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Mastercard (MA) Pay Later Solution to Boost Asia Pacific Presence

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Zacks Equity Research
·4 min read
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Mastercard Incorporated MA recently collaborated with Pine Labs for launching the "pay later" solution across five Southeast Asian markets, namely Thailand, the Philippines, Vietnam, Singapore and Indonesia. Notably, Pine Labs, which is renowned as one of Asia’s noted merchant commerce platforms, boasts an unique combination of technology and financial solutions.

Shares of Mastercard have lost 1.6% in the last day’s trading session as of Dec 10.

With an expected launch in early 2021, the "pay later" solution of Mastercard and Pine Labs is likely to be rolled out in Thailand and the Philippines during the month of February. Following the same, the solution will be launched in Vietnam, Singapore and Indonesia.

The solution has been gaining popularity of late owing to its numerous benefits offered to its users, which range from consumers to lenders, merchants and financial institutions. Consumers have been gaining from this innovative solution, which enables them to opt for hassle-free instalment payments carrying zero interest while making purchases.

As consumers are able to make instalments at checkout, this innovative payment solution tends to positively influence buying behavior of consumers. This, in turn, is likely to not only drive sales of lenders and merchants but also result in decline in cart abandonment. Also, they tend to benefit from the simple integration of a single access point into an instalments network through this solution, which is also easy to scale.

It is worth mentioning that credit cards are often equipped with instalment payments across Southeast Asia. What makes the "pay later" solution noteworthy is that it brings credit cards, debit cards and bank accounts under its radar for facilitating instalments across in-store and online merchants, thereby reflecting its broader coverage.

Shares of Mastercard have gained 13.4% in a year compared with the industry’s growth of 7.5%.

The company’s peers, namely, Visa Inc. V has rallied 13.6% in a year’s time, while that of American Express Company AXP has lost 0.7% in the same time period.

Moreover, expertise possessed by both Mastercard and Pine Labs in the ‘pay later’ space is likely to aid Mastercard’s latest expansion endeavor. Notably, both the companies had worked closely together to launch this solution across India and Malaysia in early 2020.

Also, the instalment solution seems to be time opportune amid the financial uncertainties induced by the COVID-19 pandemic. At a time when unemployment levels remain high, the purchasing power of consumers worldwide seems to be on a decline. As a result, the "pay later" solution is likely to provide relief to consumers, who are in dire need of such solutions offering instalment options thereby empowering them to manage their finance and expenses. Consumers in the Asia Pacific region have been no exception to the abovementioned need. Per a Mastercard research, 43% of consumers across the region are eager to increase spending by a minimum of 15% if provided an option to pay in instalments.

Furthermore, Mastercard considers the ‘pay later’ space as a huge market opportunity and intends to strenghthen presence. Case in point, per the market intelligence and consulting group — Coherent Market Insights, the global “pay later” market is anticipated to witness a CAGR of 21.2% over the 2020-2027 period. The same organization also identifies Asia Pacific as the fastest-growing region during the forecast period in the ‘pay later’ space, which clearly substantiates Mastercard’s latest footprint expansion plans to boost innovation in payments and enhanced checkout experience.

The "pay later" solution forms part of Mastercard’s comprehensive suite of buy-now-pay-later (BNPL) offerings. This September, the company partnered with Global Payments Inc. GPN subsidiary Total System Services (TSYS) to help issuers and merchants in North America provide flexible payment options through which customers holding Mastercard cards can break up the payment for their purchases into parts or installments. The company also teamed up with Spotii, QuadPay, Fly Now Pay Later, Jifiti, Splitit, Divido to provide BNPL services worldwide.

Notably, Mastercard carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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