Mastercard Incorporated ($MA)

Well, thank you, everybody, for being here today. I'm delighted to welcome everyone to our 11th Annual FinTech Conference. We started this thing obviously over a decade ago. And as I was saying last night at a dinner, it feels like this is our startup, as we've built it. And I feel that every year, and it's so amazing to have such great speakers like Jorn joining us to kick off the conference. So to be official about it, we're going to kick it off with Mastercard. Jorn Lambert is the Chief Product Officer here at Mastercard. And he's traveled a long way, by the way, he didn't just come from New York. So we appreciate your time being here today, Jorn.

Delighted to be here. Thanks for having me. Quite a turn out here. So excited.

Yes. So what I thought we would do as we start kind of at a high level, if you wouldn't mind. Just walking us through kind of a tour of the scope of responsibilities that you have at Mastercard, and then we can take it from there.

Sure. So Chief Product Officer, that means that I look after our product and platforms that really ensure that consumers can buy or merchant can sell anywhere in the world. So that's the platform that runs our 170 billion transactions out there. That's our acceptance network, where consumers can buy. That is our issuer solutions. We distribute our products through about 23,000 issuers out there. So first and foremost, making sure that it runs everywhere, every time, nonstop at sub 300 milliseconds everywhere in the world, right? So some big machinery there that we make sure that runs smoothly. And secondly, making sure that we are capturing the growth opportunity out there, the cash and check displacement, the digitization growth opportunity, the geographical expansion growth opportunity. So that's continuous finding out, sniffing out the new opportunities and growing the pie. And then lastly, I would say, looking 5, 10 years out, what are some of the shifting tectonic fleets in commerce and payments. Obviously, Gentech comes into play, stable content to play in that, who does Mastercard. We want to be where we grow open that space and making sure that we place the right bets based on what we see in the environment. That's kind of what I do.

Yes, no shortage of opportunities that you're going to have in driven company.

Ever building.

So let's just get this 1 really quickly out of the way. There were some recent management announced changes, and I thought I would just give you the opportunity to maybe talk about why they occurred and the purpose for that going forward?

Yes. So well, firstly, what we haven't done is we haven't changed the org. The org remains the same. We've changed some leadership positions. Actually, we moved some leaders from 1 area to the other. We also haven't changed the strategy, right? Our strategy remains, our org remains. And this leadership changes is just to make sure that, firstly, some of our deep bench of leaders have a different lens, have a different set of experiences within the company, but also a fresh pair of eyes on the opportunities and the problems that we're having gives us just a different dynamic and a different impetus on that. I'm very excited about this because we have a great management team, having just these people with the wealth of knowledge that they have, look at these issues or look at these opportunities with a different set of eyes is just a great thing. My own role hasn't changed. We need a bit of continuity as well. And there's so much going on in our space that we decided that we'll stay the course on the -- on core payments, but quite a few of the other positions, people just change their portfolio.

Yes. Not the least of which is you happen to be responsible for some of the most dynamic changes that are taking place. So let's not upset the Apple cart too much.

That's right. We really need to make sure that we capture that, and we're -- I feel at least on a great trajectory.

Yes, that's great. So let's talk about some of the guiding principles that you follow in order to determine kind of product development for Mastercard. I mean I've heard you talk about big technology trends, geopolitical viewpoints and how they shift even consumer behaviors. But if you could elaborate on that, that would be great.

