Mastercard rides data-driven “virtuous cycle” as services outpace core payments

Network maturity meets services momentum

Mastercard closed 2025 with the air of a company that has learned to turn the scale of a mature global network into a growth engine in its own right. The core payments business is still expanding at mid‑single to high‑single digits, but it is the web of data, analytics and security services wrapped around it that is now doing more of the heavy lifting.

Chief executive Michael Miebach’s headline for investors was simple: “we continue to deliver.” On a currency‑neutral, non‑GAAP basis, net revenues climbed 15% year on year in the fourth quarter, while operating income rose 17%. EPS advanced by 20% to $4.76, helped by $3.6bn of share buybacks in the quarter and an additional $715m through late January.

Beneath those headline figures sits the architecture of what Miebach calls a “virtuous cycle.” Mastercard now switches more than 70% of all transactions on its network, up 10 percentage points since 2020. That traffic produces data; the data feeds AI‑driven fraud scores, tokenization, marketing and consulting products; those in turn improve approval rates, cardholder activation and portfolio profitability for issuers, pulling still more volume back onto the network.

The dynamics are already visible in the metrics. Global gross dollar volume rose 7% in Q4, with US volumes up 4% and non‑US up 9%. Cross‑border volumes, the prized profit pool in card payments, were up 14%, with cross‑border assessments growing 17% on the back of pricing and mix. Contactless penetration reached 77% of in‑person switched purchase transactions, five percentage points higher than a year ago.

Yet it is in value‑added services where the flywheel is spinning fastest. VAS revenues rose 22% in Q4, with 3 percentage points contributed by acquisitions. For 2025 as a whole, VAS revenue rose 21% (18% organically), with all major regions and product families – digital and authentication, security, consumer engagement, business insights – delivering at least high‑teens growth apart from a residual “other solutions” bucket. Management reminded investors that roughly 60% of VAS revenue is “network‑linked,” meaning it grows with transaction volumes and digital adoption, particularly tokenization and authentication.

In effect, each incremental transaction now has a higher “services attach rate” than it did a few years ago. As chief financial officer Sachin Mehra put it, the payment network “brings volume… it brings data. Data enables the creation of the solutions. And that allows the virtuous cycle to keep going.”

Strategic pivots: restructuring, grants and guidance

The numbers were flattered this quarter by factors that will not recur in quite the same form. In late December, Mastercard secured fresh multiyear government grants tied to investments in select geographies. The Q4 impact was sizable: operating expense growth was reduced by roughly 5.5 percentage points, and “other income and expense” benefited by about $135m, reflecting the full‑year value of 2025 grants recognized in the quarter. Those grants will support operating expenses mainly in 2025 and 2026, with residual income benefits running beyond 2026.

At the same time, the company is tightening its organisational belt. Following a strategic review, Mastercard will record a one‑off restructuring charge of about $200m in Q1 2026, classified as a special item. The actions will affect roughly 4% of full‑time employees globally. Management was explicit that the objective is not to shrink, but to “free up capacity to further invest in our strategic priorities.” In practice, investors should expect a reallocation of spend towards infrastructure, geographic expansion and higher‑growth services, funded by cuts in less favoured areas.

Despite the restructuring, planned investment remains substantial. In 2025, adjusted operating expenses rose 12% on a currency‑neutral basis, with acquisitions contributing 5 percentage points. Stripping out M&A and the grants, the company continued to spend heavily on technology, services and global expansion.

For 2026, Mastercard is guiding to net revenue growth “at the high end of a low double digits range” on a currency‑neutral basis, excluding inorganic activity, with a 1–1.5 percentage point FX tailwind. Operating expenses are expected to grow at “the low end of a low double digits range” on the same basis, with FX a 0.5–1 point headwind. That implies continuing operating leverage, albeit moderated by ongoing infrastructure and innovation investments.

Investors will need to pay attention to the cadence. Revenue growth in the first half of 2026 is expected to be lower than in the second half, largely because 2025 saw unusually high FX volatility – a boon for Mastercard’s cross‑currency conversion revenues – in Q1 and Q2. By Q4 2025, and into January, FX volatility had dropped “well below historical norms,” denting transaction processing assessments. As those tough comparables roll off in the back half of 2026, growth rates should mechanically improve.

