Okay. We're going to keep things moving along. We are honored to have Raj Seshadri, Chief Commercial Payments Officer at Mastercard here with us. Raj, thank you so much for joining us. Really appreciate it.
Thank you, Ramsey. Thank you for inviting me and including me. It's a pleasure to be here again.
And you have definitely had an interesting sojourn in Mastercard, where you've covered off on a couple of different areas. Maybe just briefly, to get started, sort of described that journey a little bit, where you were the last couple of postings and where you've ended up now.
Sure. Happy to. When I think about my professional career, there are like a few different phases. I started off in academia, in physics. Then I spent some time in consulting and strategy. And then for many, many years now been leading businesses and leading people.
So with Mastercard, for almost a decade now, I came in to lead our U.S. issuing business. And then I spent 4 years leading our global data and services business. And then as of a little over a year ago, I'm now leading what we call our commercial and new payment flows business. Maybe I should spend a minute telling you what that is.
So think of it as all the payments and money movement businesses that are not consumer. So it includes commercial. So serving businesses from micro businesses to multinational corporations through various types of cards, SME cards, T&E cards, p-cards, fleet cards. Also includes invoice payments between payables and receivables, between buyers and suppliers.
We also cover, beyond commercial, invoice payments in the consumer space. So bill payments, for example. And then also cover money moved under Mastercard Move, where we move money domestically and across borders. And this is money that moves between, typically, a company, a government or an individual to an individual. And like I said, sometimes they're in the same country, the sender and receiver. Sometimes in different countries. Sometimes it's in the same currency. Sometimes different currencies.
So that's the best of businesses. What they share is that they all have amazing growth potential. So we're driving our growth algorithm really hard with shift -- secular shift services. The interesting -- what makes it interesting here is when you look at the business world, the convenience that we are used to, the safety we're used to, the digital experiences that we're used to as consumers, corporations and employees, and we ourselves as employees, don't have it. And so that just points to the opportunity here.
And add to that, the ability to make businesses stronger. And then I have to say, given my data and services role, the ability to use services to enhance the value of these payments and money movement flows, it's this really exciting high-growth area.
Interesting and very broad as well.
Very broad, yes.
I mean there's a lot going on. I want to dive into the strategy and the business in just a little bit, but maybe you could start off by just hitting on the recent headlines and kind of related impacts in terms of what you're seeing. Are you seeing any impact from macro or tariffs on B2B specifically, on commercial flows specifically?
Yes. No, that's a great question. What I'll start by saying is when you think about macro tariffs, et cetera, the first thing I'll say is what we said in our Q1 earnings, we are not seeing a pull forward in carded spend in consumer or in commercial, and that's what Sachin and Michael communicated in our Q1 earnings, not seeing it in carded spend. We're hearing about it in non-card spend. As an example, I myself bought a new car 2 months ago. And so I hear new card purchases, there's -- new car purchases, not card.
So did I.
Yes, exactly. So that's non-carded and apparently that is pull forward. But in carded spend, we're not seeing that. Now when it comes to macroeconomic environments, economies, tariffs, what is true is that the medium and long-term impact is still unknown. There's a lot of uncertainty. It's still early days. And I think it's going to depend on the size, the magnitude, the duration and the geographies where that eventually -- wherever the answer lands.
And so we're living in very uncertain times. So what we're doing is really monitoring it very carefully and being very vigilant. And as you know, our Mastercard business is very diversified, and it has withstood -- demonstrated that it can withstand many different types of environments. And so we're very agile. We are on our toes. We're watching the markets. And as things unfold, we will pivot and do what is necessary.
Now specifically in terms of the business payments and flows, it's actually a huge opportunity. If you think about the macroeconomic environment, rates in most countries, if you think about the tariffs and the disruptions to supply chains, the expenses going up for supplies, et cetera, for businesses what we're seeing is that they're very focused on reducing their expenses, on having more controls on spend, on releasing working capital. And we have a lot of the solutions that can help them do that.
Whether it is to end-to-end reduce the cost of many of these processes, have data travel with the payment. Whether it is thinking through things like leveraging lines, making sure you leverage payment terms, putting controls on spend, whether it's at the transaction level or in the software that is used for expense management, for example, we have a lot of these solutions.
And what we're seeing as a result of the macroeconomic environment and the tariffs and the uncertainty is businesses are very focused on getting stronger, and we're seeing a lot of demand for our products and solutions.
That's very interesting. And maybe taking a step back now, kind of dimensionalize us -- dimensionalize for us the commercial payments opportunity, like the TAM of this. For as long as I can remember, it's been this incredibly large TAM with a lot of sort of different sort of subdivisions. How are you guys framing up the broader opportunity?
