Mastercard and Cryptocurrencies: A Trial Program
On a local currency basis, Mastercard (MA) witnessed a year-over-year (or YoY) increase of 17.0% in its cross-border volumes in 4Q17. This trend has positively impacted the company’s net revenue growth in 4Q17.
Factors such as favorable momentum in the switched transactions, gross dollar volumes, and acquisitions also positively impacted Mastercard’s net revenue growth in 4Q17.
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Of these acquisitions, the VocaLink acquisition was the major contributor to Mastercard’s revenue growth. Mastercard’s cross-border volumes rose 5.0% from January 1, 2018, to January 28, 2018, compared to its 4Q17 volumes, which were helped by Europe, extended holidays, and buying digital currencies.
Issuers of Mastercard-branded cards are restricting their customers from buying digital currency, which could negatively impact Mastercard’s cross-border volumes. Mastercard’s management developed a trial program in which the companies that offer cryptocurrencies could offer a Mastercard prepaid debit card.
Mastercard is exercising caution with respect to compliance requirements, as it must ensure that its partners comply with these requirements. In a competitive environment, the company is trying its hand in this new area through its trial program.
Mastercard’s enterprise-value-to-revenue ratio stood at ~14.1x on an LTM (last-12-months) basis. Among its peers (XLF), Euronet Worldwide (EEFT), Western Union (WU), and Global Payments (GPN) reported enterprise-value-to-revenue ratios of ~1.9x, 2.1x, and ~5.1x, respectively, on an LTM basis.