Mastercard (MA) Unveils Offering and Expands in Open Banking Space – June 8, 2022

Mastercard Incorporated (MY Free Report) recently introduced an innovative payment feature called Pay by link, powered by Aiia, which is an acquisition of MA and a leading European open banking technology provider. The feature is already available in the Nordics and is expected to reach all of Europe by 2022.

Built on open payments, the feature allows customers to make immediate and secure bill payments using a simple link. To avail this feature, customers just need a bank account and there is no need to memorize payment details. Therefore, businesses can accept and receive payments seamlessly around the world. Businesses in a diverse space including accounting, insurance, telecommunications, utilities, and social commerce will be empowered to eliminate unnecessary steps for consumers while making payments and thereby minimize friction within the checkout flow .

The decision to extend the scope of the “Pay by link” functionality to Europe seems timely. The reason can be attributed to the success already achieved in simplifying bill payments and easy reconciliation of bills by Nordic’s well-established accounting software provider, Dinero, through the use of the innovative payment offering.

Initiatives similar to the last reinforce Mastercard’s ongoing efforts to encourage more businesses to seamlessly adopt open banking payments, due to the many benefits it offers in the form of a diverse set of choices, services improved and consistent results. In addition to the Aiia takeover, Mastercard acquired Finicity in 2020, which connects users’ bank accounts with other payment apps. The move gave the company a boost in the open banking space.

Mastercard is focused on strengthening its position in the open banking space, due to the immense scope for market growth and the growing trend of consumers around the world to pursue open banking payments. The global open banking market is expected to grow at a CAGR of nearly 24% over the period 2022-2028, according to Vantage Market Research. Some of the reasons for this impressive growth, cited by the market research service provider, are the greater adoption of open banking solutions across multiple industries and the growing emergence of digital payments and mobile wallets.

Mastercard boasts of a suite of diverse digital payment offerings, which it has developed through collaborations with industry leaders or significant investments in product portfolio.

Mastercard shares have gained 5.7% in the past six months against a 9.5% decline in the sector. MA currently carries a Zacks Rank #3 (Hold).

Image source: Zacks Investment Research

Actions to consider

Some higher ranked stocks in the business services space include Huron Consulting Group Inc. (HURN free report), Automatic Data Processing, Inc. (ADP free report) and Green dot company (GDOT free report). While Huron Consulting currently carries a Zacks Rank of #1 (Strong Buy), Automatic Data Processing and Green Dot carry a Zacks Rank of 2 (Buy). You can see the full list of today’s Zacks #1 Rank stocks here.

Huron Consulting’s net income has exceeded estimates in each of the past four quarters, with the average surprise being 29.97%. Zacks’ consensus estimate for HURN’s revenue in 2022 suggests a 22.6% improvement from the figure reported a year ago. The same for revenue suggests 13.5% year-over-year growth. Huron Consulting’s earnings consensus mark for 2022 has moved north 5.3% in the past 30 days.

Automatic Data Processing earnings beat estimates in each of the last four quarters and missed once, with the average surprise being 6.23%. The Zacks consensus estimate for ADP earnings in 2022 suggests a 15.8% improvement from the figure released a year ago. The same goes for revenues which suggest a growth of 9.5%. The 2022 Automatic Data Processing earnings consensus mark has moved 2.2% north in the past 60 days.

Green Dot’s bottom line has exceeded estimates in three of the last four quarters and missed once, with the average surprise being 20.50%. Zacks’ consensus estimate for GDOT earnings in 2022 suggests an 8.6% improvement from the figure reported a year ago. The same for revenue suggests growth of 2.3% from a year ago. Green Dot’s earnings consensus mark for 2022 has moved north 1.7% in the past 30 days.

Huron Consulting stock has gained 29.1% over the past six months. Meanwhile, Automatic Data Processing and Green Dot stocks lost 5.5% and 21%, respectively, over the same period.

Michael J. Birnbaum