Yes. So doubling down on commercial, specifically within the commercial and new payments areas, commercial alone represents something like a serviceable, addressable market of $80 trillion. And I say that because the total market is growing. Our services market is growing even faster at a multiple of the total market. And for us, what matters is the serviceable market, because that's a portion of the market where we know we have products and solutions that can meet needs, reduce friction, address pain points.
So that $80 trillion is really interesting, because only $3 trillion is carded. So there's $77 trillion that is not carded today, huge. And if I then sort of separate it in 2 pieces, there's point of sale and invoiced. So point of sale of that $80 trillion is about $17 trillion. And of the $3 trillion that's carded, there's about $1 trillion in point of sale that's carded, which means $17 million minus $1 trillion, there's $ 16 trillion that is not carded.
And what's amazing about that -- well, amazing for those of us looking at the opportunity and excited about the growth, is $16 trillion is in cash and check. And we know how to go after this and we're going after it very actively, and we'll continue going after it. So in the near term, that is a huge opportunity.
Then if you go to invoiced, which is the remaining $63 trillion is an invoice payments, there's about $2 trillion that's carded, so $61 trillion not carded. In that $61 trillion, what's interesting is within that there's another $8 trillion that is cash and check that is easy to go after. And the rest of it is, even if the money moves, it's not moving with the data, with the workflow.
And so there's an enormous opportunity to make it much more efficient and release working capital. And we have our virtual card engine, which is very unique that is helping us do that. And so you're seeing that in our results.
So last November on Investor Day, I said we -- our market share grew by 4 points versus 2019. Our market share is now about 1/3, and it's growing very rapidly. We've -- we're growing -- I think our GDV in 2024 was -- 13% of our GDV was in this space and it grew at 11% year-on-year. We're growing faster than the industry, faster than every competitor. There's enormous opportunity here.
We already have significant share in travel. We are the predominant provider in fleet. And there's an opportunity for us to extend into many, many more spaces. So very exciting high-growth, high potential space, where you're already seeing some of the results as we announce our numbers every quarter.
Let's drill down a little bit on -- you mentioned point of sale and invoicing. Let's start with point-of-sale purchase a little bit. Talk about your strategy here and update on the progress on that side of the business, particularly.
Yes. So point of sale -- for businesses that are tiny to multinationals, point of sale is a huge imminent opportunity. And there are essentially, at the highest level, 3 levers. There is getting more cards into the market through value proposition, getting more cards into the market through distribution and then acceptance.
Now on point of sale, I'll start with acceptance. We have, globally, probably the biggest acceptance network there is, and we continue to grow it. So acceptance is already there. And in fact, we're growing acceptance by bringing more SMEs, small and medium enterprises, into card acceptance. And so great acceptance footprint.
So this is really about getting more of the commercial cards in the hands of employees and owners so that they just tap, swipe it at the point of sale, and -- whether that's digital or physical. And the same benefits that accrue on the consumer side of the point of sale accrue on the commercial side. So we focused on getting more value propositions out there, segment-specific value propositions, for creators, business builders, middle-market companies, for geographies. So really focused on that.
And then we focused on distribution. And that comes in many forms. It's getting into new geographies. China is a good example. Getting into a new geographies where there is -- there are businesses but they're predominantly using consumer value propositions that aren't fit for purpose. We are growing our traditional sales forces. We're investing, on the corporate side, in direct to corporate sales teams that work with our issuing partners and work with corporates. And that our issuers are appreciative because it helps the corporate adopt these solutions faster.
We also have [ alternate ] distribution sales forces we're building to work with ISVs, fintechs, PayFac, that's particularly important for verticals, for small and medium enterprises, because you have to really work with the ecosystem in order to accelerate growth. So point of sale is really about more value propositions, more distribution, leveraging our acceptance and then extending our acceptance.
I've always thought that's one of the primary advantages is that you already have the acceptance network sort of out there, you just need to turn on the other side of that over. Maybe the same question for invoices, invoiced payments, exact same thing. Frame that up for us how are you guys kind of attacking it?
Sure. The fundamental difference between point of sale and invoiced is, point of sale, the buyer and the store -- I'll use the store as a generic merchant, are strangers to each other, right? And you might know the person, you may not know the person. But at the end of the day, the 2 are unknown parties that need to transact.
When it comes to invoiced payments, when you talk about payments and receivables, the buyer and supplier are known counterparties, they typically have contractual terms that they're working with and so the nature of the problem is different. And we are very fortunate in this space because we have a proprietary virtual card engine which is -- it's amazing. Because it's proprietary, we're able to build features and functionality.
