MASTERCARD is one of the most recognisable brands in the world. It’s one of the headline sponsors of European football’s Holy Grail, the Champions’ League; it’s in every other person’s wallet; and, as you walk through your local high street, its logo is ubiquitous.
You would imagine, then, that asking people what it is that MasterCard do would be a relatively simple one for the man on the street to answer. The likelihood of receiving an accurate answer, though, is far from certain.
That’s because the world of payments is undergoing considerable change. A seemingly inextricable move towards contactless, cash-free, coin-free transactions is well underway, with the traditional cash-and-change and even chip-and-pin potentially taking a back seat in the future.
It’s a substantial shift, and for MasterCard’s UK & Ireland finance director Giulio Rindi, one that requires investment, not just to keep up, but to effect change.
“”We leverage the UK Card Association statistics that, at sector level, gives us valuable insight about how the industry is performing and the direction that payments are taking,” Rindi tells Financial Director of the technological shift in payment methods – from the company’s rather sleek Canary Wharf offices.
Just one of those new forms of payment is creating an ‘open loop’ on London’s public transport links, which will accept cards from every network and at an international level. It means that users can pay with their contactless card at the same rates of the Oyster card payments, but they do not need to be limited to the Transport for London zones. In time, it is expected that the traditional cash-and-coins payment method will eventually become obsolete on London public transport.
Enlarging the pie
Within the first four months of the new scheme’s launch, more than a million transactions have been made through the system; “enlarging the pie”, says Rindi. And moving into areas of that kind is crucial for the company.
“There are a lot of specialities in these new payment spaces; there are a lot of start-ups, smaller companies that are entering the field and sometimes they’re offering complimentary services to what we do,” he explains.
Be that as it may, it hasn’t stopped the company embarking on significant projects as it seeks to stay ahead of the curve. In September, a joint venture was launched with mobile phone network Everything Everywhere, which Rindi says is “about convergence of NFC (near-field communications) payments – it’s about being able to make payments through mobile, which is the direction we’re going, along with contactless”.
While exploring new payment methods may be promising and, indeed, exciting, there is the question of capital expenditure. The issue, Rindi finds, is benchmarking the new systems, something that proves difficult when there’s no historical data with which to compare them.
“You can benchmark with our current performance and you can match it with our current deal study but this is a new space,” explains Rindi. “So I think to evaluate the return, to predict first and then to evaluate the return on such investment is quite complicated and this is a generic statement because it’s the same for our competitors. It’s a new field; it’s a new area.”
While exploring uncharted territory will cause a degree of uncertainty, Rindi takes a rather sanguine approach. Indeed, as far as the role of FDs and the finance function is concerned, it comes down to a fundamental set of qualities – whether the product is tangible or not.
But card companies such as MasterCard derive their revenue from facilitating transactions, making money on the volume of transactions made with their cards. At a time when the market in the UK and Europe is, by Rindi’s own admission, “not great”, transactions made on plastic are displaying admirable resilience. Indeed, given that MasterCard is accepted in 33 million locations around the world and has 1.9 billion cardholders, it’s fair to say there’s a degree of robustness.
In the UK, approximately 40% of transactions are made using plastic, with the balance made up of cash, cheques and other methods. The volume of transactions is of course linked to economic performance, and so exposure to Europe’s weak economies does have a spillover effect.
“The impact that we see in the UK is clearly linked to cross-border activities,” explains Rindi. “If economies in Europe are suffering and either consumers or corporate travellers stop travelling, we see an impact in our market.
“Low-cost airlines are really helping move people around,” he adds. “Businesses are slightly recovering and becoming more global. The inbound travel trend is up and continue to grow, whereas outbound travel is recovering but still below the 2008 peak.”
For Rindi, the challenge now is ensuring the new projects yield results. However, benchmarking them, especially before they are established, can prove difficult.
“To predict the take-up of specific new services such as emerging payments is clearly very complicated,” explains Rindi. “It is challenging to predict consumer behaviour and the nature of the transactions that will occur and therefore it is difficult to predict the financials related to new products and services. It’s a new field.”
An inexact science it may be, but – for most FDs – “inexact” is not a word that sits well. For Rindi, though, it’s about understanding the markets in which you operate, and drawing on past experience.
Having started his career in 1998 working as an audit assistant with BDO International in Germany, Rindi took the plunge into the business world with Pirelli, holding various finance roles with the firm, taking him to the US and his native Italy. He eventually moved on to American Express in 2006, first as lead financial officer for the UK and Ireland, before holding various FD roles within the group. He took his current post at MasterCard in 2011.
“I think it’s about diversifying; it’s about having different experiences,” he says, “I think, especially in finance, if you build your career around different countries and different industries then you really can add a lot of value.
“I still have from previous experiences some key learnings from Pirelli and from American Express that I am applying to my role now.
It boils down to the fundamental point: “You need to understand how you make money, how you collect money, when and how you pay your debt, how you manage your working capital.” ?
IN BLACK AND WHITE
2013 – present Divisional finance officer, UK and Ireland, MasterCard
2006 – 2011 FD global foreign exchange services; global foreign exchange services & business travel strategic markets; EMEA business travel; lead financial officer, UK & Ireland; group controller, telecom cables & systems, American Express
2001 – 2006 Group controller, controller, financial supervisor, Pirelli
1998 – 2001 Audit assistant, BDO