On Oct 6, MasterCard Incorporated
(MA - Analyst Report
) soared to a 52-week high of $103.17. The momentum in the stock seems to have been driven by a number of initiatives, alliances and agreements sealed recently that should bode well for the long term. These include a partnership with PayPal, the announcement of acquisition of VocaLink, upgrade to Masterpass and a deal with Stripe.
MasterCard expanded Apple Pay, a contactless payment technology of Apple Inc. (AAPL - Analyst Report
) , to offer a hassle-free experience in Russia earlier this week.
Last month, MasterCard and PayPal Holdings Inc. (PYPL - Snapshot Report
) announced that the extension of their long-standing partnership. Per the deal, PayPal will make MasterCard a "clear and equal" payment choice in its wallet. The card will be shown as a default payment method, making it easily identifiable to customers while transacting. PayPal will use MasterCard’s tokenization service, which swaps cardholder information such as account numbers with a unique set of numbers that validates a customer’s identity to keep online data theft at bay.
The partnership will give MasterCard greater prominence in online transactions, by funneling more transactions through its network. It will save MasterCard from the loss of transaction fees that the company used to incur when PayPal users link their PayPal digital wallets to their bank accounts. The agreement should result in more spending volume on MasterCard. Merchants will also benefit from improved customer experiences, efficiency and security, which together should help drive increased sales. PayPal has also inked a similar deal with Visa Inc. (V - Analyst Report
Also, last month, the company agreed with Stripe to provide the first–of-its-kind service named Mastercard Send which will expedite payments for users of the instant payout feature from Stripe.
The stock also seems to have got a boost from the approximately $1 billion pending acquisition of VocaLink, a leading provider of the Automated Clearing House (ACH) electronic payments services in the United Kingdom. This acquisition will strengthen the company’s position in the U.K. payments market. It will also give the company entry into non-card electronic payments, which is slowing posing a threat to credit cards. With VocaLink, the company will be able to re-do its business model and will be better equipped to compete with other players in the non-card electronic market such as PayPal and Venmo among others.
Also, the company recently launched a new version of MasterPass which will provide a digitized solution. It makes MasterCard the first and only network to deliver an omni-channel, all-digital payment service for card issuers, merchants and consumers.
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