Mastercard chief executive officer Michael Miebach stated that this company, which is one of the giants of the payment industry, currently does not observe any signs of a decrease in consumer spending, despite the fact that the results of surveys on consumer sentiment indicate a high level of concern among people about the state of affairs in the economic space.
The mentioned statement was made last Wednesday, April 23, at the Semafor World Economy Summit. Michael Miebach said that hard data from Mastercard’s Economics Institute tells a different story.
The payment giant tracks real-time spending across its network and the broader economy. The company said that consumer spending showed an increase of 1.4% last month. It is worth noting that the increase in this figure was recorded at a time when consumer confidence surveys indicate a negative dynamic.
Michael Miebach stated that the hard data does not reflect where the consumer is. He also described the modern consumer as an empowered consumer. According to him, shoppers will continue to adhere to a strategy that involves performing the actions they want. Also, the head of Mastercard underlined that consumers can pare down their spending, but they still want to make that trip.
Michael Miebach emphasized that the company he heads has not yet seen any changes in consumer behavior.
At the same time, the media notes that a significant economic downturn still continues to be a realistic prospect. The trade war based on the currently observed tariff confrontation, which can accelerate inflation in many countries of the world, is an objective fact. The final impact of this factor on the present configuration of global economic reality is still unknown in terms of the scale of the consequences. At the same time, there is a high probability that the ramifications in this case will turn out to be deep and fundamental. The implementation of the corresponding potential scenario will have a guaranteed impact on consumers, which will be reflected in a reduction in their financial capabilities. This likely state of affairs will force people to adhere to the principle of economy as the main guideline in the context of the issue of purchases. Also, such a negative scenario will force consumers to focus on their primary, critical needs and abandon additional expenses that do not belong to the category of vital in the literal sense of the corresponding wording. It is not known what data Mastercard will record in the relevant situation and how the company will cope with these circumstances in general. It is worth noting that the mentioned negative scenario belongs to the category of realistic prospects, but at the same time is not something that can be described as inevitable.
Michael Miebach took the helm at Mastercard in 2020, when the coronavirus pandemic was beginning. The mentioned state of affairs was unequivocally negative for the economy, both globally and regionally. This means that Michael Miebach has experience in managing businesses during difficult periods.
On Wednesday, the head of Mastercard said that the company’s diversification across services and geographies would be a buffer. The payment industry giant currently operates in 210 countries and territories.
In the collective consumer perception, Mastercard identification provides that this brand primarily facilitates the purchase of goods and services. At the same time, as Michael Miebach noted, it is less well-known that the company also provides a wide range of services that are tied to powerful underlying secular trends that have nothing to do with the economy. He stated that in the relevant context, cybersecurity is one example. Mastercard is one of the largest providers of corresponding functional solutions in the world.
Michael Miebach stated that the company’s scenario planning is not one of dark clouds. In this context, he noted that right now, there isn’t a scenario where this has a dramatic impact on the firm.
Also on Wednesday, Michael Miebach was asked whether the reports according to which Visa can take over Apple Pay from Mastercard are true. The head of the company stated that he had seen the relevant headlines. He flatly denied that Apple is ditching Mastercard. According to him, nothing like this is happening.
It is worth mentioning that this month the media published information according to which Visa offered Apple about $100 million to take over Apple Pay from Mastercard, which processed the Goldman Sachs’ Apple credit card. It was also noted that fierce competition to take over from Goldman Sachs is observed not only between big banks such as JPMorgan Chase and Synchrony Financial but also between payment networks that process transactions, including Visa and American Express.
In the face of extreme competition in the industry, Mastercard manages to differentiate itself in a crowded digital payments landscape. Michael Miebach acknowledged that there are currently a huge number of payment methods available to consumers, including, among others, cash, cards, stablecoins, and crypto balances. According to him, people should think of a Mastercard in a different way, not as a business-to-consumer provider. In this context, he noted that the payment industry giant powers Walmart and Sonys with its solutions on the backside. Michael Miebach also stated that Mastercard loves the competition and the choices that are now on the market. At the same time, he noted that the company focuses on solving customer problems, not on competition. In this context, Michael Miebach mentioned as an example that for retailers, the checkout experience is currently one of the pain points. According to him, no one is interested in standing in line or having a complicated checkout page on the web. He stated that Mastercard’s response to the relevant challenge is biometrics. According to him, it’s wonderful that the mentioned solution can work on consumers’ phones and on anything. He also stated that Mastercard created that standard.
By the end of the current decade, the payment industry giant intends to phase out the need to enter card numbers, static passwords, and one-time codes for online purchases. It is expected that it will replace the process with a new one enabled by a combination of tokenization and biometric authentication, to make checkout smoother and more secure.
Mastercard is also currently continuing to retool its customer experience through leveraging generative artificial intelligence. The company has been using machine learning and rule-based AI to process 160 billion transactions through its system.
Mastercard is currently leveraging generative artificial intelligence for what Michael Miebach described as agentic commerce. As part of the relevant practice, the process of using smart AI agents who know the client and simplify things like gathering reward points and leveraging them for travel planning is carried out. Moreover, the mentioned digital assistants can book the trip.
Michael Miebach stated that in the world of agentic commerce, consumers have a smart agent who knows all the preferences and all of credit, debit, and loyalty card balances. He also noted that Mastercard enables travel and commerce, and has a lot of data.
Responding to a question about how the financial impact of artificial intelligence is delivered for the payment industry giant, Michael Miebach pointed to cybersecurity and fraud management. He stated that since 2018, Mastercard has invested $11 billion in keeping its own four walls safe and putting out safety and security products for its customers.
The goal of the payment industry giant is to save $120 billion in fraud by 2030. The plan to achieve this goal, among other things, provides for the use of generative artificial intelligence to scan the dark web for compromised card data and alert banks in real-time, analyzing 1 trillion data points.
It is worth noting separately that scammers also have access to machine intelligence tools. For this reason, their activities have become more sophisticated. To counteract the threat associated with this circumstance in the virtual space, personal awareness of users is important. For example, an Internet search query such as how to know if my camera is hacked will allow anyone to get information about signs of unauthorized access to the device.