Yes. So the first thing, I mean, if you're looking at probably, the first thing is to get the right inputs, right? Like to make sure you get inbound, you kind of understand what's happening out there outside of the Mastercard walls. You don't want us to kind of be too inwardly looking and then to separate the signal from the noise. There's so much coming at us, like what's real, what's hype. And so we do that by talking to our customers, obviously, I do it, everybody in Mastercard does that, to talk about people like yourselves, investors, start-ups, VCs, but also governments, the big technology players like later this week, I'll be in the West Coast and meeting essentially all of the big AI players out there. And that gives us kind of really good input about kind of what's really going on, what's really happening out there. And then once you have a bit of a sense of a signal, then it's what I mentioned earlier, who do we want to be when we grow up in those spaces. And that's really about figuring out what is our right to play? What is our play in this space. And in Mastercard, that's very often comes down to organizing a market, right? We've -- we're in a very fragmented environment, very big value chains. If you manage to actually provide the interoperability layer, whereby different people that are unknown to each other can interoperate with trust, with security, with confidence, but at scale, I think then you have actually a real competitive edge here. And that is essentially the network effects that we have established with cards. Any consumer can buy at any merchant. They don't need to trust each other. They trust the system. They trust the brand and everything that comes with the brand. And that payment will happen. Even if the buyer ends up to be a cook, even if the merchant ends up to be a false, that actually people will be kept safe because of that structure. We've done the same with tokenization. In tokenization, every issuer, every bank can provide a token to any what we call token requester, even if they don't have a relationship with each other. That's a secured KYC credential that is exchanged and that then transacts. It's about the technology, the governance, the trust around that. And so we'll do the same with Agentic, at least that's what I'm tasked with. We will do the same with stablecoins. And so finding our right to play, finding these network effects is what's really important. And once you have that, once you have the interaction, then you can build a blend and provide further services in cyber, in security, in loyalty, in engagement. And that's where our services business comes in as well, right? So it starts with kind of getting that transaction and that interaction on our rails and then adding services on that. That's how we kind of think about things. And so far, it's been working reasonably well.

Yes, yes. So maybe we can unpack that just a little bit in terms of some large-scale trends that you have historically identified early or not and how you've interwoven them into Mastercard, which will ultimately lead us down the path of talking about Agentic and stablecoins. But this is kind of a little bit of a walk down memory lane, so people understand the context.

And you're right to focus on technology trends because these are the ones that are probably more disruptive. You can talk about consumer trends and this and that. But in my lifetime, and I'm older than most of the people in the room, but in my lifetime, we've seen like a big technology trends about every decade. Like in the '80s, it was the PC. You probably know that from history books. In the '90s, it was the Internet. In the 2000s, it was mobile broadband. In the 2010s, it was cloud. And in the 2020s, obviously, it's AI, right? Every decade has seen like a major, major shift, which transformed every business out there, created businesses, destroyed businesses and transformed commerce as well. And so if you're identifying these trends and if you're able to lock yourself into that trend in a way that you enable it, then I think you're in good shape for the next decade until the next trend comes, right? And so an example of that has been kind of mobile broadband and how people started to embrace mobile payments. And so for those who were around back then, that's kind of the mid- to late 2000s really kind of came up to maturity in 2012. But we realized that consumers will want to pay with their mobile phone. Now the problem with that though is twofold. Firstly, you need to put credentials in a phone, and then you need to make sure that this phone can communicate with the merchant. Now back then, credentials were either in your wallet on a card or were stored in a server of Sheraton hotels, right? That's where credentials were. We had a big problem already back then that data breaches happened in the Sheraton server, and we saw a lot of fraud coming from data breaches. And now people said, "Oh, instead of putting the credential at a few thousand card on file systems, we'll put it in billions of devices. But guess what, that means billions of vulnerabilities, right? Every hacker in the world, which takes themselves seriously, will try to get to these credentials. So we need to find a way to how do you put credentials in that phone? Where do you put it? Will you put it in the SIEM or in the secure element or in the TEE? And how do you secure it? And so we created tokenization, which is essentially putting a fake credential in the phone, adding some very clever elliptical curve cryptography to that and making sure that whatever a transaction occurs, we can decode the cryptography and tie it back to the credentials to make sure it's a real credential. Now that is not enough. That's just tech. Then me to say, well, if you have tokens, -- we need to make sure that these are governed that a token which belongs to a bank goes into a device that is by the consumers, how does that token get governed from a liability perspective and all that, right? And so we've been able to work with the operating systems, Apple, Android, with the device manufacturers like Samsung and then later on with card file systems to launch tokens in these environments to make the standards of cryptography universal and then to make sure that these phones can communicate in contactless environments like the NTA here in New York, so that consumers can use it worldwide, has been an amazing success. But like everything else, it kind of took years to develop the right standards, to develop the right report to develop everything for this to work. And we've continued to do this kind of iteration, similar concepts as the gig economy emerged, how do you actually make sure that your Uber transaction works everywhere, is safe, everywhere, can be used universally. When marketplaces emerged, how do we bring this on our rails. When the creator economy emerges, how do you actually make sure that we orchestrate the TikTokers and all that, right? And so the same again, as we're thinking about Agentic commerce and blockchain, like what is our role? How do we orchestrate it so that complete unknowns can now interact and transact with trust and confidence, and it works every single time.

