Mastercard Inc Class A MA

Mastercard Benefits From a Wide Moat and Favorable Industry Trends

Mastercard has multiple characteristics that should draw investors’ attention. First, despite ongoing evolution in the payment space, we think a wide moat surrounds the business and view Mastercard’s position in the current global electronic payment infrastructure as essentially unassailable. Second, Mastercard benefits from the ongoing global shift toward electronic payments, which should provide plenty of opportunities to leverage its wide moat and create value over the long term. Digital payments, on a global basis, surpassed cash payments just a few years ago, suggesting that this trend still has a lot of room to run, and we think emerging markets could offer a further leg of growth even as growth in developed markets starts to slow. Finally, Mastercard is something of a tollbooth business, and the company is relatively agnostic to smaller shifts within the electronic payment space, as it earns fees regardless of whether payment is credit, debit, or mobile.