And we're able to provide it to all the issuers that are out there. We have about 90 issuers that are fully signed up for all the features and functionalities on the platform, and that number keeps growing. And then there are others that use only bits and pieces of it. So it's a unique capability that we have that's proprietary.
And it helps us -- when you think about the virtual card, it's a remarkable product. It has so many different applications. And so we use it, for example, to increase working capital. It can help buyers and suppliers in invoiced payments use credit lines, increase float. For the supplier, reduced days sales outstanding. For the buyer, reduced payments -- or extend payments outstanding. They can actually -- both sides can maximize the terms that they've negotiated that they often don't optimize and maximize. So a lot of applications in working capital.
Applications and expense reduction, it reduces the number of manual processes, reduces the error rate. And then now you can actually have the data travel with a payment, which makes reconciliation easier on both sides. This is a classic problem in commercial payments, reconciliation is a pain point. And then it also -- for controls, it provides spend controls like I was talking about before. It also provides controls for fraud and risk management.
So the virtual card is a wonderful tool and we're working with buyers in invoiced payments to -- buyers have invested in technology. So they've invested in procurement platforms, ERP platforms and they're modernizing the platform. And so first, that's a natural place where we embed the virtual card in the platforms and meet the employees where they're working at the -- in the middle of their workflow. There's a lot of work going on with buyers.
On the supplier side, similarly, they've invested in technologies as well. They're embedding it into their software. We're also -- we have Mastercard Receivables Manager. We're working on straight-through processing of virtual cards. Working on the data traveling with the payment and reconciliation. A lot going on with the suppliers.
And then I would say across buyers and suppliers, it's pricing, variable interchange programs. We've had it in travel. We've had it in the U.S. We've just launched a global program. It's bigger and more expanded in 79 countries, and that continues to grow. And the reason that's important is because buyers and suppliers know each other, they have payment terms, and so they can bilaterally decide what the right price is for the transaction to clear.
And we've also built a B2B rate manager which makes it very easy to put those terms into our network so that we can automatically apply it when the payment comes through. So there's a lot of opportunity in invoiced payments. We're doing a lot.
What I will say is that point-of-sale fee is very immediate and we'll continue to chip away at it. We know how to do it. Here, we have wonderful examples of things that are working well, and we're scaling them. And as we scale them, there's some short-term opportunities. There are even bigger, medium and long-term opportunities. So invoiced payments is -- the secular shift here is enormous, and it's fun to go after it.
And how does this work in terms of small and medium-sized businesses? That's a big component of the opportunity. I would also imagine that's one where they're a little newer to the -- they're a little bit newer to maybe not having the resources they need to build out everything they need, like a large enterprise would. Talk a little bit about how you're pursuing SME flows?
And you're spot on, a small business owner is short on time, on resources, on capabilities, right, truly short. But if you -- every country I've been to when you look at the economy, the economic growth is derived from small businesses. Small and medium enterprises, every country, every economy, thinks they're important. It represents -- I think they represent, collectively across the globe, something like 90% of all businesses, 50% of all jobs, 70% of GDP, right? It's enormous. It's substantial. And it's underserved. It's a segment that is underserved globally in just about every market.
And so we're attacking it in different ways. So the first is thinking about value proposition, thinking about segment-specific value propositions. Cards that are relevant for -- for example, we have a middle market accelerator for middle market companies, so that -- which bundles in things like risk management or things like expense management into the proposition. And we have a pilot with Citizens that's going very well and we've scaled that globally. Or cards for business builders and entrepreneurs, for them to scale their businesses faster.
So we have very specific use cases that we're designing card propositions for and working with our issuers to get it out there. And then we're also using techniques to get existing cards used more. So you think about a small business owner, not only is she short on time and resources, the card is probably underwritten using some of her credit line -- personal credit line. So typically, they're nervous about giving it to their employees.
So what we do is have inControl for mobile payments, that takes that same virtual card technology and allows her to provision into the employees' wallet. We've built business payment controls, so that you can put controls on that wallet, on that token in the wallet, to say it can only be used for these purposes at these merchants during these times in this time frame up to this limit, et cetera. So the usage of the card goes up.
We also have proprietary in loyalty products, and we've coupled that in into the small business space. So Easy Savings is a great example, merchant-funded offers. And we find when we deploy Easy Savings on merchant-funded offers in with small businesses, the frequency of spend goes up and the ticket size goes up, and we have data that demonstrates this. So doing more to get the cards used more.
