This Is One Incredible CEOhttp://www.fool.com/investing/general/2013/05/01/this-is-one-incredible-ceo-26.aspx Sean Williams
May 1, 2013
The Motley Fool's readers have spoken, and I have heeded your cries. After months of pointing out CEO gaffes and faux pas, I've decided to make it a weekly tradition to also point out corporate leaders who are putting the interests of shareholders and the public first and are generally deserving of praise from investors. For reference, here's my previous selection.
This week, I'll turn your attention to my selection for CEO of the year in 2011, Ajay Banga, CEO of MasterCard (NYSE: MA).
Kudos to you, Mr. Banga
The biggest concern for the two largest credit card processing companies -- MasterCard and Visa (NYSE: V) -- is whether or not consumer spending is growing or slowing. If global dollars transacted and volumes are falling, that would mean less processing revenue for these giants. However, I can't actually recall the last time we saw a steady decline in credit card usage since the deep recession of 2009.
MasterCard and Visa have notable advantages over some of the peers in the payment processing sector. Discover Financial Services (NYSE: DFS) and American Express (NYSE: AXP) -- both of which I think are fantastic long-term buys themselves, may I add -- process payments, but also have a separate credit lending division. While this allows these companies to double dip as both the processor and lender, it exposes them to bad debt expenses if delinquencies rise or the economy turns south. As payment processors only, MasterCard and Visa are exempt from the negative effects of payment delinquencies and defaults.
Another smart move Banga has pursued is pushing MasterCard into the prepaid debit and payroll card business. The 2010 Federal Reserve payment study, for example, showed that between 2006 and 2009, prepaid debit-card usage increased by nearly 15% per year. That's a huge market that's yet to be penetrated and Banga has MasterCard lined up to snare a significant chunk.
International and emerging markets are also a big part of Banga's plan to generate significant bottom-line growth. MasterCard's CFO Martina Hund-Mejean noted previously that 85% of all transactions around the globe are still conducted in cash . This leaves MasterCard and Visa plenty of untapped emerging market opportunity left to harness.