Yes. It's a great segue into the next question, which is really which is more important to get right, Agentic commerce or your stablecoin strategy? And which one do you think will be more meaningful to Mastercard's growth trajectory as we think about the next decade?

I have no idea. I also don't necessarily think that that's -- it's of a different nature, these 2 developments. Agentic is how commerce is happening. Stablecoins is how money moves. And I think both will probably emerge in parallel and actually both will be reinforcing each other. So I don't think like should we bet here and not there or vice versa. I think these are very foundational trends that are happening that will be part of our future and that we are pretty confident that we can find our way to play and to add value to the ecosystem. But it's not an either/or. I think both actually result for Mastercard in net new addressable markets. And I'm very excited about that because if it's just displacement of existing volume, that's kind of okay, that's kind of cool, but that's not really driving value for us. If it allows us to address a market that today where we can't really reach, then it's where it gets really exciting, right?

Yes. So let's dive into Agenta commerce here and understand from your perspective, what Mastercard's role is ultimately going to be? And who are some of the key partnerships that you have either forged already or when we maybe want to consider as you think about the overall ecosystem and your role in that?

Yes. Great question. So the way I see this now is there's like 2 parallel dynamics that are starting to emerge, both of which are really quite interesting, but both are a little bit unrelated, and I'll try to unpack this a little bit. The first one is that I'm convinced that consumers will increasingly turn to agents to buy things. I, for example, I like running, I need a pair of new shoes. Perhaps last year or the year before, I would browse a number of shoe shops, ASICs and SCONE and HOKA and all that, and I would after 1.5 hours, find the right shoes for me. Now I'm probably going to do a prompt. I say, I want long distance, overproneating size 10.5, not over $200 shoes. And then Jim and I, ChatGPT will provide me with 3 choices. there's a high chance that from there, I will transact from that environment. Why? Because it's easier, right? Going from my discovery then to a website is kind of laborious and people are like the path of these physicians, but also that agent might actually add more value. Gemini, for example, will ask, well, if I can find these shoes over the next 2 weeks with a 25% discount, do you want me to buy them? Do you need them right away? Maybe you want to wait 2 weeks for a deal. I'm always open for a deal. So I'll say to Gemini, yes, please do if you find it before the end of the month for $150, please buy, right? That's real value added and consumers will do that. Will it be every e-commerce? No, it will be maybe 20%, 25%, 30% of e-commerce, which will move there, but a portion of e-commerce will move there. Now that, for us, is actually a very fundamental change. Over the last decades, the actors in e-commerce have been either the consumer, which initiated a transaction. I, on the ASIC side, buy my shoes or is the merchant that initiates, Netflix pushes a transaction for me and it's a merchant-initiated transaction. Now we have an agent initiating a transaction. And the consumer is not authenticated at the merchant property. The consumer is authenticated at the agent property. So you can imagine all the things that can go wrong, right? You could have a rogue consumer trying things, you could have a rogue agent doing things. You can have the merchant delivering the wrong shoes. You can have all sorts of stuff that is not really that helpful. And so we created for that first pattern, we've created what we call Agent Pay, which is a set of services that allows that transaction to happen in an orderly way, in a transparent way, in a secure way and in such a way that if I get the wrong shoes in the mail, I have recourse. It has essentially 4 things, right? It has a way to ensure that only legitimate agents have access to agent pay, and we keep out the malicious bots. It has a way to ensure that every entity in that value chain, the merchant, the issuer, the acquirer knows that this is an agentic transaction and actually knows which agent has initiated it. We do that through agentic tokens. It has a way to authenticate the consumer when the consumer is at the agent side and to cryptographically inform all the other actors that it has been authenticated and it has a way to capture the intent, the actually order I made so that when something goes wrong, I can go back to my order and I say, well, this is what I ordered. -- either the agent was wrong or the merchant was wrong, but I need recourse, right? So we've put that in place. We work with Microsoft. We work with OpenAI. We worked with Google. And essentially, that system or that set of services has now been widely adopted and is, I think, the standard in which agentic commerce, consumer-driven agentic commerce will happen. I feel very good about that. It's a little slow, not because of the payment side, but because the long pole in the tent on Agentic commerce is how merchants ensure that their catalogs are readable by the agents. And so that is a process that is ongoing. But I feel over the next couple of years, a good part and a meaningful part of e-commerce is going to move to that. That's the first dynamic. It's exciting. It's not necessarily net new for us. It's more of a movement of volume into that channel, whereby we are able to add more services. What is actually more interesting is that we are already seeing a whole set of entities, kids in a dorm room or companies who are developing agentic services, services through agents that are to be consumed by other agents. So people want to monetize all the good work they do. They create a service, they display it on agentic marketplaces for another agent to buy. Think, for example, I have a flower shop. I said stand up my new flower shop. And now I want a website. I mean I know about flowers, I don't know about websites. And so I'm going to ask Claude. Claude, just build me a website, please. And then Claude can autonomously go and buy a domain name, go and contract with Lovable to create the pages, goes and contract with Mastercard Gateway to get me a hosted checkout pages, goes and find the number of image from an image library and buys these image libraries. And in a few seconds, Claude will have made maybe 30 different transactions or 5 different transactions, whatever, chain transactions, probably micro transactions in order to kind of set up my flower websites. Those are agent to agent or machine-to-machine services. brand-new addressable market for us, really complex to set up because suddenly, you need to have the permissioning of all that. You need to have the transaction that extreme machine velocity, right, sub-5 millisecond velocity and then you need to settle that between parties that don't know each other. That's a great problem for us to solve, right? That is exactly what we like to do. And tomorrow, actually, we'll have a bit of an unveil. So this is a scope for this audience. Tomorrow, we'll have an unveil of our machine-to-machine payment system, which is not just a protocol. There's more protocol than transactions out there. It's a protocol as well as a set of services around that as well as a settlement guarantee in order to make that happen. Will that happen overnight? No, nothing in payment happens overnight. But will this be a very meaningful part of how agentic commerce will emerge? I am very, very strongly convinced of that. Not just like -- I mean, the example I gave is one example, but a Tripadvisor will want to monetize their data when agents are going to collect my next trip to Madera? That will be an agent-to-agent type of transaction framework. There's the new generation of SaaS services will probably be agent-to-agent transactions. And so I think if you can organize this, I think we'll have a very big runway. So that, to me, is kind of, let's say, consumer initiated the traditional e-commerce moving to agent to commerce is interesting. A new machine-to-machine is actually even more interesting in the sense that if it emerges, it will be a brand-new addressable market.

