MasterCard Worldwide will need the deep international expertise of incoming CEO Ajay Banga in order to hold its own against chief rival Visa Inc. in an increasingly competitive global-payments marketplace, analysts say.
MasterCard’s announcement today of its plans to elevate Ajay Banga, 50, to its top executive role on July 1 was not a surprise to Wall Street. MasterCard named Banga president and chief operating officer last year. (
But the move underscores the No. 2 payment network’s plans to expand its operations aggressively outside the U.S.
“We are in fact a more global company,” Banga told reporters today during a company teleconference, noting that the U.S. represents only 45% of the company’s revenue. Banga said he plans to expand MasterCard’s presence in “local markets” around the world in credit, debit and prepaid cards, and he emphasized the importance of developing new payment technologies, including mobile payments, and expanding its offerings in emerging markets such as China.
Banga’s appointment also cements MasterCard’s strong affiliation with Citigroup Inc., where Banga spent more than a dozen years serving in various executive posts focusing on cards and brand marketing around the world before joining MasterCard last August. Citi predominantly issues MasterCard products.
Robert W. Selander, MasterCard’s CEO since March 1997, spent 20 years at Citi in a variety of executive roles before joining the card network in 1994.
Selander, 59, will step down as CEO on July 1 when Banga assumes the post; Selander will continue as executive vice chairman until his retirement Dec. 31, according to MasterCard.
“We think Ajay Banga’s global experience positions him well as the new CEO,” Sanjay Sakhrani, an equity analyst with New York-based Keefe, Bruyette & Woods, wrote today in a note to clients. The announcement was “not unexpected,” as Banga was Selander’s heir apparent when he joined MasterCard last year, he noted.
Banga brings a lot of relevant experience but faces major challenges in his new post, Brian Riley, a research analyst with TowerGroup Inc., tells PaymentsSource. “When you look at the card business in the U.S., it’s saturated and uncertain, and clearly the big opportunities for growth lie in international markets. It’s very clear Banga understands international markets better than most, and he has a highly concentrated background there, which will be a big part of future competition with Visa,” he says.
Visa executives last month told analysts at its annual Investor Day that the company plans to generate more than 50% of its revenues from outside the U.S. by 2015 (
Banga joined Citi in 1996 as head of marketing and sales in India, later heading sales, marketing and business development in Europe, the Middle East and Africa. Citi named him chairman and CEO of Citi’s Global Consumer Group International in 2005. Banga previously spent 13 years with Nestle India and two years with PepsiCo.
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