Thank you all for coming. It's great to be here, Michael. It's great to have you here. I always love to talk to somebody who is involved with a product that probably everybody in the room has in their pocket. You can't say that about a lot of things, but everybody knows Mastercard and it's always a good window into the global economy, into all kinds of issues both here and abroad. So, thank you very much for the time. So why don't we just start with a simple thing? We're at a very fascinating moment economically right now. Of course we have seen the markets go crazy since the war started as people are concerned about oil and the Straits of Hormuz moves. And more broadly there's other things intersecting with us. Of course there's the affordability question here in the states. There's whether and how AI is beginning to impact the job market in particular ways. There's just a lot of different things happening. You guys have one of the very best snapshots of what's happening in the economy here and abroad. So can you just talk about what you're seeing right now?
Right. So we are indeed having a very privileged view on the global economy. So as a business we cover the planet, 220 countries and territories, that gives us a high frequency and pretty detailed real-time data set. So we can do what statistics bureaus of countries cannot do. So we can actually put the finger on the pulse and say what is the consumer doing? We have a view on consumer spending as well as on corporate spending. So what are we seeing is, take 2025. It feels distant in the past but just kind of take it as a benchmark, GDP 3.2% growth globally and our economics institute projects 3.1 for this year. And then you think about everything that's going on around us. You start to see, you know, what is the potential impact of AI? What is the impact of geopolitical tensions? What's the impact of further supply chain fragmentation and countries looking more to drive more resilience and so forth? Why is the impact not more significant? So why is the global economy being able to adjust? So from what we can tell is it's really two perspectives and the first is the continuous investment in technological innovation that keeps the economies globally agile to be able to adjust number one and number two is generally a strong household balance sheet. So the resilience of the consumer has been true through all of these ups and downs. So if you take that as kind of the headline picture, we have said that we expect strong consumers or healthy consumer spending to continue this year.
If you break it down a little bit, you know, there is a very savvy global consumer out there today. So in a more digital world your ability to find the best possible deal today is very different than it was like 10 years ago. You can go to your favorite LLM and then ask what is the best deal and then you'll find it and then you can go and you can spend your money in a very very targeted and very specific way. So consumers empowering themselves, that allows them to navigate some of the pressures that they might see on the income side or on the tax side or whatever pressure they feel in their personal lives. So that's going on. A couple of snippets like from year end. We always as we're a company we're always fascinated by holiday spending and we always find these interesting nuggets in there. So two things, one is apparel had like a mega jump year-over-year in the 2025 holiday spending. Interesting noteworthy. The second one was which I find much more significant is a tremendous jump in online spending. Comes back to the point that I just made. If you're in a very digital world and you have, you know, you go to your favorite shop but you don't really know if this is the best deal. So consumers are looking for what is the best deal, what gives them exactly what they want vis-a-vis what is the choice in a physical store etc etc. So we saw a jump of 10.4% over the previous holiday spending in online shopping. So when I go and travel around to any one of our markets generally we talk to governments and we get the same question you just asked me and say what is consumer in our country doing. There's nuances around that country by country but overall a healthy consumer is the fundamental truth.
To drill in on one particular aspect, is it, are there gaps or differences in types of consumers? I mean obviously here in the US and other countries in Europe and around the world have their version of this. There can be tension between, you know, different income groups. One of the things that's clearly helping all of our economies right now is we have this kind of baby boomer and immediate post boomer at the peak of their sort of wealth power and they're driving some of the economies, but younger people starting out in the job market might, you know, have a harder situation. So, how do you compare, let's say, someone our age versus, you know, people in their 30s, right? And is there something that you see that's partly fueling some of the affordability frustrations and things people say you see gaps there?
So I guess we all have, you know, in our families or friends we can see exactly what you're just seeing. So I have a daughter that lives in a high-cost city, 28 years old and it's very tough, the path to owning an apartment is very long and it's not in sight. So dependence on parents generally and at least our friend circle is longer. But if we zoom out from these personal experiences. One thing that is true is when it comes to the health of the consumer and you bring in the affordability question, it is true in general that the contribution to overall healthy consumer spending is coming from lower income groups as well as higher income groups. Because people will continue to sustain their lives and they're finding that digital payments just work for them. So it comes in our data and we see that. So it's just there are different decisions being made. Discretionary spending for higher income groups is higher comparatively to lower income groups. No question. The wealth effect really helps. If you look at people who have invested in stocks and the stock market has a significant run up then people feel like hey I can afford more. So the wealth effect has really shown its effect. Lower-income consumers said they make, they're more savvy, they look for better deals, but overall everybody keeps getting on with their lives and as long as the job market, you have a decent balance between layoffs and employment levels. So, we have a balanced market. While the job market hasn't grown at the same level that it has over the last couple months as we've seen from the latest February data but still overall it's still balanced and as long as people are employed and they get a paycheck they spend and that is kind of the picture that we're seeing.
