India Commercial Card Overview RESTRICTED

Transcription

1 India Commercial Card Overview

2 An emerging superpower Population Demographics GDP Growth Domestic Consumption FX Reserves Fiscal Governance Note: City of Varanasi in Uttar Pradesh India 2

3 Big Opportunities amongst a few headwinds Stable Government, Growth Oriented Positive for Commercial Card Growth Make in India Smart Cities Clean India Investments A few watch outs to be careful about Volatility Interest Rates Monsoons Taxes Regulator 3

4 India Commercial Cards Opportunity Estimate Commercial + Government Spend estimated INR126T 1 USD = 53.4 INR (2012 FX Rate; Source IMF) We estimate the Addressable Opportunity is INR6.4T** MasterCard Commercial and Government Spend (CGS) 1 INR6.4T CGS Addressable Spend 2 (adjusts for card-ability and EFT prevalence of total market) **Assumptions in Calculating Card-able Spend: 1. See Methodology Section in Appendix for details on MasterCard CGS calculation 2. Spend composition, acceptance footprint, and EFT prevalence are the three primary factors included in the addressable spend adjustment. A portion of high, medium, and low card-able spend is assumed to be capture-able at a rate based on MA commercial acceptance nodes per capita in the market. Additionally, EFT spend is removed given the acknowledged difficulty of transitioning spend from EFT to commercial card. EFT penetration rate calculated using output of multi-variable regression model using inputs from MasterCard-sponsored survey data of SMEs, Kaiser primary research, and payment and settlement systems data (EFT, check, and payment-card usage) of the focus market 3. Spend currently captured on card is sourced from Euromonitor 2012 and from a multi-variable regression model using inputs from payment and settlement systems data Source: MasterCard Kaiser Study 2013 INR41B Current Commercial Card Network Spend 3 4

5 India Commercial Card-ability of Total Spend by Industry Average Card-ability of Commercial Spend by Industry % of Card-able Spend 100% 90% 15% 80% 70% 60% 85% 60% 72% 45% 77% 39% 63% 52% 54% 66% 50% 40% 38% 16% 30% 20% 10% 0% 8% 7% Agriculture 26% 15% 44% 12% 14% 13% 11% 11% Mining & Quarrying Manufacturing Utilities Construction Wholesale & Retail 16% 23% 21% 33% 30% 19% 15% Transport, FIRE¹ & Community, Social Weighted Average Storage & Communications Business Services and Personal Services (Total Market) High-Card-able Spend Medium Card-able Spend Low Card-able Spend Note: 1. FIRE stands for Financial Intermediation, Insurance, Real Estate and Other Business Activities Source: MasterCard Kaiser Study

6 Commercial Card players are buoyed by the opportunity Significant market potential Renewed focus by existing and new players Buoyant YOY growth trends Several Players operating in the market place Traditional T&E dominates with focus growing on B2B Traditional products like T&E Cards, Purchase Cards and Travel Solutions continue to capture standard needs 6

7 Customers are looking for more than a payment instrument Card Issuers are already offering solutions on Maximizing Funding Data Reporting Employee benefits Financial Rebates So why isn t every client using cards? 7

8 Customers are looking for non disruptive end to end payment ecosystem Customer Expectations on Commercial Card Reduce overall costs Simplify admin processes Standardize and consolidate Easily integrate with systems 8

9 Best Practises in Commercial Card Making success of a Commercial Card program 7 step industry best practice to drive a successful Commercial Card program in India Align Monitor Compliance Buy In Success Controls Automate Manage Suppliers Program Design 9

10 Value driven success story Online Travel Company (OTA) Consumer Online Travel Company Option 1 Wire/Check/ACH Hotel, Car Rental, Airline Key Metric Improvements Option 2 Card Network Solution with Single Use Account Numbers Reduced overcharges Reduced paper Reduced manual reconciliation Improved working capital for buyers Sources: MasterCard Analysis 10

11 Thank You 11