Yes. So that's interesting, the last point because we hear this all the time, cannibalistic transactions relative to incremental opportunities. And so one of the other things that I've heard you speak about is just the nature of how transactions can be broken up into multiple transactions. So in addition to agent to agent, maybe speak about the other part of incrementality around incremental transactions.

Yes. So going back to my shoe example. what is likely to happen is I find my shoes, my ASIC shoes. And the agent might say, well, actually, you may need some socks as well. We'd like some socks or we'd like an hat or whatever I need to go running. And in the previous world, I would buy my socks and my hats at the same merchant because otherwise, I need to kind of bother to kind of find other merchants. Here, the agent may say, well, actually, there's a good deal of socks that Under Armour or whatever it is, right? And suddenly, what is basket becomes 3, 4, 5 transactions because the agent is able to find these transactions at different merchants. I, as a consumer, don't really care. I am actually I view this as one basket. But for Mastercard, we'll see the splicing of that single transaction into multiple transactions coming back. What's equally interesting for us, of course, is that we add a lot more value to those transactions. We -- it's natively tokenized. It's natively authenticated. We natively have that recourse through a product called Ethica so that the consumer can view their transactions. And so these transactions are higher quality because of the services that we added on, right? So to us, it's not just cannibalizing. It is splicing of transactions. It is adding more services. It is higher quality transactions with higher approval rates. And so there's a lot of goodness in that, but it is a movement of addressable market from one place to the other as opposed to the other pattern, which I think is net new.

Fantastic. So let's pivot a little bit to stablecoins. Similar question. What do you think is Mastercard's roll through your lens, competitive necessity, threat, mutually beneficial? How do you think about it?

