2010 master card investment community meeting 091510
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September 15, 2010
MasterCard Incorporated
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Todays presentation may contain, in addition to historical,
the Private Securities Litigation Reform Act of 1995.
-assumptions, expectations and projections about future eventswhich reflect the best judgment of management and involve anumber of risks and uncertainties that could cause actual results to
er mater a y rom t ose suggeste y our comments to ay.You should review and consider the information contained in ourfilings with the SEC regarding these risks and uncertainties.
MasterCard disclaims any obligation to publicly update or reviseany forward-looking statements or information provided during
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Bob Selander
September 15, 2010Executive Vice Chairman
Change through Innovation
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MasterCards Transformation
We faced ...and responded with ...
Strengthened brands and marketing Launched PricelessWeak Brands
Rewrote core systems Developed Competitively Advantaged Offeri
Dated
Technology Created customer teams Introduced value-added services & MasterCa
AssociationMentality
Created single global entityStructure
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We made mistakesWe learned lessonthat made us
along the way
Mondex
more successful
Listen to customers
Debit in the U.S. A global, top-down doesnt always work
mpor ance o p anndifferent scenarios
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Trends resent both
challenges & opportunities Transformation of payments
Nationalism/regulation
New competition
Secular trends
We continue to deliverinnovative solutions Mobile phone initiatives MoneySend
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Our innovative approach...
weve made over the last decade or thecom etitive solutions weve introducedin recent months
...will continue todrive momentumacross our busine
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Ajay BangaPresident and Chief Executive OfficerSeptember 15, 2010
Looking to the Future
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Unified, global presence
Increas ng y erent ate assets
Strong financial performance
Significant growth potential
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Key Trends Creating Opportunities
on nue ur an za on
Financial inclusion 8-
Growing affluent and middle class
Growing importance of youth
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Other Trends Presenting
Promoting electronification
Regulatory challenges
of Governments
Merchants, telcos andNew Entrantsinto Pa ments
Increasing competition
Product innovationNewTechnologies
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MasterCard Strategy:
BUILDNew BusineBUILDNew Busine
DIVERSIFYGeographies & CustomersDIVERSIFYGeographies & Customers
GROWCore BusinessGROWCore Business
8-10% 3-5%
Long-Term =ar e
Growthrow rom
Strategic Investmentse evenue
Growth
Growt wi come t roug ot displacement of cash and checks
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GROWGROWCore BusinessCore Business
Segmented offerings and
product enhancements
Reinforce strong
position outside New geographies
and customers Increase U.S. ma
share profitably
Public sector, corporated l d bl
Domestic proces
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DIVERSIFYDIVERSIFYGeographies & CustomersGeographies & Customers
Geographies Customers Invest disproportionately in
high growth markets
Grow acceptance, channels,
Relationships with Merchants Telcos
processing Transit Operators
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BUILDBUILD
New BusinessesNew Businesses
MasterCard Labs Ideate, incubate and
e-Commerce & Mobile Drive faster than market
Partner and build paymentsinfrastructure in emerging
Monetize informatiod f d h l
Differentiate the consumerexperience in developed
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DataCash fits our acquisition criteria well
Drive e-Commerce growth in tandem withacquiring relationships
StrategicRationale
products beyond Europe and Asia/Pacific
Enhance fraud management expertise Deliver new products with minimal
merchant integration challenges
Clear fit with e-Commerce strategy Complements and enhances existing assets
DealCriteria
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Striking the right
Driving Strategy
Shar enin our
xecu on
competitive edge Innovation
Thoughtful risk taking Speed to market
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President, Global Products & SolutionsSeptember 15, 2010
Global Products & Solutions
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Solutions
Emerging PaymeEmerging Payme
v sory erv cv sory erv c
ProcessingProcessing
MarketingMarketing
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Global Opportunity to
o e wor s ransac ons
are still done in Cash1
o a consumer e
equals $9 trillion
2.5 billion adults worldwideare unbanked 2
