|Mastercard's priceless innovation|
Over the past couple of years, Mastercard has been one of the leaders in in making digital payments safe and secure. In 2016, the company introduced its "Selfie Pay" feature, which allows card holders to opt into a program requiring them to take a selfie before an online purchase is authorized. Later in 2016, Mastercard launched its Decision Intelligence platform, an AI-based program that helps retailers make real-time judgments on fraudulent purchases. This year, Mastercard acquired NuData Security, a company specializing in passive biometrics -- which includes things like how you type on your computer or how you hold your smartphone -- to determine if a transaction is fraudulent.
In its third-quarter conference call (this and other quotes courtesy of S&P Global Market Intelligence) Mastercard CEO Ajay Banga was pleased to announce more innovative security features the company was working on, especially in the area of recurring payments where merchants store consumers' credit card information on their site:
"We've also been working to enhance the security of digital transactions through the tokenization of cards stored on a merchant's website or in their app. When consumers keep their cards on file, as some of you probably do, checkout is faster, more convenient. Merchants can easily process recurring payments. Now when you token-ize the credentials that are kept on file, it becomes useless if a fraudster steals them and attempts to use them somewhere else..."
Banga said the company had also released an Automatic Billing Updater which is "able to keep payment credentials up to date in real-time when an expired, lost or stolen card is replaced." For both features the company already has a pretty big first customer: Netflix.
Mastercard reports revenue for its security features, as well as other products and services beyond its payment network like data analytics, loyalty program management, and consulting services, under what it refers to as its "Other Revenues". In Mastercard's third quarter, its Other Revenues segment had grown to $747 million, a 21% year over year increase. With Mastercard finding new customers for its security services and showing robust growth in its Other Revenues segment, the company's stock could easily continue to give shareholders market-beating returns long into the future.