful move. That 11% number was in 2020. So we are seeing faster growth in commercial come through, which is what's manifesting itself in the nature of how 11% goes to 13% of GDV. The opportunity has to be -- back to your question, has to be thought about in the context of what is the opportunity at commercial point of sale, this is stuff which goes on at the traditional places or new places where small business owners, T&E spend takes place, fleet card spend takes place at a point of sale, and then there's the invoice payments component. So that $80 trillion I talked about, there's roughly $16 trillion of that, which is in the commercial point of sale. The remaining $63 trillion of that or $64 trillion of that is at -- in the invoice payments arena. So let's talk about at the point of sale. At the point of sale, right, what we're seeing is tremendous traction come through. And how we are seeing it happen is expanding into new verticals, expanding into new geographies. This is basic blocking and tackling. So when you ask the question, why is now the opportunity? Well, the reality is the opportunity is something which has been with us. It just takes time to open up new verticals. When I think about the trajectory of payments, which happened in consumer payments, it wasn't like -- so Mastercard has been in existence for order of magnitude, 60 years. The digital inflection, which started to take place, right, is something which drove that secular trend on consumer payments. And that playbook is exactly the same playbook we've got to adopt for commercial point of sale. So you're doing it by expanding acceptance. You're doing it by making those payments much more of a digital experience than they've historically been. You're doing it by working with ecosystem partners to bring in platforms which are relevant in the commercial point-of-sale space. So for example, a cashback proposition for a consumer might be a very interesting proposition. A cashback proposition for a small business owner might not be interesting. They might care for loyalty programs. For example, our Easy Savings platform, which is the ability to deliver always-on offers offered funded by merchants to the small business owner, something Mastercard offers. So you've got to find these unique angles, which you've got to go after. And part of the way you go about doing this is you actually drive greater proliferation across the issuers of your value props, which are there. At the same time, open up acceptance. And you see this coming through in the nature of, for example, the Wells Fargo win. I mean, Wells Fargo moved over to Mastercard on its small business book because they saw the value we could bring to their small business community. And you've got to do much more of that, both from a market share standpoint as well as a secular opportunity standpoint, that's what we're working after. Last point I'll make is on invoice payments. On invoice payments, big opportunity. It will take time to materialize. It's something we're already actually generating revenue on, and we're doing it by virtue of our leadership position in virtual cards. Virtual cards are seeing tremendous growth. We're doing it on a vertical-by-vertical basis. And we've started to do both the vertical play, which I was just talking about, which is going industry-specific and coming up with solutions leveraging virtual cards, but also on a horizontal basis. And the horizontal basis we're working on is working with ERP players, the likes of SAP, the likes of Oracle, the likes of Coupa, all of whom have now embedded Mastercard's virtual card capability in their ERP systems. So what you're doing is you're taking away the friction point for the people who have to make the payment not to have to do a separate implementation of your virtual card capability. So these are all kind of steps, but these things take time. They don't happen overnight. You've got to kind of work it through. And there's a whole bunch of work which is going on the supplier acceptance side of things as well.

So sticking with this for a second. On the new payment flows opportunity, maybe you could switch gears and talk a little bit about disbursements and remittances. How are you progressing against that opportunity?

Good progress. I think we're seeing -- so again, remittance and disbursements is sized at roughly a $20 trillion opportunity. And what that is, is effectively B2C payments. There's a payments being made by businesses to consumers, they are P2P payments and how Mastercard enables P2P payments, and then there's the cross-border component. That entire umbrella actually is what we call Mastercard Move. We've seen tremendous growth in that space. In fact, in the second quarter, we talked about how we are growing Mastercard Move transactions at north of 35% year-over-year in the second quarter. And that's been true actually for multiple quarters now running. So we've seen great growth come through. And the way we're going after this is by getting the right capability -- so first, let's talk about the reach, right? We've got fantastic reach in terms of the global footprint with which we're driving on this, right? We've got reach to wallet providers, to bank accounts, to cards in terms of where the funds have to be received. In close to 200 countries, 150 currencies, there's a tremendous reach, right? There's lots of endpoints we can reach. Now it's about going after use cases, which is what we're doing. So early wage access, winnings from people who are out there on betting sites and they need to be paid off for that. There's lots of different use cases where Mastercard Move is coming into good use. They're both in the nature of domestic flows as well as cross-border flows. And I think that's playing itself out pretty nicely. It's more of a go-to-market motion, I would argue right now than it is a product build piece, which we've got to go after. We've got great presence in small ticket payments for cross-border. We have work to do from a product standpoint on large ticket. This is where the partnership with Corpay has come into play, which is what we're doing there. So I'm quite excited about the opportunity there.

