Mastercard's Secret Weapon Against Fraud? A 40x Growth In This Security Tech

As Mastercard Inc MA surpassed analyst expectations for the fourth quarter, it highlighted an important function that grew massively in 2024, securing the data of billions of users.

What Happened: Mastercard tokenized about four billion transactions per month in 2024, which was up 40 times over the past six years, said the company CEO Michael E Miebach during its earnings call.

Tokenization is a process that enhances security by replacing sensitive card data with tokens, reducing fraud risk. It also improves the customer experience by simplifying online checkout.

The CEO explained that Mastercard’s massive growth in tokenized transactions underscores its critical role in enabling secure and frictionless digital commerce, paving the way for a future of password-free and seamless payments.

“While the growth of token makes the ecosystem safer and more secure, we also benefit on the natural tailwind associated with the growth of token usage,” added Miebach.

Additionally, in response to an analyst, the CEO also highlighted that tokenization is a key component of Mastercard 2030 vision and has “tremendous opportunity”.

“We’ll be looking at other use cases and see what that can do for our company overall,” he added.

Why It Matters: Mastercard beat Q4 revenue and earnings expectations. Net revenue reached $7.49 billion as compared to the expected $7.39 billion, a 14% increase year-over-year). Adjusted earnings per share was at $3.82, as compared to the expected $3.69, a 20% rise.

Payment network revenue grew 13%, driven by increased gross dollar volume of 12%, cross-border volume of 20%, and switched transactions of 11%. The company forecasts low double-digit net revenue growth for both the first quarter and the full year 2025.

Price Action: Mastercard’s stock rose 3.14% on Thursday and advanced 0.29% to $567.66 per share in after-hours trading, whereas, the exchange-traded fund tracking S&P 500, SPDR S&P 500 ETF Trust SPY was up 0.54% at $605.04.

Mastercard has a consensus ‘buy’ with a price target of $542.84, according to the 34 analysts tracked by Benzinga. The high target is $654, and the low is $424. Recent ratings by Piper Sandler, Citigroup, and Oppenheimer suggest a $587.67 target, implying a 3.53% upside.