I'll come back to a specific there but I have to say you sound, you know, pleasantly a little bit surprised. I mean I think when a year ago when we were talking about tariffs and sort of the impact of things and imagining things it sounds like overall things held up well.
Yeah. So it's very interesting. You know, it was just about a year ago. Liberation day was a little bit further out at the time, but tariffs were already part of the conversation and we started to monitor that very closely around the world. You know, you talked about a savvy consumer. We can also talk about a very resilient and flexible global economy. The adjusting of supply chains, of companies upfronting inventory, of shifting their supply chains. If I'm expecting a higher tariff in a corridor with this country but I'm a global business I can start to shift the corridor elsewhere. So we see all of these readjustments happening and hence the impact from tariffs was not that significant at least through the lens that we have.
I want to come back on technology. And it's affected in a couple minutes, but a couple other questions on this line first. So, you mentioned you're all over the world. You're in every country. Even if the economies are holding up, we are sort of living in a period of tensions after some periods of sort of globalization. We're in deglobalization, decoupling, whatever you want to call it. Can you just talk a bit as CEO of Mastercard? How you run the company and think about navigating all of these different tensions from country to country? You have to operate in so many places simultaneously. What's that like? How do you plan and navigate it?
Right. So significant, there's a question that takes significant time and my leadership team on how we navigate the world. But it all starts with what's our proposition to really any country in which we operate. And that is we are largely the operating system of their digital economy and that gets a starting position where it's not so much of a choice. This is really critical infrastructure that we're providing. So you automatically have a seat at the table and if you then sit at the table and you engage a government or you engage citizens or customers in a country which could be a set of banks for example or large retailers and say what are you trying to do and then we can use our technology to adapt what a particular country needs. Now you can say that gets more difficult in geopolitical tensions but I want to take us back, you know, 3-4 years into the times of COVID. COVID broke the global supply chains to a significant degree and countries were regardless of geopolitics at that time just basically saying I have to source in a more predictable fashion. At that time we were already starting to adjust on how and where we place our technology and ensure there is more resilience from the respective market in which we operate from their perspective. So it's more flexible technology generally providing a service that is needed and then understanding what the local government tensions are.
Sounds like technology is a big facilitator too in a way more than it used to be.
Yeah, we're a large network so we rearchitected what we have done so we can essentially run anything from anywhere. But I also don't want to leave out of sight that the aspect of global connectivity and global trade that isn't done. You know, it's not like we're living in a world where it suddenly doesn't matter. It matters very much. People are looking for more predictability and resilience and more choices and where they source, you know, goods and products from and the same is true for payments. But global trade is there. We facilitate that. We facilitate it across 220 countries and territories which is basically everywhere. So there's other aspects of that which have really come to the foreground and one is the aspect of cyber security. So as a business because we run global payments, we also have a very very specific view on cyber security and we see where the risks are coming from and we can see them in a way that a particular bank in a given country or government cannot see because we can see the global path of where cyber criminals are active. And if you show up with this topic and say we see those risks, let's work together and make this world safer from a cyber security perspective. That's a topic that everybody agrees. And so there are commonalities in terms of working together across countries that are very much true and real today. So we try to serve local needs as well as those global needs that are there.
A specific tension that affects you and Visa and some other American payment platforms is this sense that the US has become ever more assertive in sort of weaponizing its market dominance and so some of the European officials are saying the continent needs to reduce its reliance on companies like Mastercard and I know you hear that so what's your response when you hear those kinds of concerns?
You know, I see the general need and it's a principle that we operate our business with, there should always be consumer or customer choice. So a company that wants to run their payments in a particular way to be paid faster maybe or paid cheaper or whatever their choice is. A consumer says I want to have the best reward system along with my payments or I want to have a travel card that works everywhere in the world. All different sets of choices. That's how we operate and we try to serve that. So if a country comes along and says I need a very particular local solution, fair enough. What we always argue for is you want to guarantee consumer choice. At the same time, you want to have a level playing field on competition because topics like sovereignty, what does sovereignty actually mean? This has been a conversation in some parts of the world including Europe is you want a resilient infrastructure, you want a competitive infrastructure, you want data protection, all those things that are pretty common actually in most countries. But it means you also need the best technology. And hence cooperation with partners that bring the best technology just make a lot of sense. And then you find your local choices and together that's where your scale helps you. That's exactly, we can do things that others cannot do.