Prepaid 3 will grow to$850 billion by 2017
Over $1.7 trillion Commercial 4
opportunity globally by 2015More than $1 trillion ine-Commerce 5 sales
4.6 billion Mobile Phones 6 globally, Opportunity to displace
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BUILDBUILDDIVERSIFYDIVERSIFYGROWGROWNew Busi
Build for theBuild for the
New Busi
Build for the
Income StreamContribution throughexpanded servicesContribution throughexpanded services
Income StreamContribution throughexpanded services
Core BusinessRevenues and market sharein core businessRevenues and market sharein core business
Core BusinessRevenues and market sharein core business
MasterC e-Comm Mobile
MasterC e-Comm Mobile
MasterC e-Comm Mobile
Advisory Services Network Products inControl
Advisory Services Network Products inControl
Advisory Services Network Products inControl
Credit Debit Prepaid
Credit Debit Prepaid
Credit Debit Prepaid
Remitta Informa Transit
Remitta Informa Transit
Remitta Informa Transit
New Customers New Markets New Customers New Markets New Customers New Markets
Commercial Processing Commercial Processing Commercial Processing
8 10% 3 5%L g T
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Sustainable Differentiation
To ay
Differentiated assetsprovide leverage
Near-Term
Innovation supported bykey strategic investments
Longer-Ter
Fully-integratedcontinuous innovati
Integrated Solutions
Unified Global Entity
Prepaid
Information Services
Drive value for:
Customers etwor esponse
and Flexibility
inControl
e- ommerce
Mobile / P2P
MasterCard Labs
erc ants
End Consum
Data Analytics
Smart Data
Open API Consumer Segmentation
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Extended Ca abilities New Channels Integrated Processing Solutions Strategic Payment Services MiGS and DataCash
e-Commerce Mobile Transit
MasterCardGlobal 210 Countries
Local Domestic Pro
Network 23,000 F nanc a
Institutions Currency Rules
Unique Central & Distributed Network
Value-Add inControl
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o v ng ee sDriving Growth
everag ng: Data Insi hts Payments Expertise Problem-Solving Sk
Three lines of Consulting Managed Services
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Marketing Strategy
Emer inEmer inEmer inEmer in Develo inDevelo inDevelo inDevelo in MatureMatureMatureMatureEmer inEmer in Develo inDevelo in MatureMature
MarketsMarketsMarketsMarkets MarketsMarketsMarketsMarkets MarketsMarketMarketMarketMarketsMarkets MarketsMarkets MarketsMarket
Brand PreferenceBrand PreferenceBrand AwarenessBrand Awareness
Consumer & merchant educationand awareness
Fully integrated marketing Product innovation
Acceptance development
Issuance support
Consumer benefit driven fromfunctionality Issuer & merchant strategic
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Australian debit volumeincreased 89% 1
Top of wallet behaviormore than doubled 2
among the target demographic
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< ay eo>
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Tremendousopportunities exist
MasterCards Innovation anddifferentiation are
level insight , alignmenflawless execution dr
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Chief Product Officer, Core ProductsSeptember 15, 2010
Credit, Debit, Prepaid
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Credit:
2Q10 YOY Growth
Volumes stabilizing inthe US; growth in ROW US: -1.5%ROW: 9.8%
Leading innovation in product and card design
Focused on:
Partners ips / assets or t e A uentConsumer-centric value propositions
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Credit:
PartnershipsTurkish
Airlines
Aeroflot
(Russia)
RelevantBBVA Itau
InnovativeDesign
Chase ContinentalOnePass
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Credit:
2Q10 YOY Growth US: 4.3%
ROW: 14.1%
segment in credit
Gaining share in Europe, pursuing greenfieldopportunities in APMEA and LACLeveraging differentiated product assets
CommercialLufthansa
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Recent US Financial Regulation:
Debit economicsImpacts Opportunitie
Brand sales in li h
Network exclusivity
Discounts at POS
network exclusivity
Pre aid for financi Credit min / max
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Debit:
2Q10 YOY Growth
US*: 0.8% / 21.0%ROW: 28.7%
sustained growtharound the world
Leveraging country-level strategies,
Focused on:
Winning pro ita e ea s in ey marWinning domestic switching
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Debit:
IndiaState Bankof India
Createofferinbank in
EuropeTEB (Turkish Next g
Economy Bank)Display Card
debit c
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Prepaid:
processing solution across all categor
Focused on three verticals:
Pu ic SectorCorporate
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Prepaid:
Direct Express DebitMasterCard
Givefasterfunds
ConsumerTravelex and Worl
Ban o C na foreigprepa
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Growth at the
core continues... Credit in focus andeneratin momen
US and around the
Prepaid is the next