Yes. So very excited about that. Some of you may have noticed that we made an acquisition, a big one. That gives a sense that we are excited about that. Let me first say that many people are asking me, "Oh my God, you guys are nervous about stablecoins eating your lunch. Honestly, not very nervous about that. And I think it's a bit of a misunderstanding to think that, that could even be the case, right? Stablecoins is a great way to move money. 24/7 borderless way to move money, very efficient, very effective. Cards don't move money. If you, with your card, go to a shop and you buy flowers, no money is moved. Cards is a messaging layer. You actually exchange credentials and information between the consumer and the merchants. The money gets moved today, the money get moves on ACH behind that. We turn these messages into payment instruction in the back, and that's what happens on FedNow or on VocaLink in the U.K. So it's not the same layer in the stack. We are actually moving the money or we have actually announced yesterday that we're moving the money or we're able to move the money on stablecoins instead of ACH. So we can make card payments more efficient by using stablecoins. If we move the money with USDC or USDT or whatever, suddenly, the merchants could be moved faster. We can move the money over the weekend. We can reduce counterparty risk, we can reduce liquidity risk. So it makes card payments better. It doesn't replace it because it sits at a different layer of the stack. And then people say, okay, sure, I get that, Jon, but aren't the wallets going to replace the messaging layer. And you know what, just about every crypto wallet. I think actually every crypto wallet is adding cards to the wallet. not because they are going to replace it is because they want these cards so that the wallet becomes more useful to the consumer, right? It's not because you have the wallet that you can solve the merchant side, right? And these people happen to want to have a business model, too. Cards give them a business model. So not only does it not compete, we actually believe these wallets is a bit like the new neobanks. It's another way for us to bring our products in the hands of consumers. And so we see really quite nice growth from crypto wallets out there like a Gemini here in the U.S. or like a Mitemask that distribute our products. So I wanted to put to bed the thing is like, no, we don't think it is cannibalistic to our current P2M and person-to-merchant business. So why are we excited? Well, we're excited because it can really add value in places where cards are not present or not very present. Today, that's in, for example, cross-border remittances. It's not a big business for Mastercard. It's not carded, but we think that it's a business where there's a lot of friction and stablecoins can resolve a lot of the friction by moving money from point to point instantly from anywhere in the world to anywhere in the world overnight -- not overnight, instantly, including in the weekends. Similarly, disbursements, right? A Airbnb that needs to pay the landlord in Portugal. That's laborious today. With stablecoins, you can do that very fast. Think about payroll, international payroll or think about TikTokers, digital nomads, a lot of traffic here on disbursement that's very laborious to do, very hard to do. Stablecoins can add tremendous value. Not a big business for us today, new addressable SAM for us. And similarly, accounts payable or accounts receivables that happens cross-border by companies, very, very large business, very high friction, we can actually fluidify that. Now you look a little bit further, I personally have a high degree of conviction that many capital markets flows will move on chain because of the 24/7, the efficient liquidity, the atomic settlement, the immutability. I have a high conviction that portion of the second dynamic of Agentic will move to stablecoins because of the need for micro transactions, high velocity. And so there's a lot of addressable markets out there that haven't quite emerged yet, but that we believe will emerge. And then there's all those that we haven't seen yet, but that will come as well, right? So we're very excited about the space. We think it will be part of our future. And then the question comes back to what we said before, well, what do we want to be when we grow up? Do we want to be a chain? Do we want to be a coin? Do we want to be a wallet? And we decided, no, no, we want to be the interoperability layer. You're moving towards a space whereby you need to interoperate the fiat world with the on-chain world. And the on-chain world is actually 20 chains, not chain, many, many chains, many, many coins. distributed to many, many distributors. And so you have a gigantic spaghetti of an interoperability problem. That's where we like to play. Now for us to play, we need the licenses to play. It's a whole different licensing regime. We need the connectivity on chain and in fiat world. We need the technology. We need people who know the space. And so we decided to make that acquisition of the best company who has all of these things. They have the best licensing coverage. They have the best technology. They have connectivity in many -- all of the biggest fiat currency systems, and they have a great team. And so we think with them, once we close, which hopefully is going to be in the next couple of months, we can really build the ecosystem that will power all these use cases and be the ones that are providing the same kind of interoperability structure as that we currently do in the fiat world. So hard to say how quickly, hard to say how big. But as you can hopefully sense from my own enthusiasm, we think this is going to be, together with Agentic, a major trend for the next decade that will power a lot of new benefits for consumers and businesses.

Yes. I mean I think rarely have we seen 2 like massive forces happening at the same time for your company. I mean there have been many opportunities around the world. You talked about mobile and you talked about tokenization as part of that. But like both of these happening at the same time seems rare.

