Why Mastercard Could Benefit from Wearable Devices



Contactless payments

On February 22, Mastercard (MA) announced through a press release that around a quarter of Europeans support contactless payments through wearable devices like a keyring or smartwatch. We’ve seen an upward trend in contactless payments.

However, since the momentum in contactless payments is expected to continue, hurdles for these payments have reduced, which has benefitted Mastercard’s technology. All the European banks are joining with the company to execute payments through wearable devices.

While Mastercard’s dividend yield stood at 0.51% on an LTM (last-12-month) basis, peers (XLF) Discover Financial Services (DFS), Visa (V), and American Express (AXP) have 1.67%, 0.57%, and 1.35%, respectively, on an LTM basis.

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Management’s viewpoints

Among European banks, ABN AMRO is leading the way, as it has adopted this technology. The bank has successfully initiated the technology, which involves making payments through wearables. Mastercard is currently running a trial program that involves 500 customers with payments executed through customers’ current accounts.

According to Mastercard’s management, Europe would be an excellent opportunity for the company, as the scope for contactless payments is seeing an uptrend. Shoppers support contactless payments and connected device payments.

The trial program could prompt consumers to adopt digital payment tools.


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