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Mastercard (MA) Inks MOU to Ease Digital Payments in Japan

Mastercard (MA) Inks MOU to Ease Digital Payments in Japan
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MasterCard Incorporated MA recently signed a Memorandum of Understanding (“MOU”) with Japan’s Wakayama Prefecture, which is home to world-famous World Heritage Sites. The five-year strategic collaboration aims to leverage MA’s global Standard Payments network to drive digital transformation among the tourism sector and small and medium-sized businesses (“SMBs”) within Wakayama Prefecture.

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This deal represents MasterCard’s first alliance with a Japanese prefecture. The two parties will collaborate to develop infrastructure that paves the way for hassle-free digital payments, in an effort to revive the local tourism industry. This will be very useful for foreign tourists to make payments through regional cities. In addition, the Mastercard Cashback Program (Mastercard Travel Rewards) will be used to offer cash rewards to foreign visitors (Mastercard holders), which in turn will serve as an incentive to spend more at Wakayama Prefecture stores. The prospects for the program are bright as it includes several offshore banks and card issuers as participants, and extends to cardholders in more than 30 markets.

The latest partnership also aims to digitize payment and settlement processes for small and medium-sized businesses in the province, increasing and securing cashless transactions. Advanced technologies will be used to achieve efficiencies in payments processes for SMEs, which in turn will enhance the efficiency of accounts payable, settlement processes and data analysis. Thus, business owners will benefit from simplified billing processes and greater sales opportunities and will be protected from headwinds caused by pending payments.

Initiatives like the latest one reinforce the solid reputation that Mastercard has gained as a leading international payment technology company over the years. Administration of Per Wakayama Prefecture, MA’s sound insights into international travel and consumer trends along with its extensive network of overseas credit card companies make it a perfect match to enhance the prefecture’s growth prospects. The latest deal is likely to lead to increased use of MasterCard cards in the county, which is expected to bring in higher transaction processing fees (a key driver of MA’s top line growth) to the company.

The latest deal clearly highlights MasterCard’s dedicated efforts to revive the tourism sector and small and medium-sized businesses, which have been hit hard by the volatility caused by COVID-19. While strict restrictions on cross-border movement have been imposed amid the pandemic that has affected the tourism industry, small and medium-sized businesses have faced insufficient resources and financial uncertainties. With digitalization in every sphere of life and the global economy in recovery, MA’s efforts to help the tourism space and small and medium-sized businesses in Wakayama Prefecture to get out of the stalemate caused by the pandemic and thrive amid an improving digital economy appears to be a good-timed move.

Driving digital transformation remains one of Mastercard’s primary drivers. Concurrently, it continues to partner with many well-established organizations and offer many innovative digital payment solutions. MA pledges significant investments and forays into underserved areas through technology offerings.

Similar to Mastercard, there are other companies such as Visa company Fifth, global payments company GPN and American Express Company AXP also continues its digital transformation efforts and launches several contactless payment solutions from time to time.

Visa uses advanced technologies to roll out newer payment solutions. V strives to integrate blockchain technology into the payments platform. The launch of various payment alternatives, including mobile payments through Visa Checkout and Visa payWave, highlights the company’s commitment to ensuring enhanced online checkout experiences for customers.

Global Payments is a pure payments technology company with deep expertise in payments technology. Backed by its expertise, GPN continues to offer a wide range of payment technologies and software solutions to customers around the world. Global Payments has joined forces with several organizations to expand its reach nationwide in the field of digital payments.

American Express follows a series of actions focused on technological advancements, the introduction of secure digital solutions, and assistance to businesses to organize payments. AXP unveiled an automated accounts payable (“AP”) solution in 2020 to automate the accounts payable process through an innovative and comprehensive solution. These initiatives strengthened the digital pavilion and American Express’ global foothold.

Mastercard shares have lost 6% in the past six months, compared to an industry decline of 16.9%.

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MA currently has Zacks Ranking #4 (Sell).

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While American Express stock is up 1.1% in the past six months, Visa and Global Payments stocks have lost 12.3% and 22.9%, respectively, in the same time frame.

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