And then in another trend, I was mentioning the fact that they are short on time, short on resources, is we know business owners use the same bank typically for their business and consumer needs, but they need to be adjacent and fit for purpose. What we're also finding is that they use the same platforms, they'd like to use the same platforms for their financial needs and for their business needs.
Their business needs around invoicing, customer management, sales, marketing, accounting, they want one platform. They want simplicity. So we have Biz360 and other products that we're deploying. Our middle market offering that I mentioned earlier had some of this built into it. And that we have capabilities for smaller businesses that we're rolling out. So spending a lot of time on value propositions.
The second thing we're spending a lot of time on is distribution. So going into new geographies, we now have 10 programs live in China. And geographies where small businesses are using consumer products, we're rapidly getting fit-for-purpose products into the small business owners' hands. We're investing in our traditional sales force as well as in our alternate distribution sales force. It's working with the entire ecosystem in many verticals to innovate and provide the services and products to the small businesses. And in some cases, driving financial inclusion.
And actually, the acceptance growth is coming from here. So in the small business space, we have things like -- we bundle issuance and acceptance for a small business owner. We're using -- every small business owner today globally has a phone, so that's an acceptance device. And we're using it with mobile wallets in it and driving both small business financial services as well as inclusion, Tap on Phone, very relevant for the small business space.
There are some markets where they innovatively -- the small business owner on their credit card have a QR code so they can use the same card to accept payments. So doing a lot of creative things to drive acceptance as well. So small business is a very exciting space. We have a number of wins across the globe.
Here in the U.S., Wells Fargo has converted. We have IHG and Chase. There's so many examples. There's AMP in Australia. There's BNA in Argentina. There's Ant in -- WorldFirst in the AP region. Actually, we announced these on our earnings call, so -- and I probably won't remember all of them. But it's a tremendous number of both new wins and expansions and extensions of existing customers.
So SME is a space that I think is nearer term, and I'm very excited about it. And as you grow the SME business, you realize you're helping economies, you're helping economic growth and you're helping business owners. So that's also very satisfying.
You mentioned the word verticals in your response -- in your last response. Is there a vertical overlay here? Are there particular verticals that you guys go after, if you look at it that way?
Yes. So the first vertical that we really spent a lot of time on and we're successful on is travel, right? Travel as the entire vertical, B2C and B2B. So we're looking at other verticals. And we've prioritized a few based on the size of the spend in the vertical, how cardable that spend is, how much cross-border there is. So using a variety of levers to say which verticals should we prioritize. And we prioritize several, and we're making great progress. I'll give you a couple of quick examples.
So in trade, for example, we announced Dubai Port World. They have I think 82 terminals globally. And they are -- you can look it up. It's -- there are a number of port terminals that they operate. We launched it initially in Dubai, where SMEs can use a card to put their port charges and a lot of their other expenses on the card that -- at the port. That is expanding to other ports around the globe.
We have Medical Tourism Association. This is a great business because it's a platform where you, as a consumer, when you travel abroad, you get medical coverage. Which means there's a B2C payment when you pay into the platform. And then should you have to have medical access to medical services, a doctor, a pharmacy, a hospital while you're traveling, every one of those payments is a B2B payment. There are multiple B2B payments that are made, and these are all cross-border.
CPG, another example. We're working with -- what's a great example of CPG. Yes, we're working with Pepsi and Coke distributors in Latin America, where they're using their information to provide acceptance and to provide issuance in a mobile wallet to SMEs who sometimes are not financially included. They're not part of the financial ecosystem. They use cash.
And so now they can use a wallet to pay for the inventory when the trucks pulls up with the inventory. It takes cash out of the system. It also makes the payment and delivery problem go away. The SME has more inventory and more timely inventory and they can leverage the credit line on the card. And the distributor now is able to unload the truck.
And so it solves a lot of different problems. And this is driving financial inclusion in something like 16 markets across Latin America, and there are about 2 million SMEs that are coming into the ecosystem. And by the way, increasing acceptance. So a lot going on in the vertical space. That's just a few examples.
Yes. A lot of different ways to kind of get at the market, it sounds like. So commercial payments as a better opportunity, it's been an opportunity that you guys have spoken about for quite some time. And I think some might argue that it's a slower grind to kind of actually get to market. Obviously, your business is growing quite well, so you're doing something right. But what is -- has there anything change in the environment in terms of -- how do you actually convert this complicated beast to basically accept these new forms of payment?
