Expanding its presence in the high-growth generating region of
) announced a Memorandum of Understanding (MoU) with China's
leading eCommerce giant Alibaba Group last week.
Through this MoU, both MasterCard and Alibaba intend to tap
eCommerce opportunities, within small and micro businesses as
well as consumers in and around China. Moreover, the parties laid
out other business-related issues that deal with mutual aid and
collaboration as well as intellectual property violations.
MasterCard is working on its long-term growth strategy for
eCommerce not only to expand its geographic horizons in the
emerging markets of the Asia-Pacific, but also to gain
competitive edge over rival
). Subsequently, the company plans to generate growth in the
eCommerce arena by teaming up its digital service - MasterPass
with Alibaba's efficient payment platforms - AliExpress and
Through this association, both the parties expect to promote a
better eCommerce environment and bring out user-friendly and
secure payment solutions for cross-border transactions, merchant
acceptance and bill payments, thereby improving the customer's
Building a Name in China
However, this is not the first time the company is nurturing
an alliance with Alibaba. The latter had joined forces with
DataCash in the past, which was acquired by MasterCard in Oct
2010. Further, MasterCard works closely with China UnionPay - the
sole bank card transaction processing company in the region - as
per a MoU signed in 2010.
In September last year, MasterCard also introduced first
dollar-denominated credit card in China in association with
Citibank. Both China UnionPay and MasterCard can issue these
cards. Such initiatives are gradually helping the company better
penetrate the otherwise highly-regulated market in China.
Overall, MasterCard benefits from strong secular demand
growth, meaningful international exposure, high barriers,
excellent pricing power and impressive operating leverage. We
believe such long-term growth strategies are also crucial and
should prove beneficial for sustaining competitive pressures and
generate optimism over management's expectation of delivering
earnings growth of over 20% in the next two to three years.
While MasterCard carries a Zacks Rank #4 (Sell), other strong
electronic payment service providers include Visa,
Total System Services Inc.
). All of these carry a Zacks Rank #2 (Buy).
FISERV INC (FISV): Free Stock Analysis Report
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