Very good. So just turning to the third pillar, which is value-added services and solutions. You've delivered very strong growth in Q2. I was hoping you could help us understand each of the components that make up the services portfolio and just where you're seeing the specific areas of strength and then just how you plan on maintaining those strong growth rates going forward?

Sure. So what we define as value-added services and solutions is a composition of -- there are basically a few elements, and I'll just speak to them. There are our security solutions. This is everything we do from a cyber standpoint, ID verification, et cetera, et cetera. So let's call that bucket security solutions. It's consumer acquisition and engagement, right? This is the work we do with our loyalty platforms. This is stuff Mastercard has had a very good kind of position. And this is -- I think you're familiar with a company called Dynamic Yield, which we acquired a few years ago. It's driving personalization and things of that sort, which is driving consumer acquisition engagement. And then there's business and market insights, which is taking the data we've got, delivering insights to our customers, the consulting engagements, which we do on the payment side of the business, tremendous opportunity. So there's these 3 buckets, which make up what we call services. In addition to that, we've got our gateway assets and our processing assets, which sit in as part of that VASS bucket. And then we've got open banking, real-time payments, cross-border payments, all of that stuff that sits in there. So you're right, we're growing this entire portfolio at a fairly healthy clip. You saw the results come through in the second quarter, but more than the second quarter. It's been -- that's been the trajectory for some time now. I think the important thing to recognize here again is what drives the growth. The size of the addressable market here is -- now I'm going to talk revenue numbers. We had talked about a $500 billion revenue opportunity, $450 billion of which sits across these facets of what I've spoken about right now. We don't have solutions for all of that $450 billion, but we do have solutions for about $165 billion in revenue opportunity. We have tapped into roughly 7% of that $165 billion. So there's a lot of runway with existing solutions to go after that $165 billion, and that's what we're doing. And you're doing that by doing a few things. Number one, causing for deeper penetration with our existing customers, right? There's roughly about 60% of our value-added services and solutions net revenue, which is tied to our network. So if you're a believer, back to your original question around the secular trends, if you're a believer that there's runway from a transaction growth standpoint for Mastercard, this 60% number actually tends to have the tailwind of transactions growing because these services are attached to transaction growth. So when transactions grow, services revenues grow for that 60% component, right? Really important. Roughly 85% of our revenues in value-added services and solutions are recurring in nature. Again, very important, right? Because you're not having to go every year and actually have to do the hot sell every year with a fresh book. There is components of it which you have to do that for, but 85% is recurring in nature. So the reality is the profile of our value-added services and solutions is well positioned to drive growth. The most important thing I'd tell you is the kinds of services we're playing in, for example, security solutions have got natural secular tailwinds, which come along with that. And those tailwinds are around the fact that as the world has gone more digital, there's a greater amount of fraud, which has moved into that digital environment, which is not a good thing, but our customers need solutions to prevent that fraud or to solve for that fraud. And that's what we're delivering in the nature of our security solutions. So you've got that tailwind coming through from the secular trend there is. You've got the market share wins, which you're trying to drive by virtue of causing for deeper penetration. And last but not the least is we're also working on expanding our addressable market. So it's not just our existing solutions. It's about expanding the addressable market, which we can participate in. The best example I'd give you on that is the recent acquisition of a company called Recorded Future, which is in the threat intelligence space. This is a company we acquired in the fourth quarter of last year. It's -- I mean, if you want more detail about that, I'm happy to, but suffice it to say, it took us into a new space of threat intelligence, which Mastercard never really participated in, and it's giving us the opportunity to drive growth again there. So really exciting there.

