Mastercard Focuses on AI Technology for Customer Experience and Digital Innovation

Mastercard is making strategic strides in utilizing advanced technology including AI to drive growth opportunities, CEO Michael Miebach said.
Mastercard campaignUnder the leadership of Chief Technology Officer for Operations, George Maddaloni, Mastercard is actively modernizing infrastructure and platform services through the Operations, Network, and Employee Digital Experience organizations (ONE).

Mastercard does not disclose the size of the IT spending focusing on digital transformation to enhance business efficiency.

The financial giant reported a strong performance in the fourth quarter of 2023, with a net income of $2.8 billion on revenue of $6.5 billion, marking a significant 13 percent increase. Operating expenses also rose by 21 percent during this period.

Mastercard has reported a net income of $11.2 billion (up 13 percent) on revenue of $25.1 billion (up 13 percent), with operating expenses increasing by 11 percent to $11.1 billion.

As of December 31, 2023, Mastercard’s global footprint extended with 3.3 billion Mastercard and Maestro-branded cards issued to customers.

Mastercard continues to be a technology partner of choice for fintechs, serving over 80 percent of the top digital payment and neobank fintechs on the CNBC Global Fintech list. Notably, Starling Bank, a prominent U.K. fintech, renewed its partnership with Mastercard in the latest quarter.

In the co-branding business, Mastercard is forging ahead with partnerships like J. Crew and Synchrony in the U.S., launching the retailer’s inaugural co-branded digital-first card. The company also holds an exclusive partnership with Fiserv Money Network for U.S. government benefit and wage disbursement debit programs.

Strengthening its ties globally, Bank of America has expanded its service relationship with Mastercard, incorporating test and learn program management and supplier enablement solutions. Axis Bank in India has also deepened its relationship, leveraging consulting, marketing, and analytics services for comprehensive portfolio lifecycle management.

The technology-driven initiatives are not confined to partnerships. Worldpay utilizes Mastercard’s fraud alerts to streamline dispute resolution processes, and Citi deploys consumer clarity digital receipts, enhancing transaction validation for U.S. cardholders.

Mastercard’s influence extends to e-commerce, with Square, Nexi, and Alibaba integrating various solutions for fraud reduction and streamlined onboarding experiences for small businesses.

In a forward-looking approach, Mastercard is actively developing new services and solutions, leveraging Generative AI to drive enhanced customer experiences and derive valuable insights from data. Recent GenAI use cases include Shopping Muse, a conversational shopping tool, and Small Business AI, providing personalized real-time assistance.

Expanding Mastercard Access, a platform offering a single point of connectivity for AI digital and identity services, contributed to millions of new acceptance locations globally in 2023. The growth is facilitated by tap on phone and cloud commerce capabilities, with Mastercard now live in over 18 markets.

Mastercard is also at the forefront of the contactless payment revolution, supporting global partners like Apple in expanding tap-to-pay features. The company’s focus on payment technologies such as Click to Pay, tokenization, and biometrics offers secure, password-free checkout solutions.

The adoption of these technologies not only benefits consumers but also enhances value for merchants and issuers. Click to Pay, operational in over 35 countries, drove over 60 percent growth in transactions in 2023.

With a commitment to driving tokenization across all channels, Mastercard significantly reduces fraud and boosts approval rates by approximately 3 to 6 percentage points globally.

Mastercard’s exploration of biometric payment capabilities, enabling payments with gestures, has extended its reach to the Asia-Pacific region through a partnership with NEC Corporation.

The company’s technological prowess is evidently influencing the global financial landscape, with strategic partnerships and innovative solutions propelling Mastercard to the forefront of the evolving digital payment ecosystem.

Rajani Baburajan

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