Sachin Mehra: Sure. Tien-tsin, I’ll take that. So like I mentioned right, I mean, first of all, our overall outlook and the demand we’re seeing for our Value-added services and solutions continues to be quite compelling and strong. I mean, we’re out there actively, as Michael mentioned earlier, driving and pushing harder across the various vectors, which he kind of talked about, so I won’t repeat them. As it relates to, the thoughts I shared as it relates to growth rates for Value-added services and solutions for the remaining quarters of the year, which I said that the growth rates would be higher in each of the quarters compared to Q1. It’s really based on what we’re seeing in the nature of the pipeline, how we’re seeing things shape up in terms of the cadence of how we’re going to deliver on these Value-added services and solutions.
We feel pretty good about the outlook there, which is why we’re sharing with you what we’re thinking about in the nature of this higher growth relative to Q1 in each of the quarters. The only other comment I’ll make is, it’s a little bit of a reminder out here, which is as we deliver on these Value-added services and solutions, we’re obviously generating revenue from the Value-added services and solutions, but there’s also driving very compelling kind of cases for us to accelerate our payments growth, right? So that’s part and parcel of the strategy. It’s all kind of very interdependent one on the other. On your other question, which was around other solutions growth, look, we continue to remain focused on growing the other solutions. It’s primarily comprised of our real-time infrastructure assets and our bill payment assets.
That inherently is slightly slower growth compared to what we’ve got in our safety and security solutions, our consulting, marketing, loyalty solutions. So we’ll continue to drive on that. I don’t necessarily expect that the growth rates there are going to get comparable to what we see on the safety and security side, as well as on the consulting, marketing, loyalty solution side, primarily because the opportunity, which is there on safety and security and on consulting is a much larger TAM and it’s a faster growing TAM, and we’re continuing to execute on it. The good news is the safety and security piece, as well as the consulting, marketing, and data analytics and insights component is the lion’s share of what comprises our Value-added services and solutions.
Tien-tsin Huang: Got it. Thanks for the talk.
Michael Miebach: In fact, to the piece, Tien-tsin, we discussed earlier about existing customers and the cross-sell, so that’s an opportunity. We laid out the drive into new customer segments, so that’s pretty clear. And here, give you an example, on the personalization thing, our dynamic yield acquisitions dating back to 2022, you have a lot of high-end retail and commerce brands that want to engage on that. Everybody’s trying to cut through the clutter, take Saks Fifth Avenue they are using our personalization services. So those are all opportunities to get into verticals that we’re not even in today in a significant way. So that is what gives us great confidence, just great demand as we look ahead into services, and it’s why we’re saying they’re going to be hired in the first quarter.
Tien-tsin Huang: Understood. Thank you both.
Operator: We’ll move next to David Togut at Evercore ISI.
David Togut: Thanks for taking the question. Are you seeing any change in competitive intensity in Europe, primarily for your payment network? Your primary competitor called out share gains versus local payment networks in the quarter. That has long been a source of growth for Mastercard. So either changing competitive intensity from the principal competitor in Europe and/or any initiatives by local payment schemes to become more competitive themselves. Thank you.
Michael Miebach: All right, David. Europe’s fantastic growth story for Mastercard, starting off with some of the big shifts and debit in the U.K., some great wins on the continent. Earlier I was talking about the renewal of Crédit Agricole. Some big deals are still in flight on conversion. If you think about UniCredit, 13 markets across the continent. So we’re well positioned here. Obviously, Europe is in focus from a set of competitors that is local players, as in local schemes and so forth, but we’ve long found a way to partner with them. We feel they have a great proposition on credit and debit to compete. At the same time, there are services partnerships that we drive across. And then more traditional competitors, of course, we’re all eyeing Europe.
Europe is too much of a growth story overall for everybody to keep competing. But, we, as I said earlier, we try to turn these relationships into win-win partnerships. UniCredit in the end decided to go with us because they feel we have shown better traction in serving their customer needs. So it comes down to that. And I feel pretty confident as I look across Europe and it continues to be a growth opportunity. Back to this question about secular opportunity, Europe still has a lot to offer on that front. And we have a whole set of solutions to go after that.