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September 15, 2010
Chief Emerging Payments Officer
Growth through Innovation
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,
A strong global network and branwith robust assets / applicationsWhowe are
Building infrastructures and enhanWhat we are consumer experiences around wor ng on
Facilitating commerce by drivinggrowth in new markets and segmeere weare going
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-
Ra id ado tion of the InGlobal Online Sales
(in USD Billions)
continues to bolster onl
Brand lo alt securit
643768 806 3%
18%
45% convenience drive grow
2007 2008 2009
32%
Infrastructure :
Focused on:102%
YTD June 2010 Y/Y GrowthNorth America Europe Asia Pacific LAC + Other
Gateways, payment option Consumer Engagement28%
66%
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Global Mobile Pa ments Volume Mobile hones
250
300 Ubiquitous part of consudaily lives
200
i o n s Overall CAGR
68%
Innovation platform throa partnership approach
Infrastructure : Contac
Focused on:100
B i l l
Payments Gateway Consumer Application
0
50
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MasterCard introducesMobile PaymentsGatewa an m-wallet
First Commercial
platform linkingMasterCard cards
First Market Trial Custom Pioneer mobilehone debit
mo e NFCDeployment
NFC-EnabledMobile Phones
200 phonesa ment ilot in
Near FieldCommunicationand MTA
payments in the UK,using MaestroPayPass
Turkeys first mobilehones, enabled
First MobilePayPass Tagpilot in Canada
partnership withViVOtech
Fully-integrated First trial of PayPass -
Enable customers to
with MasterCardPayPass
-
person-to-personmobile paymentservice
phones for secureEMV paymentspayments via phoneswith MasterCardPayPass
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High volume, faster than cashsystems are cumbersome and in
Transit is an anchor for everyda
Paris
Taipei
New York CitySalt Lake City
Liverpool
IstanbulNewarkCleveland
Miami
Norfolk
Warsaw
Las Vegas Infrastructure
Focused on:
Rio de Janeiro
Kaohsiung open loop netwo
Consumer Expe
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Drivin rowth in emer in
markets, devices and segments
experience tmobility, acc
everag ng an expan ngour infrastructure
personalizat
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President, US MarketsSeptember 15, 2010
US Markets
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Winning deals in the fast-growing Debit space
Well positioned for the impact of the financialreform legislation
-governments, merchants, telcos, others to grow reven
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Strategy to Address Recent
Ensure Fed has a well-informed view
Leverage advantages of MasterCardsignature and PIN debit offerings
Provide financial institutions withnew solutions
Merchant focused innovation
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-
Engaging with merchants,governments, telcos andother players
New U.S. BusinessDevelopment function deto non-traditional players
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Complying with regulationand managing uncertainty
Seeking to replace or en ance revenue streams
p m z ngportfolio economics
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Opportunity
C
More than half of themarket is still using paper
Economic downturn causingDebit
2
C2
consumer s i t to De it
Regulation driving change
in competitive landscape
Strategic Imperatives Levera e stron momentum
Drive product innovation anddemonstrate differentiated value
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Opportunity Will represent a $442B market by 2
Regulation driving the unbanked to
Prepaid
Strategic Imperatives
public sector and consumer reloada
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Opportunity Favorably positioned with secular
Credit cards accounted for one-fiftof PCE in 2009
Credit
Regulation will drive product innov
Strategic Imperatives Protect and row core Credit
Leverage consumer insights to drivproduct innovation
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Opportunity
Double-digit growth in online salesdespite tepid overall retail sales gro
US accounts for more than 30% ofe-Commerce
global e-Commerce volume
Strategic Imperatives Grow share of online card s end ah
of the market Partner with targeted online player
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Opportunity Significant competitive differentiat
Regulation driving changes in Issubusiness models
AdvisoryServices
Economy driving changes in consu
Strategic Imperatives Im rove rofitabilit of Issuer or
Demonstrate predictive capabilitie
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deal activity and momentumExercisin rudence infinancial negotiations
Investing in innovative
US Poised for
pro uc s an so u ons
Focusing on both traditional-
Building, Growing and
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President, International MarketsSeptember 15, 2010
International Markets
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Our Objective...