Issuers, co-brands and the affluent spine

Mastercard’s network still rests on the choices of banks and brands when they decide which logo to put on the front of a card. Here too, management struck an upbeat tone.

Miebach highlighted “hundreds” of new issuing deals and expansions in 2025. In North America, the company extended its long‑standing credit partnership with Capital One, at a time when the US issuer is simultaneously working to integrate Discover’s network. Mastercard will be the network for a “large portion” of newly acquired Capital One credit accounts, and Capital One will draw more heavily on Mastercard’s services portfolio across its business.

Outside North America, the network is still taking share. Turkey’s Yapi Kredi will migrate nearly 10 million cards – spanning consumer credit, debit and affluent portfolios – to Mastercard, supported by the company’s consulting and marketing teams. Scotiabank selected Mastercard as its network partner in Chile and Uruguay, citing security, loyalty and analytics. In South Africa, Mastercard’s modernised real‑time payment switch underpinned exclusive deals with Nedbank and Standard Bank, positioning it to gain “multiple” share points.

The affluent segment remains central. Mastercard secured more than 60 new affluent programmes in 2025, including deals with Brazilian brands PickPay, Ziklub and SisPrime, and an affluent extension with Nedbank. On the co‑brand front, it will remain the exclusive network for the Apple Card, even as issuing migrates to JPMorgan Chase over the next two years. It also secured the Walmart and Sam’s Club co‑brands in Mexico with Inbursa, renewed Barclays co‑brands in the US and the Tesco Bank partnership in the UK, and launched an Amazon card in the UAE with Emirates Islamic.

Management’s subtext was that, in a competitive field, the battle is increasingly fought on the terrain of data, analytics and digital capability rather than interchange alone. Issuers, they argued, are choosing Mastercard not just for global acceptance but for its ability to lift approval rates, reduce fraud and drive “top‑of‑wallet” status through targeted interventions. Digital commerce approval rates have improved by 270 basis points over the past five years, according to Miebach – a meaningful yield gain when spread over the 175bn transactions Mastercard processed last year.

Commercial flows and the Move platform

Beyond consumer cards, Mastercard continues to chase what it describes as “secular opportunities” in business payments and money movement. Commercial credit and debit volumes represented 13% of total gross dollar volume in 2025 and grew 11% year on year in local currencies, underscoring the shift from cash and cheques towards electronic methods in B2B and small business segments.

In commercial point‑of‑sale and invoice flows, virtual cards are a focal point. Mastercard’s Commercial Express programme is designed to make it easier for issuers and platforms to integrate virtual cards into travel and expense or procurement systems. In Q4, Amex GBT’s Emburse platform joined, alongside issuers BMO and Huntington. Renewals and expansions with WEX and Barclays, and a new partnership with business spend management platform Coupa to launch the Coupa Mastercard, extend virtual card usage across large corporate ecosystems.

Small businesses – still heavy users of cash and cheques – remain a particular prize. Mastercard has struck a verticalised partnership with L’Oréal in Latin America, starting with a co‑brand card for salon owners in Mexico via fintech Clara. In Italy, it extended its agreement with Intesa Sanpaolo to drive small business issuance. The aim is to use large anchors to pull fragmented small enterprises into the digital payments fold, where they can then consume additional services.

Perhaps the most quietly significant asset is Mastercard Move, the company’s disbursement and remittances platform. With over 17 billion reachable endpoints – bank accounts, debit cards, wallets and even cash-out locations – Move aspires to be, in Mehra’s phrase, “the money movement platform with the greatest reach in the industry.” New corridors include bank accounts in Bangladesh, expanded wallet connectivity with GCash in the Philippines and Weixin Pay in China via Tenpay Global, and stablecoin wallets through Xoom’s Zunes partnership. Transaction growth exceeded 35% in both Q4 and the full year.

The commercial and Move franchises underscore a strategic theme: Mastercard is deliberately pushing into adjacencies that sit alongside, but are not constrained by, the consumer card rails. These areas may be less mature, but they also carry less interchange‑related political risk and offer larger pools of non‑card flows to digitise.