Sachin Mehra: Just one more point I’ll add, David, is as it relates, we’ve had this long standing focus on conversion of Maestro to debit Mastercard. And that’s very much the case in Europe as well, that we continue to execute on that. And I feel like that’s going to be one of those things which will continue to provide us a natural tailwind as we continue to execute on that capability. For example, in this quarter we migrated or converted roughly 7 million consumers from Maestro to debit Mastercard. And that’s a global number. That’s not just a Europe number. But I just wanted to share that with you as another piece of how we’re executing in Europe.
David Togut: Thank you very much.
Operator: We’ll move next to James Faucette at Morgan Stanley.
James Faucette: Great, thank you very much. I’m wondering, you talked about strong cross-border and travel trends, etcetera. We’ve seen some more indications of uneven consumer spending development in other parts of the economy generally. I wonder if you can call out, whether it be in the U.S. or in other markets, if there’s anything discernible at your level in terms of consumer shifting, spending preferences or categories that are noteworthy. And if we should take in, if there’s anything that could impact Mastercard or other indications that we should be aware of.
Michael Miebach: All right, let me start off on this and then Sachin can comment further. So you’ve seen the 18% growth. So this is strong. So there is a travel component to that and there is an ex-travel component to that. Ex-travel continues to be particularly strong. It’s cross-border e-commerce and the likes. On the travel side, if you break that down, we talked about the trends. I want to lift it up a little bit to the broader, I think, the broader angle of your question. So what are the various things that consumers think about as they make spending decisions? How do they make ends meet? And travel has been strong ever since COVID, particularly strong from a recovery perspective. It has been strong even before COVID because the seeking of experiences is just a fundamental trend that hasn’t gone away.
So it is not one of those circular things. This is just a secular trend that we see. People are seeking services and experiences and travel is the top of the list. Now, as you go and break this down into different countries, you’re going to see different stages of inflation. You’re going to see different monetary policy and fiscal policy, how governments and regulators are reacting to inflation and so forth. And that affects consumers in different ways. If you see inflation in non-carded verticals, that’s going to impact your payment decisions or your spending decisions on carded verticals and so forth. So it’s a pretty not uniform story around the world. That’s why I come back to the fundamental trend. Travel is winning. People want to go out and make that trip.
We remain pretty optimistic around that.
Sachin Mehra: As it relates to what we’re on the topic of cross-border travel, I just wanted to kind of share where we are in terms of where we see potential for some recovery, which is particularly in Asia Pacific, which has got still some room to grow. Case in point would be China, where we’ve shared these metrics with you in the past, but I’ll share with you what the Q1 metric was inbound and outbound of China. So in Q1, cross-border travel inbound and outbound into and from China stood at approximately 80% of the pre-COVID level. So there’s still room to recover. And granted, China is going through a little bit of a slower period in terms of how the domestic economy is performing. But the reality is there still remains an opportunity over the medium-to-long-term to see how this recovery comes through in the nature of travel, even from that corridor per se.
James Faucette: That’s great color. Thank you, Michael. Thanks, Sachin.
Sachin Mehra: Sure.
Operator: We’ll take our next question from Tim Chiodo at UBS.
Tim Chiodo: Great. Thank you for taking the question. I want to talk a little bit about U.S. debit trends. So you mentioned the Citizen Bank beginning, portfolio beginning to come through, but also on Reg II more specifically, we we’ve talked about it in the past as a small portion of your overall net revenue in terms of U.S. online debit. And often we talk about the risk or the threat to that small portion. But could you also talk about the flip side to that, so the opportunity for Mastercard to gain the position on the back of the card for some of the Visa debit cards of the U.S.? Thanks.