Okay, that leads into the just a slightly broader question at this moment. You're here for the business round table. It's been...
I'm actually here for you.
Thank you. We appreciate that. Well, hopefully this is more fruitful than that, but anyway. No. But of course obviously, you know, we're a year into this administration. How broadly can you just talk about, you know, as you think about the round table and where business stands, we've got a very active administration. How is the CEO playbook evolving in Washington right now and how to accomplish things in this city?
Right. So I think the first point is the current administration is business friendly and business open. So engagement levels are there as a global company and this would be true for many of the peers at the BRT who have a global business. Having the ability to engage government and understand what are some of the global issues that need to be addressed. Where do we need to focus? Where do we need the partners? So we find that the BRT is an excellent platform to bring that across because it's never really about the issue of one company versus another. That's competition that the private sector is very happy to sort out amongst themselves. What where government can help is to say, you know, what do we do for example on setting global standards that come to cyber security. You really do need the government at the table. What can you do to ensure, you know, reciprocity and market access? Those are things that matter to the private sector and we find that the administration here as administrations in other parts of the world that we engage with on these topics, you know, as you come with good arguments and you engage and that works. So in essence the playbook hasn't changed. What is good is they're receptive and therefore I come here quite frequently to engage.
I mean a lot of companies would say I think something to the effect of it's a much more friendly business administration, which is a good thing and they understand it, but they're also an activist, hands-on administration from a corporate perspective. So you have to act carefully in how you interact with them and there's a little bit of nervousness about that. Is that fair or is that a little too simplistic or?
I think, you know, for us so far I would agree to the first part of that. The second part we haven't seen. We continue to engage and we try not to surprise any government somewhere so that we get into the crosshairs.
We try to surprise them every day but that's our business.
That is, yeah, see you do different things than we do.
I mentioned we'd come back to tech. So I do want to talk about that. So we're sort of, and I want to talk about it through two lenses both the economic societal one but also for you as a company as an operator. You've been called yourself a technologist at heart. So I want to start as we're getting more deeply into generative and agentic AI, right? How are you using it? How are you seeing it evolve? How do you assess the state of the technology and the curve ahead right now?
Right. So we could have a broad conversation around this but I'd like to start with just our industry, take a little more of a narrow view and when you think about the world of payments, you all would have some sort of Mastercard form on your phone maybe and that's how you just simply pay and you start to think how that looked like 20 years ago and it was just a piece of plastic and maybe you even actually used a pen. So we've come a long way since through mobile. We've come a long way since through internet to shift to online. We just talked about 10.4% increase in online spending. So all of that has dramatically changed. And then you're kind of wondering what else could happen. So what would be the next thing and the next thing is indeed AI-driven. So we see that it's not only AI-driven in our part of the world, in every part of daily life there's a few other things that are going on besides AI. So how does AI matter to the world of payments? First of all like any other company if any other company leader would sit here we would probably talk about efficiencies and how you run your business in a more effective way and there would be nuances but fundamentally everybody say, you know, you can use your company's data in a better way to provide better solutions to your customers. So we do the same thing as everybody else, coding assistants. So today, you know, do you need as many software engineers as you needed before or do you need people that are just basically problem solvers and they use these coding tools. So do you need the same number of people, different kind of people? So we're shifting around that like everybody else.
Meaning overall your employment force will drop over sometime?
So no, it's actually we continue to invest because we see a tremendous growth opportunity in digital commerce. So we keep investing. So it's not growing at the same rate anymore. So that's true. What I find more exciting is how we use this very special data set that we have that we talked about at the beginning of our conversation to the benefit of our customers. So how can I come to a customer and say because I have a view of global payment streams, I can tell you with a very high rate of precision which of the payments that you as bank XYZ are processing will be fraudulent versus not. Now we've done this through machine learning for the last decade, probably better than anybody else. Today we can go ahead and say we can start to predict what is the next fraudulent transaction because there's enough signals out there in the dark web, signals out there in the whole data set of global payment processing we can pick out trends where we say this is likely to be a fraudulent transaction 99% new bank XYZ you should ask your customer if it's really what they wanted to do. That's a really really important advance and that is only possible now through the use of generative AI because we're injecting more data than just our own data.
I mean I would imagine another potential area of further growth is a more personalized individuated experience to the customer level over time. That may not be possible now, but I suppose you could get to a place where whatever offers you're making to me or whatever programs or incentives or whatever are almost individually tailored. For instance, right?