through Global resources embedded in local execution.MasterCard Net Revenue
55%US International
$5.1B
48%
$2.8B N3.3B CAGR
21%
52% CAGR10%
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Strategic Framework for Capturing
based on size of opportunity andpotential returns for MasterCard
Segmentation of marketsto identify common themes and approach
Countr -level strate iesaround MasterCard strategic pillars of:
Core BusinessCore Business New BusinNew BusinIncome StreamIdentify New CustomersIdentify New Customers
Income StreamIdentify New Customers
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Global Drivers Translate into
-
Secular Trends
Demographic TrOpportunities
Transformationof Payments
Evolving Rolef G t
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Secular Trends:
-
22%
IndiaVenezuela16%
18%
20%
o f
e n
d i t u r e
China
Peru
Nigeria10%
12%
14%
- 2 0 0 9 C A G R
r T o u r i s
t E x
Singapore
AustraliaPoland
Mexico Spain4%
6%
8% 2 0 0 4
C r o s s - B o r d
S. KoreaFrance GermNetherlands
0%
2%
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-
GermanyLeveraging
domestic position
ChinaWon all 9 recent
co-brands toto captureoutbound travel
capture grow ngcross-border inChina
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Demographic Trends:
- 140%
100%
120%2009 Penetration 2004 Penetration
DevelopedCountries
DevelopedCountries
60%
80%EmergingCountries
DevelopedCountries
40% EmergingCountries
0%Banked Population Broadband Penetration Mobile Pe
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Mobile Payments:
- MasterCard introducesMobile PaymentsGatewa an m-wallet
First Commercial
platform linkingMasterCard cards
First Market Trial Custom Pioneer mobilehone debit
mo e NFCDeployment
NFC-EnabledMobile Phones
200 phonesa ment ilot in
Near FieldCommunicationand MTA
payments in the UK,using MaestroPayPass
Turkeys first mobilehones, enabled
First MobilePayPass Tagpilot in Canada
partnership withViVOtech
Fully-integrated First trial of PayPass -
Enable customers to
with MasterCardPayPass
-person-to-personmobile paymentservice
phones for secureEMV payments
payments via phoneswith MasterCardPayPass
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The chan in a ments landsca e rovidesnew opportunities with non-traditionalcustomers and innovative products but
Customer
New Techand Produ
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Strategic Global PrepaidAlliance with Travelex
Co-Brand Partnershi S annin11 Countries in Latin America
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Working with regbodies to drive pos
MasterCard is
actively partneringSupporting finanin emer in marke
with governments
Driving electronic
in rastructure eve
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Russia
,
largest retail bank, to offer customers
Maestro Debit Cards instead of
traditional savings passbooks.
