Mastercard Sees Growth in Tokenization and Commercial Payments

Mastercard’s fourth-quarter earnings results showed that consumers still rely on their cards for everyday spending — and beyond the resilient consumer, tens of trillions of dollars in commercial payments beckon.

A presentation released Thursday (Jan. 30) in tandem with the earnings report indicated that worldwide gross dollar volumes were up 12% year on year to $2.6 trillion.

Drilling down into specific markets, the United States GDV was up 9% to $793 billion. Within that figure, spending on debit cards surged by 10.7%, outpacing, at least for the quarter, the 7.8% gain in credit card spending.

The number of cards wielded by consumers and commercial clients across the globe was up 6% to 3.5 billion.

Investors cheered the results and sent the shares up by more than 4% in early trading Thursday.

Cross-border payments volume was up 20%, and the business update through the first few weeks of the year through Tuesday (Jan. 28) indicated that the year-over-year growth rate was 18%.

During a conference call with analysts, CEO Michael Miebach said that “the macroeconomic environment continues to perform well, and it is underpinned by healthy consumer spending as we’ve seen in today’s news. The labor market is strong with low unemployment and continued wage growth. Inflation has moderated, but to varying degrees across categories and countries, consumers remain engaged. Affluent consumers have benefited from the wealth effect, while the mass segment remains supported by the labor market.”

Tokenization Momentum

Miebach said that during 2024, the company tokenized 4 billion transactions per month, a rate that is 40 times higher than it was six years ago.

“There are many use cases for tokens,” he said during the call. “Take, for example, the next click of our multi-option payment solutions. We’re rolling out the Mastercard One credential, which allows consumers the flexibility and control to set their payment preferences in the banking app for each transaction if they so choose to beat credit, debit, prepaid or buy now, pay later — it’s all behind one credential, one token.”

Commercial Payments Opportunity

Commercial flows represent an $80 trillion opportunity for Mastercard, given that only about $3 trillion of that spend takes place on cards, Miebach said on the call. In 2024, commercial debit and credit volumes were 13% of total GDV, and they were 11% higher as measured year over year.

Disbursements and remittances offer an additional $20 trillion in terms of addressable market potential, and Mastercard Move transactions leaped 40% year over year in the fourth quarter, he said.

Chief Financial Officer Sachin Mehra said during the call that contactless payments now represent 72% of all in-person, switched transactions. Value-added services and solutions net revenue increased 17%, tied to demand for data-driven market insights, security products and services, and digital and authentication solutions.

Mehra said that looking ahead, Mastercard expects “value-added services solutions to grow in 2025, and the underlying fundamentals of what we’re doing there continue to be very healthy.”

Asked on the call about stablecoins, management said the potential exists with B2B cross-border payments and with partnerships with the likes of J.P. Morgan and other settlement banks.

Later during the call — and in a nod to Mastercard 2030, one-click payments and the drive to get rid of manual entry of card-level data — Mastercard executives said Europe remains a key market, with the emergence of the Payment Services Directive and a heightened focus on security.

Miebach also weighed in on the new administration and Congress.

“We have an administration coming in that is touting a business-friendly approach, and that’s fundamentally good for us,” he said during the call. “The conversation around tariffs and to the intended use of tariffs that’s been discussed, we have to see how it plays out and what will happen… Questions like digital trade are going to be important questions.”