Crypto, stablecoins and the agentic frontier

In a sector prone to hype, Mastercard has been careful to present its forays into digital assets and AI‑driven “agentic commerce” as extensions of its existing role rather than wild diversions.

On stablecoins, Miebach was emphatic: “For us, it is another currency we can support within our network.” The company has been active in digital assets for more than a decade, but the current focus is on enabling purchases of crypto, supporting stablecoin‑based settlement, and co‑branding with players such as MetaMask and Gemini. The latter has launched what Mastercard describes as the first business‑focused stablecoin co‑brand, while the company has also added Ripple as a settlement partner. The key, management argued, is to transplant trust, interoperability and global acceptance into a new medium.

The more novel frontier is what Mastercard calls “agentic commerce” – AI‑powered agents that can assist or act on behalf of consumers across the shopping journey. Here again, Mastercard is trying to position itself as the trust and identity layer.

Last year it launched AgentPay, a framework that allows issuers to recognise and authenticate AI agents initiating payments, bringing conventional consumer protections into machine‑mediated commerce. US issuers can already participate; global rollout is targeted by the end of Q1 2026. The company is piloting or consulting on agentic payment use cases with Anthem in Asia, Lloyds, Elavon and Santander in the UK, and Dubai‑based retailer Majid Al Futtaim in the UAE.

To monetise the trend beyond pure transaction fees, Mastercard has also created an Agent Suite within its consulting arm, moving from AI strategy to “asset‑led engagements” in which it designs and deploys AI agents inside client environments. Distribution partnerships with FIS, WPP and Comcast Advertising are intended to give these services a “one‑to‑many” trajectory rather than relying solely on direct sales.

The exact revenue timetable is uncertain, but Miebach’s message was that the train is already leaving the station. By putting standards and trust frameworks in place early, Mastercard hopes to influence the rails on which agentic commerce runs, much as it did a decade ago with tokenization. As of Q4, nearly 40% of all Mastercard transactions are tokenized, a statistic management ties directly to higher approval rates and richer opportunity for services.

Macro resilience and political crosscurrents

The company’s confident guidance rests heavily on its reading of the macro environment. Despite “geopolitical and macroeconomic uncertainty,” Mastercard’s data suggests a consumer who is, in Miebach’s words, “savvy and intentional” rather than retrenching. Surveys and sentiment indicators may be gloomy; actual spending behaviour has remained “healthy” across 2025 and into the first weeks of 2026.

Digital tools, he argued, allow consumers to optimise purchases, deploy loyalty points and rewards, and arbitrage prices, cushioning the effect of tariffs and cost‑of‑living pressures. The jobs market remains supportive across many economies, while wealth effects buttress higher‑income spending. Regional patterns differ, but aggregated global volumes still point to a robust underlying demand.

Where politics could bite more directly is in regulation. In prepared remarks, Miebach revisited the proposed US Credit Card Competition Act, which would require large issuers to enable at least two unaffiliated networks on credit cards. While the topic surfaced in the Q&A rather than the formal presentation, his earlier framing on geopolitical and regulatory risk was clear: Mastercard is positioning itself as a partner to governments, banks and merchants, emphasising cybersecurity, resilience and data localisation as much as price.

On potential US credit card rate caps, he underlined that Mastercard does not set interest rates, but is actively engaged in “a constructive dialogue” around affordability and access to credit. The consistent theme was one of pragmatism: the company cannot control legislative outcomes, but can seek to align itself with broader policy goals such as inclusion, security and competition in non‑card payment channels.

From a balance sheet and capital allocation perspective, the other lever is flexibility. Mehra stressed that, if macro conditions deteriorate, Mastercard has “several levers” in operating expenses – from personnel to marketing to professional fees – and a natural offset in lower cost of goods sold when volumes fall. But he was equally clear that the company will not “do anything which will impair our ability to grow over the long term.”

In that trade‑off between protecting margins and funding the next leg of the virtuous cycle, Mastercard appears, for now, to be erring on the side of reinvestment.