Yes. And I am going to come back to that. Let's -- before we do that, though, you mentioned open banking as a part of that portfolio. I was wondering if you could just provide an update on how you're thinking about Finicity and the outlook for some of the recent regulatory focus on open banking and changes related to the CFPB?

Yes. Look, I mean, we still think open banking is an important part of our portfolio, and we'll continue to actually engage and drive growth in that. We've seen decent growth on open banking. The use cases -- we're primarily focused on the U.S. and the European market as it relates to open banking. That's been where -- and Finicity is a U.S.-based kind of play, and then we've got activity going on in Europe as well. The use cases are more around account opening. It's around validation of the consumer, and then it's around payment initiation. These are the areas which we're mostly focused on and lending is the other piece. I shouldn't forget that. So these are the areas in which open banking has been mostly focused. The question you asked about the recent news around financial institutions who hold the consumers' data wanting to charge for it. Look, the reality is every participant in the ecosystem is going to want to drive value for what's out there. There's a lot of uncertainty, I would argue, as it relates to the 1033 rule, which was put out by the CFPB. We'll see where that kind of plays out. But the reality is, if consumers consent, what is really important is that, that data should be made available to the consumer in whatever form they want and whatever app they want. Now the financial institutions who are providing access to that data have to invest money to actually make it safe and secure to allow easy access to it. And so they want to be compensated for that, which candidly, we're not in the business of deciding whether it's the right thing or the wrong thing. But to the extent that, that is something which needs to be charged for, then somebody is going to have to pay for it. We, in the middle, right, will do what we do, which is create the connectivity. So if there are players who are actually going to charge for access to the data, then someone is going to bear the cost of that, which likely will be either the consumer or the app provider. And if at the end of the day, like for in Europe, you're not allowed to charge for that data. So there is no charge. But that becomes a cost center for the financial institutions to create a safe environment to create access for it. But we still see promise. The headline is we still see promise for open banking.

Makes sense. Okay. I want to talk about 2 topics that have been very top of mind for investors over the summer. So that would be stablecoins and agentic commerce. And I want to start on stablecoins. Can you discuss your approach here and how you think about both the opportunities and the risk to the business over time from stablecoins maybe gaining a little bit more prevalence in the payments ecosystem?

Yes. A few messages for you. One, I'd tell you, stablecoins, the way we should think about this is we think about this as one more currency, which Mastercard will settle and does settle, right? For example, at the end of the day, a stablecoin is a manifestation of what is a fiat currency because it's backed by U.S. government treasuries. If people choose to settle in stablecoins, we will settle it over the network, not an issue. We're ready for that. We do that. We're good in that, right? We think about it as additive to our addressable market. And let me explain to you why I think that's the case because the way we're participating in stablecoins is providing the on-ramp. So this is when consumers wish to purchase stablecoins, they use and leverage Mastercard products to make that happen. We act as -- like I said, we'll do the settlement of those stablecoins over our network if people wish to settle stablecoins. And we act as the off-ramp. The off-ramp is when if you're a holder of stablecoins and you wish to use them everywhere Mastercard is accepted, we're making our network available for you to be able to settle with merchants who may not be willing to accept stablecoins, who want only fiat currency, we will kind of handle that transition over from stablecoins, working with our partners, right, to give them access to be able to use it everywhere. So there's the on-ramp, there's the off-ramp and then there's a settlement. Why is it additive? The reason it's additive is if you think about what normally would happen, let's say, absent the stablecoin universe, you as a consumer would have money sitting in your checking account, you would use your debit card to access that money which is sitting there and you would spend at the point of sale. That would be the typical transaction, which is taking place. There's one new transaction which comes in place here, which is the conversion of that money sitting in the checking account over to stable coins. This is the on-ramp piece, which I was talking about. That is new volume for Mastercard. The reason it's new volume for Mastercard is because that transaction never took place in the past. So you're now converting money sitting in your checking account to stablecoins leveraging a Mastercard product. That's incremental GDV, that's more transactions. So it's additive. We will continue to participate in this space. Our job is not to pick winners and losers. Our job is to be available and make it a safe and simple and a very -- a really good consumer experience, and that's what we're looking to do here.

Very good. And then on agentic commerce, you recently announced Mastercard Agent Pay. Can you talk about the components of Agent Pay and how Mastercard views the opportunity in agentic commerce?

