Why Mastercard hasn't given up on China
If Mastercard chief executive Ajay Banga is frustrated that the payment card giant continues to be shut out of the lucrative Chinese market, he isn't showing it.
"Just because we're a global company, doesn't mean we have a birthright to be [there] ... you earn your keep," says Banga.
The People's Bank of China has so far ignored the application that Mastercard made more than a year ago to obtain the licence it needs to sell its products in China. Arch rival Visa is also waiting for a response to its application.
"The whole ideal of taking a thoughtful risk and taking ownership for it, being accountable for it, goes as a cultural element in our conversations," says Mastercard CEO Ajay Banga. Eamon Gallagher
Mastercard has been allowed to operate in cross-border transactions with China for the past 30 years, but obtaining a licence that will allow it to process payments within the country has proved frustrating.
"Fundamentally, the issue has been that in the Chinese government's eyes, they have rules and systems in place about who would be allowed to operate domestically, and foreign networks were not allowed," he says.
Banga remains hopeful, saying his company is continuing discussions with the Chinese government. "Watch this space. We'll see. We'll see," he says. "I haven't given up."
Access to China's electronic payments market for Visa and Mastercard was one of 10 points agreed to between the US and China after the first summit between President Donald Trump and Xi Jinping in April 2017 and it is believed China is still open to the idea as part of an overall trade agreement.
Further, in the intervening time since Banga spoke to BOSS, it has been reported that Mastercard has agreed to form a joint-venture with Nets Union Clearing, a Chinese organisation established in 2017 to process transactions for online payment platform Alipay and social media site WeChat.
Banga believes Mastercard will earn its place in China by helping the country open itself up to the global economy: "If you look at any economy where payments of the type we provide are there, combined with safety and security, combined with global connectivity ... you find economies are much better off than if they are closed," he says.
Mastercard and rival Visa have so far been shut out of the lucrative Chinese market. MARK LENNIHAN
The attempted foray into China is an example of what Banga describes as taking "thoughtful risks" – something he says is crucial to keeping ahead of the pack in the ever-changing payment platform industry and ensuring Mastercard stays relevant.
Banga was born in Maharashtra in west-central India in 1960, the son of a general in the Indian army. After graduating from Delhi University with a degree in economics and an MBA from the India Institute of Management, he spent 13 years at Nestle in India.
He then worked for two years with PepsiCo and was instrumental in introducing its Pizza Hut and Kentucky Fried Chicken restaurants to India.
Golden age of credit cards
Banga has also spent more than a decade at Citigroup, much of it managing its overseas credit card and consumer banking businesses. He worked for a year as CEO of Citi's Asia Pacific division before moving to Mastercard in 2009 as online shopping was exploding onto the scene. Less than a year later, he was appointed CEO and president of the credit card giant.
Access to China's electronic payments market was among points agreed to after the summit between President Donald Trump and Xi Jinping in April 2017. ANDY WONG
The birth of online shopping was hailed as a golden age for credit card companies like Mastercard, but the industry has experienced a rapid influx of new fintech services. The likes of PayPal and buy-now-pay-later platforms such as Afterpay are now jostling for customers.
Banga, however, disagrees that these new services have disrupted Mastercard.
"I don't call it disruption," he says. "I just think it's an interesting way of reaching consumers, and for some reason that's called 'disruption'."
Banga might not agree with the term "disruption", but Mastercard has rebranded itself as a tech company rather than a credit card provider in order to reposition itself in the brave new world of fintech.
Mastercard is facing competition from the likes of PayPal and Afterpay. Dominic Lorrimer
If the stories are to be believed, some online shoppers prefer to use one-touch payment platforms such as PayPal or Apple Pay for one simple reason: they're too lazy to get off the couch and find their card.
For that reason, Mastercard has joined rivals Visa and American Express to back the development of a one-touch payment platform, regardless of payment method. It is expected to be rolled out this year.
In another move to rebrand itself as a tech company, Mastercard is leading a new system that allows public transport users to tap and pay with their bank cards instead of cards like Opal in NSW and Myki in Victoria.
The system, originally taken up on London's Underground, was rolled out in Sydney last November and chalked up 1 million swipes in two months. It will be rolled out in Melbourne next, Banga says.
"I'm not certain how pay later, buy now is not borrowing money," Banga says of services like Afterpay. "That's a pretty interesting angle." Dominic Lorrimer
In another "thoughtful risk", Mastercard has invested in new artificial intelligence technology that Banga says will add an extra layer of protection when consumers shop online with Mastercard using their phones. In March 2017, Mastercard bought Vancouver-based tech firm NuData, which has developed biometric software that identifies the unique ways people hold and touch their smartphones.
Meanwhile, Banga is unfazed by the proposition that debt-shy Millennials are turning to platforms such as Afterpay and Zip Pay because they fear falling into credit card debt.
"It's a flavour of the month kind of thing, and I'm not into it," he says. "The part about younger people being less inclined to borrow money – I'm not certain how pay later, buy now is not borrowing money. That's a pretty interesting angle."
In fact, he welcomes these new competitors with open arms. "I want to kill cash anyway," he says. "I think the more ways we can find to make a consumer's life cheaper, faster, better, the better off we all are."