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ocus ngon market trendsThe
Tailoringcountry-level strategies
Engine
Leveragingglobal resources
Adapting innovation
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President, MasterCard EuropeSeptember 15, 2010
Opportunities for Growth
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2009 Global PCE
LAC9%
Canada3%
32%
US29%
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Europes Card Payments Business is
$10T
Spendon Cards23%
MasterCardMarket Share
50%
MasterCardSwitching Ratio
has substantial
t ti l t g19%
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MasterCard is Well Positioned
A starting position of strength
Building for the future withproducts and partnerships
An active force inshaping the industry
Giulio Tremonti, Italy's Mpresents the new Maestr
Global and independent
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SEPA opens competition for 97% of domestic transactions
2006 2009Domestic DebitSwitchinIcelandIceland IcelandIceland
No Domestic DebitSwitching
DKDK
EstoniaEstonia
LatviaLatvia
LithuaniaLithuania
FinlandFinland
NorwayNorway
SwedenSweden
IrelandIreland
DKDK
IrelandIreland
SwedenSweden
NorwayNorway
FF
PoanPoanGermanyGermany
NLDNLD
SpainSpainPortugalPortugal
ItalyItaly
FranceFranceSwitzerlandSwitzerland
SloveniaSlovenia
GreeceGreece
BulgariaBulgaria
RomaniaRomaniaHungaryHungary
Czech Rep.Czech Rep.SlovakiaSlovakia
Lux.Lux.BelgiumBelgium
AustriaAustria
PoanPoanGermanyGermany
NLDNLD
SpainSpainPortugalPortugal
ItalyItaly
FranceFranceSwitzerlandSwitzerland
SloveniaSloveniaHungHung
Czech Rep.Czech Rep.SlovSlov
Lux.Lux.BelgiumBelgium
AustriaAustria
Percent of MasterCard DomesticDebit Transactions Switched3.4% 6.9%
CyprusCyprusMaltaMalta MalMal
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Enhancing the consumer experience
en Domestic scheme:100% of Debit cards and domestic volume
Challenges Nationalist sentiment Cost of migrating merchants to EMV
Now 90% of Dutch Debit cards converted to EMV Maestro Additional securit and features for consumers
e ver a pos t ve consumer exper ence
MasterCard begins processing Dutch domestic Debit transa
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Sparking innovation and choice
en Strong domestic schemes controlled by banks Difficult for non-traditional players
to enter market
Challenges Breaking the market Legacy of co-branding restrictions
Now Carrefour:First major MasterCard-only Issuer in France
Auchan and others follow; unique card propositions emerg 2.5 million PayPass cards within 18 months
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$8T $10T $ContinentalEurope PCE
Spendon Cards 20%
23%
MasterCardMarket Share 46% 50%
MasterCardSwitching Ratio
15% 19%
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-Chief Financial OfficerSeptember 15, 2010
Financial Perspective
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2010 Outlook e a es ncen ves
Capital Structure ConsiderationsLong-Term Growth Opportunity
Updated Long-Term Performance Targets
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Worldwide
Reported P
10.811.9
15%
As ReportedImpact of Deconversions
2.53.410%
l G r o w
t h
8.38.5
0.35.9
5% L o c
0.6
.
0.6
0%
. Processe
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US Credit
Reported 1.2 Processe
-1.5
-5%
0%
-8.0-10% l
G r o w
t h
-13.0-15%
L o c
-17.9-20%
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US Debit
Reported P
22.3 21.0
30%
As Reported
Impact of Deconversions
2.315.3
20.2
12.8
10% l G r o w
t h
5.210.5
7.00.8
0.4.
0%
L o c
-10%
.