Yes. It's -- the time is here and now. And we finally -- I'll tell you why, because several reasons. One, our proprietary virtual card engine, we're just discovering all the ways in which we can use it. It's very versatile. And because it's proprietary, we're able to build the features and functionality as we as we go after it. Like it's very relevant, for example, to e-commerce flows right now that are real time.
I think across the industry, there's a few other trends. One is technology. There's a lot of software out there that is very viable that companies are investing in, small and big, enterprise software, procurement software, invoicing software. And as technologies develop and as companies invest in them, you take that virtual card that's so versatile, you can just embed it into these software packages.
And so what that means is that the payment can meet the workflow where it is. The data and the payment can flow through the workflow as it's being redesigned. And so there's a lot of leverage there.
Coupled with the fact that in many of these companies there's a generational shift. There's a new employee that's younger that essentially looks at the old processes that are cumbersome and says, why would I do it that way? They're also consumers, so they're used to having a level of ease, digital, safe, quick experiences that they want in their working lives. And so that drives a lot of change, because they look at how they live their consumer lives and they go, when I go to work, I want the same -- I want everything to work the same way. And so that's driving a shift.
And then I would also say, from our own point of view as Mastercard, we've learned a lot about the space and we continue learning about it. So we've learned about it's a very heterogeneous space. So we're learning about and learned about and continue learning about different slices, how to approach them, how to address all the needs of all the stakeholders in a particular ecosystem, which is important. Because if it's a win-win-win, then it moves forward faster.
We're thinking about how to leverage safety and security and digital, and tokenization and data reconciliation, and data traveling with the payments, how to bring all of this together in easy, simple ways that we can deploy into the ecosystem. So I'd say we've also -- we've advanced a lot and we're advancing a lot in our own thinking about how to approach the problem. So net-net, when you add it up, it's a big opportunity.
I wanted to ask you about a specific partnership you announced, and that was with Corpay. Talk about the strategic rationale and the sort of benefits associated with that partnership specifically?
Yes, very excited about that partnership. It's -- I've known Corpay since my days in North America, about a decade ago. And it's a long-standing partnership, very deep, very broad. The investment is specifically in their cross-border business, not in the parent company, and it's because we have very complementary businesses when it comes to money movement.
When Mastercard move, it is small ticket. It is global. It's largely through financial institutions. And we use both carded rails and account-to-account rails. I mean we could reach something like 95% of the accounts out there, 10 billion end points. We're in 150 countries -- 180 countries, 150 currencies. So it has depth and breadth in one particular part of the space.
And if you take Corpay -- and they have a really exciting growing cross-border payments business, it is large ticket. A lot of it is focused on corporates. They have a concentration in the U.S. And so it's very complementary. And so we're very excited about -- even as we roll out the smaller ticket use cases with Mastercard Move, with Corpay, we can now join forces.
So for example, distribution to FIs, we now have more to service the FIs with, small ticket and large ticket through Corpay. And for them, they have the ability to extend their capabilities leveraging Mastercard Move to more geographies, more corridors, more currencies. And so it's a very complementary set of capabilities. Very excited about that minority investment.
And like I said, it's in the cross-border business unit, not in the parent. But we know the parent really well. And as we also took this opportunity to take our virtual card agreement with them, which is not on cross-border business, it's in their other businesses. And together, we extended the virtual card agreement to extend the depth and breadth of what they leverage the virtual cards for in their other businesses and concurrently extended that agreement as well. So very excited about the Mastercard-Corpay partnership.
Great. Fantastic. We have only a couple of minutes left, but I wanted to ask you 3 or 4 key messages that you'd like to leave the audience with as it relates to commercial money movement and what you all are doing here?
So commercial and new payments flows, I'll say -- I'll leave you with 3 messages. The first, $100 trillion, it's an enormous opportunity. And there's a massive opportunity not just for share shift, where we're winning, but also for secular shift and for services. So enormous opportunity.
And the second thing I'll tell you is our services and -- our products, capabilities and services, we have solutions to go after this space. And the example I'll use is our proprietary virtual engine. It is unique. It is powerful. It is versatile. So we have the capabilities to go after the $100 trillion opportunity.
And the third one I'll leave you with is trends. Whether it's technology trends. I was talking about investments in software platforms, where there's macroeconomic and tariff trends, and the fact that businesses need to focus on reducing expenses, putting in more controls, releasing working capital. Every small business is being at the heart of every economy's growth, all the trends point to tailwinds.
So $100 trillion, incredible capabilities that are very relevant, lots of tailwinds. So very exciting.
That's fantastic. Thank you so much for the insightful conversation. Really appreciate you being here today.
Thank you, Ramsey. Pleasure to be here with you.
