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MasterCard’s Gilberto Caldart: Growth outlook for Latin America, Caribbean is strong

MasterCard’s Gilberto Caldart: Growth outlook for Latin America, Caribbean is strong

Posted by Shanelle Weir on November 24, 2014

“In the past, we were a card company,” said Miami-based Gilberto Caldart, president of MasterCard’s operations in Latin America and the Caribbean.

“But over the years, we became a technology company working in the global payments industry,” added the Brazilian-born Caldart, who took over as the regional head of MasterCard in 2013.

“Our role is to provide the technology that connects people, merchants and financial institutions. The essence of our business is processing all the transactions related to pay before [prepaid cards] pay now [debit cards] and pay later [credit cards.]”

MasterCard does not issue credit, debit or prepaid cards to individuals, companies or governments. It signs licensing agreements with financial institutions that actually issue the cards, while MasterCard operates the global payments system that links cardholders, merchants and banks and handles the processing of payment transactions for all the parties involved.

MasterCard makes its money by charging fees to banks that issue their cards and to merchants who accept them (for processing transactions). They also receive revenue on the dollar volume of activity from cards and devices like ATMs and fees for processing financial transactions for other clients.

“Our system can process billions of transactions in the blink of an eye,” said Caldart, who joined MasterCard in 2008 in Brazil after working with Citigroup for 26 years.

MasterCard opened its Latin American and Caribbean headquarters in Miami in 1986, in the same Brickell Avenue building where it operates today.

The company’s focus at the time was to create greater brand awareness in the region and broaden the use of its credit card transaction processing services. It did not start offering debit cards to client banks there until the early 1990s.

Today, MasterCard provides a full range of services in Latin America and the Caribbean — credit, debit and prepaid cards — under the MasterCard and Maestro brands, as well as Cirrus and MasterCard branded ATMs.

MasterCard has about 600 employees in the region (including 234 in Miami), 12 regional offices and operations is 37 countries. The regional headcount has grown by 32 percent over the last two years. It has more than 5 million merchants affiliated with the MasterCard and Maestro cards.

MasterCard also handles payments for governments. In Brazil, for example, the government sends plastic, prepaid cards to millions of poor families in a social welfare program called Bolsa Familia (Family Allowance). MasterCard processes these payments for a large, government-owned bank.

“Latin America is a very important market for MasterCard, and our 340 million cards in the region represent about 11 percent of our cards in use worldwide,” said Caldart, who earned degrees in business administration and accounting from the Universidade Federal do Rio Grande do Sul in Brazil and an MBA from Duke University’s Fuqua School of Business.

The region also accounts for about 7 percent of MasterCard’s global purchase volume and some 8 percent of its global “gross dollar volume,” which refers to all transactions.

“Our outlook for growth in the region is very positive,” Caldart said.

About 50 percent of the company’s cards in the region are credit cards, while the remaining 50 percent are debit cards, a sector growing faster than credit cards.

Caldart also noted that Brazil is not only the company’s largest market in the region, but also is its No. 1 individual market outside the United States.

Mexico is MasterCard’s second largest regional market, he said, while Colombia, Chile, Peru and Venezuela are growing rapidly.

MasterCard had net worldwide revenues of nearly $8.4 billion in 2013. The company does not release regional figures, but says Latin America posted growth of 12 percent last year in dollar terms.

While many people may think that MasterCard issues credit, debit and prepaid cards, they do not. MasterCard’s customers — financial institutions — are licensed to issue these products with the MasterCard logo. And they, not MasterCard, are the ones who decide whether consumers receive a credit card, issue lines of credit and credit cards, set interest rates and fees and collect money from cardholders.

The “unbanked” population in Latin America — or people who do not have bank accounts or access to traditional financial institutions — is a key growth sector for MasterCard, and the company is working to provide basic financial services to people who currently lack access to banks and ATMs.

According to the World Bank, about 60 percent of adults in the region do not have bank accounts, and must rely on cash for all their transactions. This means tens of millions of people living in the region’s slum cities receive their pay in cash and must pay all their bills in cash, often standing in long lines to pay bills and facing the risk of robbery at home or in the street. Millions of small businesses — sometimes called microbusinesses — also have the same problems.

Through the use of prepaid and debit cards, MasterCard can provide people and small businesses with a safer and faster way for handling their money.

MasterCard works with governments, banks and the Inter-American Development Bank in a variety of programs offering greater financial access to the region’s population.

In addition to the Bolsa Familia in Brazil, MasterCard and the Mexican government have set up a program with Mexico’s social bank, BANSEFI, that helps 6.5million people.

Individuals are issued a BANSEFI MASMasterCard-branded card with which beneficiaries receive government payments electronically and, for the first time, are able to pay bills, make deposits and save money.

In Peru, MasterCard is working with a local bank that issues debit cards to 40,000 microbusinesses. And in Colombia, where 82 percent of small businesses do not have access to the formal banking system, MasterCard and BancaMia developed a debit card for business owners.

“We strongly believe in financial inclusion, providing access to basic financial services,” Caldart said. “It’s a basic right. If you don’t help to increase access to financial services, you are increasing financial exclusion throughout the region.”

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