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The pending $35.3-billion merger of Capital One and Discover has concentrated minds in the payments industry for nearly a year, but perhaps nowhere so much as at Mastercard Inc. That became apparent early Thursday as equity analysts quizzed the card network’s top brass about the combination’s potential impact on Mastercard, the brand on Cap One’s debit card portfolio.
Mastercard chief executive Michael Miebach was quick to dismiss concerns. “Cap One is a strong partner. They have been public about transferring debit volume to the Discover network. There are no surprises fundamentally,” Miebach said during the call, held to discuss the company’s fourth-quarter 2024 results. “This isn’t the only partner we have. We have built out many partnerships.”
Meanwhile, Mastercard has already calculated the potential impact, officials said. “Those debit-network transactions are built into our best estimates,” added Sachin Mehra, Mastercard’s chief financial officer, who added a note of caution as observers try to calculate the potential impact of the merger. “The deal’s got to be approved.”
The merger proposal was announced in February 2024 and is expected to close later this year. Miebach hinted that rivalry with entities that are also Mastercard clients is not unusual. “We have partners we also compete with,” he noted.
On other fronts, MIebach said the network is looking to stablecoins as a vehicle for international payments. “We’ve started to move beyond the proof-of-concept stage,” he noted. “It hasn’t scaled yet [but] this is an interesting space for us vis a vis cross-border transactions. We feel we’re well-prepared. We’re leaning in.”
Stablecoins, which are blockchain-generated currency whose value is tied to a national fiat currency, such as the dollar, have drawn attention as a form of digital currency whose value isn’t subject to the wild swings seen with Bitcoin and other crypto coins. “It’s an exciting space,” Miebach said. “The more choice there is, the better.” Though overall, he added, “there’s a need for sound governance” for crypto.
The move toward cryptocurrency comes as card networks are seeing a maturation in the long-term trend toward contactless transactions. Some 72% of all in-person switched transactions at Mastercard are now contactless, the network said Thursday.
For the fourth quarter, U.S. gross dollar volume at Mastercard grew 9% year-over-year to $793 billion, while volume globally came to $2.56 trillion, also a 9% increase. Net revenue totaled $7.49 billion, up 14%, while adjusted net income grew 18% to $3.51 billion. Cards in circulation globally increased 6% to 3.5 billion.