Yes. No, it's rare and they're very profound. I mean a new way of moving money doesn't come along often, actually comes along maybe every 50 years, right? And so making sure that you're inserting yourself in there in the place where you can truly add value is really important for us. And so that's why we actually have that conviction and made that acquisition. Agentic, the same. It's a fundamental rewiring on how consumers and businesses will transact. The last time people were wired was in the early -- in the early 1990s when the e-commerce pattern was set. Remember, every e-commerce is the same thing. You search for your product, you fill a cart, you press on the card, you get a checkout page, you check out. That's how all the e-commerce works. That's being completely rewired and it's going to be rewired for a while, not for the next 3 years, but probably decades. I think inserting ourselves into that new pattern early on with -- in a way that we can add value to all parties in the chain is what we need to do, and hopefully, we are able to.

Can we just talk a minute about how Agenta Commerce and stablecoins kind of change the threat vector that you're having to protect not just Mastercard itself, but out there for your merchant clients and relationships and your financial institutions. Like how does the threat vector change these 2 happening in the space?

It's a great question and frankly, one that I worry about a lot, right, because we're very excited about the technology, but the bad guys have access to the same technology. The bad guys are very well funded, as you may have noticed, with other people's money. So making sure that we are very thoughtful into that whole process to keep things safe and to make sure that when something goes wrong, there is recourse is very foundational in our thinking. We do that, obviously, with technology. Again, tokenization is essential. And by the way, I mentioned earlier on kind of elliptical curve cryptography and all that. Our cryptography over the last now 14 years of billions and billions of transactions has never been compromised, right? So this is very solid stuff. Where we see compromises is where tokenization has not been adopted yet. And that's why we're driving it very hard to have -- to go to 100% adoption of tokenization. But these new things are natively tokenized, right? We have to because we can't leave any daylight in for any bad actors to come in. But that -- the technology itself is not enough. You then need to assume that something somewhere might go wrong and then you need to have the consumer protections. And that's the case in agentic. It's very much the case in stablecoins. Stablecoins is scary, right? The on-chain world is a bit scary. It's hard to do. So we need to do a lot of work around the UX, but it's scary around, okay, well, do I -- can I trust the counterparty here? People say, oh, it's cool, it's final, but final means final. You don't get your money back, right? So what recourse do I have in stablecoins. And so we're building this into our design to make sure that actually counterparty assurance is there. We will have a stamp so that if I transact with you, I know that you are a KYC non-sanctioned individual and I can transact with you. And we'll make sure if something goes wrong, you have a layer on top of that so that I have recourse. Extremely important because if we get this wrong, this whole house of card will come crashing down, right? People will say, I don't touch this with a barge pole. This is scary, this is bad and the benefits don't outweigh the risks that I have, right? So extremely important that we do that right. That's actually the way -- the reason why when I go to the West Coast, people pick up the phone or people open the doors, like an OpenAI, Gemini or Google, Microsoft want to talk to us because they know that we're at a quite precarious point. We need to make sure that people can trust these new technologies that can trust that not to send the picture of a cat, but with your money. And so that whole construct is extremely important, and that's why we're really proud to be part of it, but also feel the weight of responsibility to get this right.

Yes, completely. So let's change course a little bit and talk about naturalistic schemes. It's still a question that comes up quite a bit with the idea here that we know they're not new, right? They've been around for a long time. As you get outside of the United States and you look around the rest of the world, there's a lot of these. But they have become more digitally sophisticated. They have consumer front ends that people are using, and they have a lot of local market data. So what has been the response in your view? And kind of how do you think about opportunities and threats going forward with that?

