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Mastercard (MA) Banks on Growing U.S. Retail Landscape

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Zacks Equity Research
·4 min read
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Mastercard Incorporated MA is positioned well to capitalize on the opportunities present in the growing U.S. retail landscape. Since the coronavirus outbreak, the retail industry had to undergo several changes with the major one being the shift to a digital landscape from a brick-and-mortar one.

Faster adoption of digital means became the need of the hour as the COVID-19 pandemic triggered stringent social distancing norms. While many establishments were shut down, essential businesses such as grocery stores and pharmacies continued operating at their physical locations.

It was during this period wherein most retailers witnessed a shift toward e-commerce, which ensured minimum physical contact and was the only option for Americans to procure unavoidable household items. Also, global retail online witnessed spending of an additional $900 billion last year per Mastercard’s recent Recovery Insights report. This clearly highlights accelerating adoption of digital means amid the retail industry. Mastercard was able to capitalize on the scenario through partnering with several organizations and rolling out cost-effective solutions that enabled the retail industries it caters to in providing enhanced payment experiences for customers.

The company has been making continuous efforts to expedite its digital business for quite some with the pandemic further accelerating the efforts. It has been undertaking constant technology investments to strengthen its digital arm. It has also remained committed to helping merchants in faster adoption of digital means spanning across several retail stores. One notable move in this respect includes launch of Cloud Tap on Phone, which paved the way for merchants of any size to acccept contactless payments rapidly and easily through a range of devices.

Per Mastercard SpendingPulse, while U.S. retail sales increased by double-digits in March, online sales surged 56.8% in the same month compared to last year. These facts lay the ground for Mastercard to keep pursuing initiatives for enhancing the retail experiences. Also, there has been a noticeable change in consumer spending during this March with respect to discretionary sectors comprising Apparel and Jewelry. These items witnessed a downtrend in March last year due to lower purchasing power amid consumers, thanks to COVID-19 induced financial uncertainties. Nevertheless, sales of these items have witnessed significant growth rates last month.

Even with the U.S. economy gradually reopening, people still tend to prefer contactless payments. To capitalize on this oppurtinity, Mastercard has unveiled an array of frictionless solutions for benefiting the retail environment, which assures touch-free ways while interacting between retailers and end consumers, and making transactions at the physical setting.

The latest Mastercard’s Recovery Insights report also stated that Asia Pacific, North America and Europe witnessed fastest adoption of digital means. This bodes well for the company.

Another company in the same space, Visa Inc. V has also aided businesses, governments and financial institutions to make faster secured digital payments utilizing Visa Direct’s real-time payment capabilities. While American Express Company AXP came out with business offers for small merchants, Global Payments Inc. GPN has been working closely with numerous businesses by rolling out enhanced and secured payments technology solutions.

Zacks Rank & Price Performance

Shares of this Zacks Rank #3 (Hold) company have gained 44.4% over a year compared with the industry’s rally of 29.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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American Express Company (AXP) : Free Stock Analysis Report

Mastercard Incorporated (MA) : Free Stock Analysis Report

Visa Inc. (V) : Free Stock Analysis Report

Global Payments Inc. (GPN) : Free Stock Analysis Report

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