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Analysis of the MasterCard company – American fintech company, an international payment system.

Analysis of the MasterCard company – American fintech company, an international payment system.

4 November 2020

MasterCard is an American fintech company, an international payment system. The main cash flow generating the company’s revenue is the commission charged from banks. Payment processing is also a significant part of the company’s revenue. Payment processing is a commission charged by banks for making and authorizing domestic and international payments. The company’s revenue is quite diversified – 34% comes from the USA, 28% from Europe, 30% from the Pacific region and 8% from others. It should be noted that the geographical diversification of this payment system is much higher than that of its main competitor, Visa. However, the number of issued Visa bank cards exceeds that of MasterCard (3.5 billion versus 2.6 billion).

In recent years, the company has been operating mainly with borrowed funds. However, the company does not experience any problems with debt. Net debt / EBITDA ratio is 0.12.

It is worth noting that in 2019 the company spent more than 75% of its net profit on share buybacks. The company also pays dividends, but at current prices the dividend yield is less than 0.5%.

The marginality of the business is quite high, but it is significantly reduced by various promotions and discounts that the company provides to its customers. One of the reasons for this generosity of MasterCard is fierce competition with Visa

The company received a license to operate in China in 2020.

Thus, the market in which the company operates is still potentially profitable for many years to come, because it is too early to talk about full digitalization of payments. The only threat to the sector is the state, which can impose sanctions on them for abuse of monopoly position in the market.

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4 November 2020
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