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Money on the move

Posted July 3, 2024 at 10:15 am
Alexander Gunz
Heptagon Capital

How many times a day do you swipe or tap? A lot, probably. Mastercard’s network processes over 60,000 transactions a second on its network at peak times of the year, such as Black Friday. Digital payment may be utterly commonplace for all readers of this piece, but your author was reminded of the sheer complexity that underpins this process when recently visiting Mastercard’s London Experience Centre.

Mastercard has seven such Centres around the world (we have visited the New York one several times). It uses them to showcase innovation to stakeholders. In homage to one of Britain’s most famous fictional creations, at the heart of the London Centre sits the ‘Bond Room.’ It was fittingly equipped with a huge screen displaying the full extent of Mastercard’s global network. The company’s underlying decision intelligence platform reviews around 2bn transactions daily. Backed by more than 100 different AI models, 200,000 fraud criteria are considered before any transaction is approved (or declined). This process takes just 50 milliseconds, on average. Great news for retailers seeking to minimise fraud risks.

No wonder then that the number of merchant acceptance locations at Mastercard have expanded significantly in recent years. Payments on the Mastercard network are accepted in over 110m locations globally, with 20m added in the last three years. This is equivalent to one every three seconds. Payment facilitation via the likes of Square and SumUp have helped, but for consumer, the frictionless use of Mastercard also matters. Contactless payments now account for more than 1-in-2 in-person transactions globally. Tokenisation, via the use of biometric-enabled Apple ID, for example, has been another important driver. More small business (and their customers) will likely embrace these technologies.

Expect more AI too. Beyond its crucial role in fraud protection and cyber, Mastercard showcased to us its ‘Intelligent Agent’ solution. Imagine an avatar with whom customers can interact via a conventional conversation. Said avatar could, for example, book flights and then potentially make a hotel reservation in the same city. It might also be able to secure a table at a top restaurant. With payment details and user preferences saved, and the system constantly learning (that you prefer, say, morning flights and aisle seats), in the words of our host, AI could “transform the payment landscape.”

Originally Posted July 3, 2024 – Money on the move

The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Heptagon Capital is an investor in Mastercard Inc. The author of this piece has no personal direct investment in the business. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.

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