At first glance, MasterCard’s core business model would seem enviable: it collects a fee on every payment it processes. But while Martina Hund-Mejean, who became CFO last year, appreciates “the high profitability of this sector,” she’s quick to add a cautionary note: “We can never put our head in the sand.” Hund-Mejean is constantly scanning the horizon for signs of what’s ahead, in terms of both technology and competition. What market segment will attract new rivals and where will they spring from? What device is likely to replace traditional credit cards? (Hint: you’re probably carrying one right now.) And with the economy forcing consumers to cut back on discretionary spending, how long will it be before MasterCard holders hesitate to plop down their cards so freely? Hund-Mejean doesn’t have the answers, but she’s well trained to look for them. A product of General Motors’s rigorous treasury program, she assumed increasingly demanding finance positions at GM before serving as treasurer and senior vice president at Tyco International. That broad experience will no doubt come in handy at MasterCard, as economic uncertainties pile up as steadily as, well, credit-card solicitations from banks.
You have said that you are constantly thinking about strategy and ways to stay on the leading edge. Is that a new focus?
We are focusing on strategic planning in a renewed way now that the company is two years out of an initial public offering. We have a nine-person executive committee that consists of our CEO, Bob Selander; business partners; unit leaders; and myself. We meet every week for an hour and a half, and one full day a month. It’s a great team.
MasterCard faces some interesting challenges. For instance, the House Judiciary Committee recently approved a bill that would require credit-card companies to negotiate fees with merchants, rather than letting the banks set those rates. How would the Credit Card Fair Fee Act affect MasterCard?
If the bill passes, it will harm consumers. Australia passed regulations slashing these “interchange fees” about five years ago, and it is clear that consumers have been hurt through higher fees and fewer rewards. Merchants are paying lower fees, but there is no evidence that they have lowered the prices they charge consumers. The result was completely contrary to what the legislators wanted to accomplish.
What about the technological hurdles ahead? Will cell phones ever replace plastic cards in the United States?
MasterCard’s [tap-and-go wireless] PayPass technology has enabled us to lead the development of the communication standard around contactless payments for the industry, which ensures that cards and terminals supporting all contactless-payment brands are globally interoperable. This has led to the transformation of mobile phones into secure contactless-payment devices. We have been working with telecom providers and industry organizations to ensure that standards are met as mobile phones move to the center of commerce [see "Cash, Credit, or Cell Phone?"]. As of today, we have announced about 17 mobile pilots across all major regions.