Mastercard has embraced real-time payment networks all over the world, but it’s not ready to participate in the new U.S. instant payments system FedNow. The card company is still sizing up the new competitor, its CEO said.
The Federal Reserve launched FedNow last week and the central bank’s officials have touted it as the biggest change to the U.S. government’s payments system in a half century. Only banks and other financial institutions can tap into the FedNow network, but it’s expected to ultimately offer businesses and consumers faster payment tools.
“We have stayed close to these systems in various other countries, in the end, ending up partnering with most of them,” Mastercard CEO Michael Miebach said on an earnings call Thursday. “We'll have to see where it goes,” he said of the new U.S. system.
The CEO noted that Mastercard’s debit proposition is “strong” and evolving as it faces competition from the new U.S. system. “We will obviously continue to compete and offer our services to our banking and issuing partners,” Miebach said.
He knocked the notion that FedNow will make services more directly available to consumers and businesses anytime soon. “Going live doesn't mean that it is broadly available yet,” the CEO said. “It doesn't have features. It doesn't have a consumer platform as such, you can't access it through your mobile banking app,” he said.
Nonetheless, other payments companies and fintechs have been lining up to be part of the new FedNow system. The Federal Reserve has named some 50 early adopters of the system. They include JPMorgan Chase, the biggest U.S. bank, payments processor Fiserv and bank technology services provider Jack Henry & Associates.
Purchase, New York-based Mastercard, which is the No. 2 U.S. card network company, isn’t standing still with respect to the modernization of payments though. It has joined in other innovative approaches, including the trend toward open banking in Europe, and to some extent the U.S.
For the second quarter, Mastercard reported that net income climbed 25% to $2.8 billion, and revenue rose 14% to $6.3 billion, according to a press release issued Thursday.