Ajay Banga, who led Mastercard during nearly a decade of double-digit annual revenue growth and a soaring stock price, will step aside as the payments company’s chief executive at the start of 2021 and move into the role of executive chairman.
The group’s chief product officer, Michael Miebach, will become chief on January 1, the same day incumbent chairman Richard Haythornthwaite will also step down from his position.
Since Mr Banga’s appointment as chief in 2010, Mastercard’s revenue has grown from $5.5bn to $16.9bn, and its shares have returned more than 1,600 per cent, easily outperforming rival Visa. The S&P 500 returned 280 per cent over the same period.
“The numbers speak for themselves,” KBW analyst Sanjay Sakhrani wrote in a note to clients. “The news is surprising and bittersweet given the admirable job Mr Banga has done leading the company over the past 10-plus years.”
As chief, Mr Banga oversaw Mastercard’s transition from a credit card company to a more diversified payments group, with strength in debit and prepaid cards, security and data services, and business-to-business payments. Credit cards now account for less than half of revenue, and services account for more than a quarter.
In a recent interview with the Financial Times, he emphasised that the secular transition from cash to electronic payments was only enough to drive revenue growth to 7 per cent to 8 per cent. Reaching the 13 per cent growth it averaged over the past 10 years required the addition of new products and businesses.
Mr Banga, a longtime advocate for global financial inclusion, had argued that global private networks were a “better, faster, cheaper” way to increase the security and breadth of electronic payments, at a time when several countries have moved towards nationalising their networks.
He has also been an outspoken critic of bitcoin and other virtual currencies. He told the FT last year that Mastercard opted to leave the consortium sponsoring Facebook’s Libra currency because he could not make sense of the business model or extract hard commitments from key stakeholders about data privacy and security.
On Monday, Mastercard cut its 2020 financial outlook, citing the impact of the coronavirus on cross-border travel and commerce.
As part of the leadership transition, Mr Miebach, a 10-year Mastercard veteran, will become president of the group on March 1 and oversee the sales, marketing products and technology organisations, the company said in a statement on Tuesday morning. Mr Miebach held leadership positions in Europe, the Middle East, Africa and in the US in payments, banking services and technology.
“Mr Miebach has been instrumental in driving MA’s multi-rail [diversification] strategy,” Mr Sakhrani wrote. “We believe the company is in good hands with this transition.”
Shares were down about 1 per cent in early trading on Tuesday, with investors processing the earnings downgrade delivered after Monday’s closing bell.