MasterCard CEO pragmatic on economy, growth - 13Oct 2010

MasterCard Inc Chief Executive Ajay Banga said on Tuesday that the U.S. economy needs 12 to 18 months of "hard work" to recover but that he does not foresee a "double-dip" recession.

"I'm not a double-dip believer," Banga, who took charge of MasterCard in July, told Reuters on Tuesday.

But he also urged caution on the global economy, saying that the U.S. economic recovery will be the key for sustaining growth in Latin America and Asia.

"Their domestic consumption cannot grow fast enough to make up for the declines in the U.S.," he said, during an interview at the company's headquarters outside of New York City.

Banga, who ran Citigroup Inc's Asia-Pacific businesses before joining MasterCard in 2009, is betting that the company can grow more robustly in emerging markets. While most U.S. consumers already use credit or debit cards, consumers in countries like Brazil and India still use cash more than plastic, offering an opportunity for MasterCard to expand.

MasterCard, the second-largest credit and debit card processing network after Visa Inc, is also investing in new types of technologies, including e-commerce and mobile payments.

But for someone who has repeatedly emphasized new technology and new markets, Banga was remarkably pragmatic on Tuesday about MasterCard's immediate sources of revenue.

Mobile payments is "a real opportunity, just like e-commerce is a real opportunity," he said. "But 50 percent of our time is growing my core businesses -- credit, debit and prepaid processing -- because that'll pay for the rent and the lights for the next few years."

In phone talks

Banks, networks and telephone companies are all jockeying to help consumers pay for goods and services with their phones, which some say could become one of the dominant methods of payments. Visa is working with Bank of America Corp and Wells Fargo & Co, among other banks, to test mobile payments around the country, while Verizon, AT&T and T-Mobile USA are said to be working with Discover Financial Services.

MasterCard is also in discussions with "all" major phone companies, Banga said on Tuesday. But he would not discuss specifics, and reiterated his comments last month dismissing investor concerns about competition in the space.

"People are very excited about mobile payments," but "I truly believe it will take years" before a significant number of consumers start paying with their phones instead of with cash, he said.

MasterCard shares closed down less than 1 percent at $222.13 on Tuesday. They have lost more than 10 percent since May, when U.S. lawmakers introduced a provision to the Dodd-Frank financial reform law that would restrict debit card processing fees.

But Banga helped MasterCard's shares recover about 16 percent over the past month, in part by telling investors in September that MasterCard still expects earnings per share to rise at a compound rate of more than 20 percent for 2011 through 2013.

"Regulations are very much a part of the industry," he said on Tuesday. "It's been happening overseas for a long time, and now it's happened" in the United States.

(Reuters)