Sure. So it goes back to a little bit to the discussion we were having around tokenization, but that's one component of Agent Pay. The way you should think about Agent Pay is at the end of the day, we're not building agents. Let's stop there. There are others who will build agents, right? We are partnering with the players who want to actually drive the search and discover process, likes of OpenAI, likes of Microsoft, et cetera, et cetera, where they will do search and discover and they wish to go down the path of actually closing the commerce transaction as well. And closing the commerce transaction is where we kind of step in. Because at the end of the day, when a consumer delegates to an agent the right to consummate a transaction, right, that agent has to be validated. That agent has -- so you have to create ID verification. You have to create a set of rules over the Mastercard network over which that transaction can happen. Merchants will not accept agent-initiated transactions unless there's a set of rules to know who bears the liability, where are the chargeback rights? Is it tokenized? Is it not tokenized? That's where Mastercard Agent Pay comes into play. Very actively engaged in that, early days. And people oftentimes will ask the question, "Hey, you think there's great opportunity here." Look, the reality is we think there's a tremendous opportunity as the world evolves from leveraging AI standpoint. But again, we're not in the business of picking winners and losers. If people, consumers wish to use the search and discover process and delegate to agents the purchasing experience, we want to be the payment mechanism by which that happens. We've done this in the past. We will do this in the future. It's our job to be present, to be making our rails available in a safe and secure manner to make that come through.

Very good. Maybe we can talk a little bit about the competitive environment. You've announced several wins over the last several years. I was hoping you could just talk about what's been driving those wins and discuss any shifts you've seen in the competitive environment and any expectations you have around rebates and incentives going forward?

Look, I mean, the environment continues to be competitive. I wouldn't tell you there's been much of a change in the competitive environment. Our wins and our gains in share have been largely driven by the set of capabilities that we've built over time, and this is across both our core payments, the digital capabilities as well as the services, which we've spoken about, right? Our approach, our go-to-market motion is something which I would argue has been a key enabler of driving these wins. And really, it's about working with the top of the house at our customers to understand what are the pain points which they are trying to solve for. How can we help them grow their revenue? How can we help them reduce their costs? So case in point, if I am a bank or financial institution and I am working with the competing network at this point in time, right, for me, to move volume over from the competing network over to Mastercard, if it's the same volume, is not really interesting if all I'm going to get is a little bit of a break on pricing to move that over, because there's a lot of disruption which I have to do from a system standpoint, potentially have consumer attrition take place. That is not the reason why I'm going to move over. I will move over, though to the extent that Mastercard can drive faster growth in my portfolio because that's going to help my revenue side of the equation. I will move over if Mastercard can bring safety and security solutions, which is part of our services portfolio to reduce my fraud cost. And so this solution selling approach that we have been adopting and the portfolio we have built over the years to really go after solving for pain points for our customers have been a large reason why we've been winning this share.

And I promise I'd come back to Recorded Future. Maybe you could touch on M&A briefly, your approach to M&A and just an update on how Recorded Future has been trending and kind of your updated thoughts on...

Yes. Look, our approach on M&A is no different than it's been in the past. It's strategy led. What are we trying to accomplish from a strategy standpoint? You all are familiar with our growth pillars. And what we do is we sit back and we think about what are the gaps in our portfolio, what are we hearing from the market as it relates to what their needs are? Is it better for us to build, to buy or to partner? To the extent we feel like buy is the right way, we'll go about doing that from an M&A standpoint. You've seen us be fairly acquisitive. And the reason is very often, we're looking to either buy talent, buy technology, buy a go-to-market motion, buy connectivity. And we've mostly done this in commercial and new payment flows, and we've done it in our services portfolio. That will be a focus area for us going forward, has been. And to your second part of your question, I know we're running short of time here is on Recorded Future, off to a great start, very excited about the potential there. We think these are -- they are the premier player. Well, they're now Mastercard. So they're the premier player in the threat intelligence space, and we're seeing really good reactions come through from our customer base on that. So we're excited about that. Very good.

Great. Well, that takes us right up to the last second. So Sachin, thank you so much for the opportunity to have a conversation this year.

That's great. Thanks, Will. Appreciate it.