September 26, 2020

Mastercard (MA) Takes Advantage of Digital Payment Acceleration

The evolution of currency has swiftly shifted over the years as more people move toward a cashless society with the convenience of online payment transitions. The digital payment platform Mastercard has grown so much from the change in consumer behavior to electronic payments. Even during the coronavirus pandemic, MA is benefiting from the accelerated trend towards digital payments as more people continue to make purchases from home.

Deutsche Bank reiterated their Buy rating on shares while raising their price target to $383 (from $320). The analysts expect volumes and transactions to continue to improve and the potential for accelerated adoption of digital to drive long-term growth rates.

During discussions with the anlaysts at a virtual tech conference, President and CEO-elect Michael Miebach highlighted increased demand from the government wanting to modernize the structure of electronic payments and allow businesses to optimize payments. Miebach also mentioned the potential for the accelerated trend toward electronic payments to continue to sustain the business and grow revenue. Additionally, Miebach believes the pandemic has positively highlighted the company’s business model which includes a strong services component. The two services are cybersecurity and data analytics, which have seen increased demand during the pandemic.

Mastercard has plenty of room for growth in electronic payment which can surpass cash payments on a global basis. Currently, 80% of payment transactions worldwide still take place in cash this leads to high-growth areas for the digital payments industry that could allow Mastercard to get much larger.

Mastercard continues to see modest improvement as more people continue to stay home and social distance, leading them to increase online purchase activity. On a global basis, electronic payments have persistently kept a positive trend and are expected continue growing over the the next 5-10 years.

Overall, the digital payment market will continue to accelerate as society leans more towards a cashless society even post-pandemic.

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Disclosure: At the time of publication, I have no positions in any of the securities mentioned in this article. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for creating this article (other than from TheStreet) and have no business relationship with any company whose stock is mentioned in this article.

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