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Mastercard Fosters Cashless Ecosystem in the Middle East and Africa

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Financial services major Mastercard Inc. (NYSE: MA) recently revealed that the company has entered into a strategic partnership with mobile payment fintech company OPay to enhance the penetration of digital commerce in the Middle East and Africa region.

Following the news, shares of Mastercard declined 1.1% on Thursday. The stock pared its losses marginally to close at $332.26 in the extended trading session.

Mastercard’s partnership with a key payments player of the region like OPay is expected to enhance the scope of digital commerce there.

The partnership will allow OPay consumers and merchants in the region to engage with brands and businesses globally with the help of a Mastercard virtual payment solution, which will be linked to their OPay eWallet.

The OPay customers can use Mastercard’s virtual payment solution for activities related to leisure, travel, accommodation, entertainment, streaming services, etc. Further, the service is available irrespective of the customer having a bank account.

Management’s Take

The Vice-President for Market Development at Mastercard EEMEA, Amnah Ajmal, said, “At Mastercard, our innovation strategy is rooted in partnerships to support inclusion at scale. Our partnership with OPay demonstrates our commitment to supporting payments providers across the world to create an interconnected global payments ecosystem that benefits an array of consumers with unique needs.”

Stock Rating

Recently, Goldman Sachs analyst Will Nance initiated coverage on the stock with a Buy rating and a price target of $460, which implies upside potential of 38.5% from current levels.

According to the analyst, Mastercard is well-positioned to deliver strong earnings growth. Further, solid operating leverage gives it operational flexibility.

Consensus among analysts is a Strong Buy based on 16 Buys and one Sell. MA’s average price target of $436.53 implies upside potential of 31.4% from current levels. Shares have declined 9.7% over the past year.

Conclusion

The underpenetrated regions of the Middle East and Africa in terms of digital payments represent an untapped growth market for Mastercard. The collaboration with OPay is expected to further boost its presence in this growing region.

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