The rapid pace of economic growth in the Middle East and South Asia region is expected to drive MasterCard's growth in the region, according to Robert W. Selander, president and CEO of MasterCard Worldwide.
Selander who was in Dubai recently to attend the MasterCard Worldwide's board meeting told Gulf News that his company's business in the Middle East and South Asia region reported 39 per cent growth last year, the fastest worldwide and has the potential to maintain such high growth rates as regional economies are going through an unprecedented economic boom.
While the affluent Gulf markets are contributing significantly to the volume of MasterCard's business in the region, Selander said the growth opportunities are huge in relatively under banked markets in the region such as India and South Africa.
"There are huge growth opportunities in emerging markets while developed ones are nowhere near saturation. Economic growth in the Middle East is a testimony to the growing opportunities," he said.
Selander expects electronic payments to increasingly replace paper-based payments, which will increase business opportunities for card companies.
Presently, about $80 trillion worth of business is conducted through paper-based transactions. "Last year we did a little over $2 trillion worth transactions through MasterCard brands, which simply shows the extent of potential at our disposal to grow further," he said.
MasterCard has about 33 million cards in the region. It has more than 900 million MasterCard payment cards and an additional 600 million Maestro cards worldwide.
To that extent the proportionate spend from the region is relatively small. However, Selander said the card spend by affluent customers is significant.
Commenting on the impact of the US slowdown on MasterCard's business outlook, Selander said wide geographical diversification of business and faster growth rates places MasterCard in a better position to deal with the slowdown.
The US presently accounts for less than 50 per cent of the company's revenues.
Selander said the slowdown in the US economy is temporary. He said the fiscal and monetary stimulus packages announced by the US administration and the Federal Reserve will reverse the trend in the next few quarters.
MasterCard expects the US economy to perform better from the third quarter, as the multiplier effects of the fiscal and monetary policy stimulus boost economic performance.
"There is always a delay before the stimulus packages boost consumer spending. Relatively, the leakages from the stimulus packages are low although a portion that could get saved and some would be used for paying of existing debts, a majority of it will end up as consumption which could lead the much needed multiplier effect," he said.
Selander believes that a major portion of MasterCard's future card business will come from internet transactions.
"In 1995, four per cent of our business was done through non face-to-face transactions. A couple of years ago it had crossed 25 per cent. Last year in the US, e-commerce transactions accounted for more than 30 per cent," he said.