Dive Brief:

• Mastercard plans to increase investments in new technologies, particularly in regions of the world outside of the U.S., as it seeks growth, the company’s CEO told analysts on a webcast Wednesday. As a result, the card network will incur a third-quarter financial charge.
• The Purchase, New York-based company aims to spend more on artificial intelligence, biometrics and tokenization as it seeks to differentiate its services, including in regions such as Africa and Latin America, Mastercard CEO Michael Miebach said.
• ”We plan to redeploy resources into growth markets with high cash levels,” Miebach told analysts during the call to discuss the company’s second-quarter financial results. “We will invest in opening acceptance in new verticals. We will continue to apply technology to help us realize even more of the shift to digital across both consumer and commercial.”

Dive Insight:

The company’s decision to take a third-quarter charge follows a prior announcement in April that it would realign its business to target certain strategic priorities. In its discussion of its second-quarter results, those priorities became clearer.

For instance, Mastercard will more heavily invest in providing data analytics, fraud and cybersecurity services, particularly with the incorporation of AI into those offerings. Miebach also mentioned ways in which the company is increasing its use of biometrics, like a consumer paying in-store with a wave in Latin America. In addition, it’s turning to more tokenization, which replaces cards with digital tokens to improve authentication and security.

Miebach noted in particular Mastercard’s increasing focus on bringing its services to Africa, where the continent’s evolution from cash to alternative payments, particularly those made on mobile phones, make it a ripe market for the company’s services. “The continent is a great example of the vast secular opportunity in emerging markets,” Miebach said during the call. “We are committed to the digital transformation of the region.”

Mastercard’s tech changes extend to Europe, where it’s phasing out the manual entry of card numbers for e-commerce payments in a switch to one-click checkout by 2030 to increase ease of use and security.

In commenting on Mastercard’s report, analysts at the financial firm William Blair noted a preference for the types of investments that Mastercard is making versus those at its larger rival Visa.

“We think Mastercard’s [value added services], which emphasize data, analytics, fraud, ID, advisory, etc., are more advanced than Visa’s,” the analysts said in a Wednesday note to their clients. “Our view is that Visa focuses on processing and e-commerce, which do not address as many customer pain points.”

Mastercard reported second-quarter net income rose 15% to $3.3 billion as revenue climbed 11% to $7 billion, according to a press release on its earnings results.