Yes. So it's a great question. And look, we've been around for 60 years, and we've been competing for 60 years against all sorts of players. And that's a great thing, right? The better our competitors become, the more we have to be on our toes and we need to get better, too. And you're right, these -- some of these APMs are pretty good. They're pretty sophisticated. They're pretty nice. They're pretty effective. And that puts the bar higher for us to make sure that we continue to innovate, we continue to earn the right to play, earn the trust of our parties. And so that's what we're very focused on. Sometimes the angle is financial inclusion. And so we have then created what we call essential debit, like a low-cost debit solution to compete. Sometimes it is more of a kind of policy decision. But by the buy, we welcome the competition because it forces us to be on our toes. Now that said, they have their issues, too, right? So they're essentially all domestic only, and therefore, they can't serve their consumers when consumers travel. They very often have limited acceptance. They may be in-store, but not online or vice versa. They may be online but not in store. So they can't really offer the full gamut of consumer needs. Possibly more importantly, as these scale and as the threat vectors start to kind of be more prominent, especially around scams and authenticated fraud, I think what we'll find is that scammers will go through the easiest targets and we'll start targeting these more and more. And so the conversation we have with these players is actually a constructive one. Yes, we compete. But in many cases, we can join up. We can join up for acceptance. We can join up for technologies like tokenization. We can join up for fraud protection or fraud detection because that is a kind of collective problem that we all have. What you'd actually now find like a couple of years ago, you would find big fraud attacks to be very pointed, like they hit in one country in a very big way. Today, they're no longer doing that. What they do is that they hit all across the world, in the Philippines, in Argentina, in the U.S. and in Norway at much lower levels so that they get undetected. If you have a system just in Argentina or just in the Philippines, you actually don't know what's going on. you might see a little bit, this is kind of okay. We sitting globally, we have our, what we call in the sky. We kind of see all these patterns across the world. We say, "Oh, well, there's this fraud vector happening, let's shut it down. And then we communicate across all of the countries. This is the kind of conversations that we need to have and are having with these APMs. So in the end, yes, we compete, we cooperate. It's just the nature of the beast when you're in 200 countries in the world, you have the opportunity to add services in different ways.

Yes. How do you think Agentic commerce will play into that? It seems like that actually would play in your favor would be my guess.

Well, so especially if you think of kind of a sovereignty agenda, in principle, okay, if a country in, let's say, France wants to have a French solution, and there's really not much we can do about that, right? However, the French want to service their consumers as well. They want to make sure that there's economic growth. They want to make sure that their consumers have access to the latest and greatest in terms of agentic and this and that. They want to make sure that the consumer are kept safe from that fraud vector that I told you about. And scale providers really have a benefit there, right? I am not sure that the local French or the local Malawi system will really integrate with OpenAI the way we can integrate it with OpenAI. And yet these consumers will need that access to these services. So I do agree that especially if you look at the big technology trends, scale players like ourselves have an advantage and gives us an additional reason to engage with local countries, to engage with local governments to provide those benefits to the consumers and the citizens there and to provide economic growth, which at the end is really important to these governments, right?

Yes. Well, it leads me to another thought. So has it become more challenging for Mastercard to operate in the kind of evolving geopolitical environment that we've had over the past several years relative to years past? Or are you finding that navigating that is no different?

Well, so let me first maybe make the distinction between what we view as our secular growth versus the cyclical growth. So what is great about our business is that we have been benefiting from a secular growth from cash and checks on to cards, but also from inefficient electronic payments like closed-loop transit onto open-loop transit from inefficient bill pay onto open loop bill pay. And so that secular trend, the digitalization has been very healthy, very positive and continues and has a long runway. And so we see even in times like these, where, frankly, there's a lot of difficulty in many respects, and I'll not kind of go into details on that. Our secular growth is very robust, and we feel very bullish about that. But then within that, you have indeed some cyclical trends. And some of that is conflict. Some of that may be some sovereignty agendas here and there. Some of that might be just short-term inflation, energy prices, what have you. These are usually short -- relatively short-lived. And given that we are so geographically diversified and given that we're diversified from a payments use case and from a vertical use case, those impacts are quite do in our overall perspective, right? Now you may argue, okay, well, this geopolitical thing is not a cyclical thing. It might actually be here to stay. And so as a result, we actually have made investments to be able to operate differently in a number of geographies where we need to. And honestly, we are a guest in most countries, right? We are an American headquartered company, and therefore, everywhere else, we're a guest. We need to service the needs of those consumers, the agendas of these governments, the priorities of these governments. And that may mean that we need to put our infrastructure on soil. We've done that in South Africa. We've done that in India. That may mean that we need to put our data on soil. We have done that in India. We've done that in China. It is just the nature of operating as a global company. We've done that for 60 years. We continue to do that. Sometimes it's a little bit more onerous or a little bit more involved, but it's just the nature of our business. And I think -- is it harder? I think that there is a like tweak perhaps in our capital allocation, but it's not something that we are -- that is foreign to us is what I would say.

Yes. Well, we're out of time. So Jon, thank you so much for that discussion. We're going to keep that transcript as a primer for a lot of things to discuss in the future. And thank you so much for your continued partnership with us.

Well, thank you. And it looks like you have a great day ahead with lots of interesting discussions to come.

Thank you very much.