Mastercard Incorporated (MA - Free Report) recently extended its relation with BOB Financial Solutions Ltd. (BFSL), which is a Non-Banking Financial Company (NBFC) wholly owned by Bank of Baroda (BoB). Notably, Mastercard has been working closely with BFSL for more than 25 years and provided them with a varied range of financing solutions to assure safer and more secured digital payments. Notably, shares of Mastercard gained 0.6% on Sep 30.
The latest collaboration between Mastercard and BFSL resulted in the launch of four new credit cards, which intend to serve a wide customer base, ranging from the affluent to the ones who will be using credit cards for the first time.
Among the four credit cards, Eterna is meant for addressing the diverse needs of not only BoB’s Radiance program customers but also of other affluent customers within and outside BoB. The Swavlamban credit card intends to provide the required liquidity for low-income employees of specific corporates and SMEs sharing a banking relationship with BoB.
The two other credit cards have been rolled out specifically for Chartered Accountants and Cost and Management Accountants by joining forces with the Institute of Chartered Accountants of India (ICAI) and the Institute of Cost Accountants of India (ICMAI).
On a collective note, all the four abovementioned credit cards are equipped with some common features. Customers using these cards can avail not only travel benefits, shopping benefits, insurance benefits but will also be entitled to cashback rewards and welcome gift on specific products.
Notably, shares of Mastercard have gained 27.9% over a year compared with the industry’s growth of 14.8%.
Among its peers, Visa Inc. (V - Free Report) has rallied 17.8% in a year’s time, while American Express Company (AXP - Free Report) and Discover Financial Services DFS have lost 11.1% and 24.7%, respectively, in the same time period.
Intensified Focus on the Indian Market
The latest move clearly hints at Mastercard’s interest to cater to the growing demand for cashless payments in the Indian market, which has been accelerated further by the COVID-19 pandemic. Case in point, Mastercard and BFSL has intensified focus to launch solutions that ensure safer digital payments since the onset of the pandemic. Mastercard’s collaboration with SBM Bank India this month to launch SBM World Debit Card, which will club niche banking solutions, is another notable move on part of the company to strengthen presence in India.
Moreover, it must be mentioned that India is a big market for Mastercard given its rising middle class and working population, and large chunk of the population, who are eager to utilize debit or credit cards. This led Mastercard last year to announce an investment of $1 billion in India for the next five years. Notably, this is in addition to the $1-billion investment that the company has already made in India in the past five years (2014-2019). These investments have enabled Mastercard to embrace newer technologies and partner with several organizations for capitalizing on the current prospects in the digital payments space of India.
Furthermore, online payments are likely to gain traction not only through plastic cards but also via increased usage of smartphones, which is in fact, paving the way for e-commerce market growth in India. A spurt in online shopping will fuel the usage of debit or credit cards and other forms of digital payment methods. Notably, the e-commerce market in India is projected to witness a CAGR of around 18.2% by 2024, per Research and Markets.
It is to noted that the government of India has been encouraging e-commerce platforms for innovating and devising newer technologies to upgrade digital payments. This, in turn, positions Mastercard, which carries a Zacks Rank #3 (Hold), well for long-term growth. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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