MasterCard Inc. Earnings Call Highlights: Transaction Processing Fees

On Thursday, MasterCard Inc. (NYSE:MA) reported its fourth quarter earnings and discussed the following topics in its earnings conference call. Take a look.

Europe Green Paper

Craig Maurer – CLSA asked: I was just hoping to get your initial thoughts on the green paper that was published in Europe and is now out for comment.

Ajay Banga – President and CEO responded: The green paper, which came out recently, they’ve got a three month consulting period; it ends in April 11.

Basically they are looking at all aspects of European card, internet and mobile payments. They’re saying there’s not enough innovation, competition, or integration in Europe. This is fascinating given all the other things they are dealing with, but it does identify potential obstacles or barriers to further expansion of card, mobile and internet payments; it kind of says we’ve got to do something with this.

It may actually lead to a legislative proposal later, but in contrast to what the EC seems to think. We see e-commerce and mobile payments growing dramatically in Europe. Consumers are adapting new technology and new players are coming in with different ways to pay. I don’t see Europe lagging behind other regions in innovation when you look at the complete picture.

So that’s where they are coming from.

We share their goal to see commerce grow through more electronic payment on cards and mobile phone and over the Internet; we have the ultimate open platform. We are allowing new entrants to compete. They result in more choice for consumers, more choice for merchants.

We actually see ourselves as a part of the solution, and that’s how we are approaching our work with them. We’re kind of working with retailers. We’re working with telcos; we’re working with governments and we are working with software companies as well as a lot of other methodologies to make European payments simpler and easier.

I don’t think regulation is going to meet that need, it’s just that it needs more fragmentation, less innovation. This will probably increase costs at the end of the day, so I’m not big on this stuff.

I think we can work with them in a way to enable them to meet their needs to align more innovations, align in open system, align more people to play rather than try and put up walls to close the system in some way.

That’s our attitude towards the green paper. It’s positive in terms of participation, but not completely agreeing with the basic premises on which the paper was put out.

Transaction Processing Fees

Greg Smith – Sterne, Agee asked: I’m still confused about the transaction processing fees, meaning that they declined sequentially in the fourth quarter, I understand the pricing impact but was there – or the PIN debit impact – was there any sort of setting new pricing tiers or anything else going on that could have impacted that revenue line item?

Martina Hund-Mejean – CFO responded: No, we have seasonality and that’s cyclical. You shouldn’t look at this sequentially, you really have to look at that versus the year ago quarter. That’s why I made my remarks that you really have to compare the 23 percent transaction processing growth versus the 12 percent transaction fee growth.