Michael Miebach: So Tim, great point. We love to talk about debit. You saw the 6% growth rate. So this is good. We’re doing well. And the impact of the conversions is felt. As far as it comes to routing and Reg II, this question comes up for now for a couple of calls. And I have to say, where we are, we’re seeing some impact, but it’s not material. That comes to the bigger question that you raised, how do we look at that? So it’s not material. That’s great. That gives us even more reason to look at the opportunity side of this and fighting for back of card. And in the end, it comes down to the routing mandates such as just distorting the market. I think what’s happening here is it’s ignoring the fact that in the end, a merchant will make a decision on the basis of an economic outcome.
And the net economic outcome is not just the cost of operating related to some routing costs, but it is fraud costs, etcetera., the whole package altogether. And this is, I think, where we score well, because we have a better proposition. Last five years, we’ve invested $7 billion into safety and security solutions, and that makes a competitive advantage for us. So I see the opportunity. Our teams are out. They’re talking to merchants, saying, here’s what the net proposition is if you go with choice A versus choice B. And so far, that is an encouraging set of dialogues.
Tim Chiodo: Excellent. Thank you.
Operator: Our next question comes from Bryan Bergin at TD Cowen.
Bryan Bergin: Hi, guys. Good morning. Thank you. I want to just ask about the change in the organizational structure and any financial implications to be aware from that, and just how you’re feeling about those early changes as you pursue the growth opportunities across the business.
Michael Miebach: Right. So what we’re doing here is you heard us talk about the growth algorithm, about our strategic priorities. In the end, what’s happening here is we’re realigning our portfolio of activities, always recognizing these are all interdependent. We’re talking payments and services, and altogether, it makes our competitive advantage position. But we’re basically saying we want to focus on core payments. We want to focus on new payment flows. We want to focus on an integrated services set of offerings. And that is what is part of this announcement. Plus, we see tremendous opportunity on the AI side, particularly on the generative AI side, and we’ve created a central role for that. So these are four very seasoned leaders in the company that have tremendous experience around these topics.
They’re going to take this on. And the whole idea is to move faster and drive more value to our customers. In terms of financial impact, what I hope to see is we can deliver the growth that we think is out there in terms of potential. That is the impact that I’m looking for. So that’s really the play. There’s nothing else to say behind that. I’m looking at talking to Craig, who’s going to lead the services thing. What is going to be on our product roadmap going forward? How do we drive even more services growth, etcetera? So that’s the whole play. It’s bringing structure and strategy in line and move forward.
Bryan Bergin: Thank you.
Operator: Next, we’ll move to Bryan Keane at Deutsche Bank.
Bryan Keane: Hi, good morning. I just want to ask about the continued positive yields you’re getting across border. Your major peer isn’t seeing the same kind of positive yield, and they talk about low currency volatility as part of the reason. So I think you mentioned, Sachin, pricing and mix and just helping us understand how much is sustainable of those changes for yield and cross border and the differences maybe between your closest peer. Thanks.
Sachin Mehra: Sure. So first, I just want to quickly remind you that as it relates to the impact of FX volatility, in our instance, that shows up in our transaction processing assessments. It doesn’t show up in our cross border assessments. So the impact of the, what I would say, the drag associated with that with FX volatility shows up in this transaction processing assessment line. It doesn’t show up in our cross border assessment line. Point number one. Point number two, you’re right about the yields. Our portfolios continue to perform well. It goes back to what Michael said earlier. We want to win not only every portfolio, but we want to win the right portfolios. And that’s what we focused on doing over the last few years, which is winning the right portfolios for cross border.
And what that’s helped us do is see this table and mix come through where we are seeing the inter-cross border grow at a more rapid pace than the intra-Europe cross border. And you do know that the yields on the inter-cross border side are higher than the yields on intra-Europe cross border. So that certainly helps from a yield standpoint. And then as it relates to your question on pricing, look, we’ve always kind of done pricing for the value we deliver when we deliver value to our customers, whether it’s on the issuing side or the acquiring side, we price for it. I called out that in this quarter, we had a little bit of a lift come through on pricing in the cross border assessments line. And you’ll see that come through the ensuing quarters as the year progresses as well.
