Mastercard’s next CEO to continue company’s push beyond cards3 min read . Updated: 26 Feb 2020, 09:55 AM IST
- Michael Miebach will become president on March 1, then chief executive next January
Mastercard Inc.’s pick for its next chief executive puts more muscle behind the company’s effort to expand beyond its legacy cards business.
The company said Tuesday that Ajay Banga, its chief for nearly a decade, will be replaced by Chief Product Officer Michael Miebach effective Jan. 1. Mr. Banga will become executive chairman of the board. Current Chairman Richard Haythornthwaite will retire.
For decades, Mastercard primarily provided the rails for debit- and credit-card payments. But Mastercard and rivals like Visa Inc. are facing competition from new payments companies and trying to navigate changing consumer habits, while also developing technology to play a bigger role in business-to-business payments. Mr. Banga, the longest-tenured CEO of a major U.S. card network, has focused on transforming Mastercard from largely cards-based payments to a range of payment technologies.
New competitors that let consumers bypass cards have been a driving factor. In Asia, for example, mobile wallets like WeChat Pay and Alipay have grown rapidly, allowing consumers to shop with money moving directly from their deposit account to the merchant. More broadly, the payments sector is undergoing big changes as tech giants including Apple Inc., Amazon.com Inc. and Alphabet Inc.s' Google aim to grab a bigger piece of the market, raising the prospect that cards could play a smaller role in payments in the future.
“Everything’s changing and what we’ve tried to do inside the company, rather than be in a foxhole, I’d rather go out there and embrace the change and try to drive it," Mr. Banga said in an interview. Shares fell 6.7% Tuesday, an off day for the markets.
The company has tried to break away from being branded a card firm. Last year, it said it was removing its name from its logo in most contexts, leaving just the familiar red and yellow circles to represent the brand on cards, advertising and elsewhere.
“We aren’t really just a card company," Mr. Banga said. “We are a payments and technology organization that enables the movement of money [between] account[s]. That’s who we are and that’s why I don’t like that we are called a card company."
Mastercard is the second-largest card network in the U.S. behind Visa.
Before Mr. Banga took over in 2010, card-based transactions accounted for about 80% of the company’s revenue. That has since declined to just over 50%, the company said.
Another revenue stream the company has grown involves selling consumers’ spending data to governments, banks, merchants and other companies. Mastercard says the data is anonymized and that it doesn’t sell individual transaction data.
The focus on shifting the company beyond cards will continue with Mr. Miebach, whose expertise includes digital and real-time payments. Mr. Miebach has played a crucial role in the company’s empire building, leading the deals to acquire Vocalink, a payment-technology firm that allows payments to move between bank accounts, and Nets, a Danish payment-services provider. The Nets deal, which is in the process of closing, would be its biggest.
Last year, Mastercard bought Vyze, a technology company that enables point-of-sale lending, where loans are offered to consumers at checkout. That type of lending has threatened to take away purchase volume from cards.
Mr. Miebach also led a push to enable Mastercard payments in emerging markets and was president of Mastercard’s Middle East and Africa operations between 2010 and 2015.
Mastercard stands to benefit from a trade deal the U.S. signed with China last month, which could clear some of the obstacles that prevented it and other U.S. financial-services companies from having a bigger presence in China.
This story has been published from a wire agency feed without modifications to the text.