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Rest of World
Reported P
11.6
14.8 14.516%
12.5 Processe
7.48% l G r o w
t h
4%
L o c
0%
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Worldwide
15%
As Reported
Impact of Deconversions
7.61.6 4.8 9.8
8.2
9.4 9.910%
l G r o w
t h
6.6
5% L o c
4.6
0.10%
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Worldwide
-
15.214%
18%
10.910%
l G r o w
t h
3.5
2%
6% L o c
-0.5-2%
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-
a se cqu rer ross- or er ssessment ee nQ4 2009, with corresponding rebates
All rebates will be collapsed into gross revenue
with no impact on net revenue As-reported Acquirer Cross-Border Rebates were:
Q1 2010 = $65 million
Q2 2010 = $62 million
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-
Debit Portfolio losses Rebates & Incentives trajectory
NetRevenue
Operating
Modest decline
1-2 ppt tailwind from Euro/Real FXExpenses Reinvestment in the business in Q3 A&M spend higher in second half o
Net Income Achieve at least 20%
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*
% of Rebates& Incentives
Volume / Transaction Based
~
New / Renewed Deals
anCustomer Marketing ~
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Capital Structure Considerations
Preserve strong balance sheet, liquidity and creditStrong $3.5 billion net cash with remaining litigation pay
$0.6 billion as of June 30, 2010 Available debt capacity, though to be used sparing
Balance Sheet
Investments in organic opportunities and M&A
transactions
Long-Term
Primary focus in technology, processing, prepaid,e-Commerce and mobile
Will target regular cadence depending on use of cthe business
Excess Cash
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62.0 3.0
$5
3.5
1.0$3
$4
B i l l i
o n s
0.5
$1
$2
$
Cash Balance Revolver Operational Share DataCash$0
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PCE Growth and Secular Trend
Personal Consumption Expenditure (PCE)
2010 2Cash & CheckEFTCredit / Debit
$48 Trillion
Global PC
Card Purc18%
29%$27 Trillion
$36 Trillion
Secular G
65% 56% 46%
12%15%
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-Estimated 2010-2015 CAGR
~10% StrategicInvestmentsSecularGrowth+4%
6%
~MA Mix
(1%)
d d d d
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Updated Longer-Term
On a constant currency basis:
Net RevenueGrowth Rate 12-14%
Margin
m n mumannually
Earnings Per Share 20% +
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APPENDIX
-Simplified structure with no Net Revenue impact
As B/(W)
Q1 2010 $ % growth $
Adjusted View 1
Gross Revenue 1,683 12.7 1,74
Rebates & Incentives (375) (11.3) (4
Net Revenue 1,308 13.1 1,30
Rebates & Incentives % of Gross Revenue 22.3% 25.2%
Q2 2010Gross Revenue 1,766 8.7 1,8
Rebates & Incentives (401) (16.6) (4
Net Revenue 1,365 6.6 1,36
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Group Executive, Research & DevelopmentSeptember 15, 2010
Innovation Experience
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MasterCard Drives Growth
been a payments innovator.And will continue to be a keycontributor
of species that survive, nor the most
Change is happening fast.
Needs of merchants and cardholders
one most responsiveto change .
Charles Darevo ving aster t an ever
We must leverage our.
To stay ahead or react quickly asopportunities emerge
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Make MasterCardfaster at innovation
disruptive breakthrosolutions for the n
n as er ar s gro
The temptation of business isalways to feed yesterday and to starve tomorrow
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Be open and diverse from anywhere
Share everythingFail smart
Dare to dreamDefine success metrics early
Labs is a stepping stTimeliness trumps perfection
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ccess o new eas,
even better experien
Companies revolutionopening up prove
This is just the begin
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Providing personalized spendingcontrol and peace of mind.
Spend management tohelp companies work smar
MasterCard MarketPlace
MoneySend . ,
in person-to-person payme
Prepaid SolutionsLeading the conversion from cash Integrated Processing SThe globally integrated pro
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Ajay Banga
President and Chief Executive OfficerSeptember 15, 2010
Closing Remarks
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New BusineNew BusineGeographies & CustomersGeographies & CustomersCore BusinessCore Business
Capturing opportunities while addressing challenges
Striking the right global / local balance
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