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Mastercard (MA) Continues to Boost Presence in Open Banking Space

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Mastercard Incorporated (MA - Free Report) recently announced that its tie-up with Finland’s online payment services provider Paytrail has witnessed widespread success with monthly open banking payments of over one million. Apart from its collaboration with Paytrail, the acquisition of the leading European open banking platform Aiia in 2021 helped MA in achieving this milestone.

Aiia, which is a Mastercard company, aids Paytrail in rolling out new payment options and offers a seamless online checkout experience to enable over 20,000 merchants and shoppers to adopt digital means. The collaboration between Mastercard and Paytrail also empowers merchants to extend a fully-integrated solution within the checkout environment, thereby providing varied consumer choices.

The joint efforts of Aiia and Paytrail, which have been working together since 2019 to ramp up open banking-powered payments across the eCommerce checkout flow, remain commendable in attracting more merchants and consumers to the rapidly expanding open banking space.

The concept of open banking appeals to individuals worldwide, owing to the numerous benefits offered by it. Through open banking, individuals in possession of just a bank account can pursue accelerated digital payments via a reliable interface. Consumers leveraging open banking solutions benefit from faster checkout processes. The payments reach a retailer’s account within minutes in some countries or at least as fast as possible. As the payment is directly initiated from the bank and there is no need to fill in payment details manually, the completion of a payment procedure is accelerated. Such advantages often do not come with traditional payment options.

Partnerships similar to the latest one clearly reflect one of Mastercard’s most important endeavor — to deepen its presence in the open banking space. The immense growth scope of the open banking market justifies MA’s strategy of harnessing growth prospects prevailing in the space. Per a report by Allied Market Research, the global open banking market is anticipated to witness a 24.4% CAGR over the 2019-2026 period.

Mastercard has been resorting to continuous efforts in the form of either collaborations or acquisitions to sustain its position in the space. The buyout of Aiia is one such effort on MA’s part. Last month has been quite an active one for Mastercard with respect to measures undertaken to enhance its open banking space footprint, as evident from the following moves. It introduced an innovative open banking payments feature called Pay by link, powered by Aiia. The feature can already be availed across the Nordics. The feature is projected to reach the entire Europe through 2022. Mastercard partnered with the Open Banking services provider of the Gulf Cooperation Council (GCC) — Spire in a bid to incorporate the latter’s “Ingage” platform within the Merchant Identifier solution of Mastercard, resulting in better digital banking user experiences in the region.

Shares of Mastercard have lost 11.4% year to date compared with the industry’s decline of 13.7%.

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Zacks Rank & Key Picks

Mastercard currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the Business Services space include Huron Consulting Group Inc. (HURN - Free Report) , Green Dot Corporation (GDOT - Free Report) and ICF International, Inc. (ICFI - Free Report) , each carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The bottom line of Huron Consulting outpaced estimates in each of the trailing four quarters, the average surprise being 29.97%. The Zacks Consensus Estimate for HURN’s 2022 earnings suggests an improvement of 22.6% from the year-ago reported figure. The same for revenues suggests year-over-year growth of 13.5%. The consensus mark for Huron Consulting’s 2022 earnings has moved 2.9% north in the past 60 days.

Green Dot’s earnings outpaced estimates in three of the trailing four quarters and missed once, the average surprise being 20.50%. The Zacks Consensus Estimate for GDOT’s 2022 earnings suggests an improvement of 12.2% from the year-ago reported figure. The same for revenues suggests growth of 2.3%. The consensus mark for Green Dot’s 2022 earnings has moved 2.3% north in the past seven days.

The bottom line of ICF International outpaced estimates in each of the last four quarters, the average surprise being 14.81%. The Zacks Consensus Estimate for ICFI’s 2022 earnings suggests an improvement of 11% from the year-ago reported figure. The same for revenues suggests growth of 11.1% from a year ago. The consensus mark for ICF International’s 2022 earnings has moved 1.9% north in the past 30 days.

Huron Consulting stock has gained 32.2% year to date. Meanwhile, shares of Green Dot and ICF International have declined 28.6% and 7.5%, respectively, in the same time frame.