Michael Miebach
Chief Executive Officer at Mastercard
Thank you, Devin. Good morning, everyone. The headline this quarter, we delivered very strong results powered by broad-based momentum across all aspects of our business. Second quarter net revenues were up 13% and adjusted net income up 24% versus a year ago on a non-GAAP currency-neutral basis. These results were underpinned by healthy consumer spending, including strong cross-border volume growth of 17% year-over-year on a local currency basis. And value-added services and solutions net revenue grew 19% year-over-year on a currency-neutral basis.
The macroeconomic environment remains mixed, and we continue to monitor the positives and negatives. A few to note: Strength in consumer spending continues to be supported by a solid labor market and wage growth. While there are some signs of labor market growth moderating, this is off very strong levels of job creation. As -- also inflation and interest rates remain in focus. We've seen inflation cool but to varying degrees across carded and non-carded categories. Price levels are still elevated for many goods and services.
Interest rates also remain elevated, but many central banks have started to ease, and economic indicators support broader rate reductions. While tailwinds and headwinds to economic growth remain on balance, we remain positive about our growth outlook. With that as a backdrop, we remain focused on executing our strategic priorities, which fuel our growth algorithm across core payments, new payment flows and services.
You may remember that we recently announced organizational changes to further increase our focus on these priorities. They included the realignment of both regional operations and payments and services to support our growth algorithm. These changes were designed to accelerate growth and unlock capacity to invest in long-term business opportunities. This also helps us continue to deliver positive operating leverage over the long term. For example, we plan to redeploy resources into growth markets with high cash levels. We will invest in opening acceptance and new verticals, and we will continue to apply technology to help us realize even more of the shift to digital across both consumer and commercial.
We will also enhance and expand our value-added services, such as in data analytics, fraud and cybersecurity particularly as we further embed AI into our products and services. As a result of this organizational realignment, which positions us well for the long-term growth, we expect to incur a onetime restructuring charge in the third quarter.
Now moving on to an update on some specific elements of our growth algorithm. In payments, we're driving growth by winning and retaining deals, and we're tapping into the vast secular shift opportunity by expanding in new geographies and further digitizing the payments ecosystem. Let's start with our continued deal momentum. I'm happy to announce that Varo Bank will convert their debit and credit portfolios to MasterCard. They were the first all-digital bank to receive a national charter in the United States. Varo chose Mastercard due to our differentiated data insights, merchant-funded offers platform and our ability to seamlessly integrate into their technology stack.
We expanded our enterprise agreement with Wells Fargo and partnered to launch the Attune World Elite Mastercard. This is our first proprietary consumer credit program with the bank. We also want to renew deals this quarter with key U.S. prepaid partners, including Ouro, H&R Block, Wirecard network, Rellevate and Dash Solutions. In aggregate, these partnerships will drive a meaningful increase in our U.S. prepaid market share.
In Canada, we extended our long-standing partnership with the National Bank of Canada across consumer credit, commercial and prepaid for the next decade. And PostePay who already issues millions of Mastercard cards in Italy, has expanded our collaboration to drive additional growth across debit and prepaid. Let's deep dive into a few specific verticals and geographies.
Travel is, of course, a key focus. It has strong growth potential and a meaningful cross-border component. Travel is also a natural fit with our virtual card technology and our marketing, loyalty and consulting capabilities. We executed several new travel partnerships this quarter. We signed a deal with global digital payments provider Checkout.com to enable them to deploy their virtual card issuing solution to their online travel agency customers.
We also announced a multiyear agreement with Wells Fargo and Expedia to launch two new co-branded cards with a range of unique travel benefits. And we executed a new co-brand deal with Dashen Bank and Ethiopian Airlines, the largest airline in Africa. This builds on a co-brand deal with [Indecipherable] and I&M Rwanda that we initiated earlier this year.
I'm sure it wasn't lost that these two last deals I mentioned are in Africa. The continent is a great example of the vast secular opportunity in emerging markets. External sources estimate that approximately 90% of transactions in Africa are made in cash. We are committed to the digital transformation of the regions, and we're doing so by ranking up our investments, developing new partnerships, and rapidly expanding our acceptance footprint.
For example, Africa is the world's largest adopter of mobile money accounts. Our partnerships with large telcos and mobile network Operators like Airtel, MTN, Vodafone Egypt and others put us in a great position to accelerate inclusion and cash conversion. On the acceptance front, we've more than tripled the number of acceptance locations in Africa over the last five years. We recently signed deals with the Commercial Bank of Ethiopia, the largest bank in the country, and I&M Bank in Kenya.
These partnerships will enable us to increase share in both markets. In Nigeria and Ghana, we partner with [Indecipherable] Financial, who will work with fintechs across the region to issue Mastercard cards. Also, our Mastercard Move capabilities are the foundation for a new cross-border money movement solution with Access Bank Group. Together, we're enabling businesses and consumers in several African markets to send and receive international payments across over 140 countries.
Now this secular opportunity is not limited to Africa, we see opportunities around the globe. Think about emerging markets in Latin America and Asia Pacific. Fully capitalizing on that secular trend requires that we continue to innovate to support the digital economy at scale, and we're doing just that. We're enhancing the checkout experience and expanding our Tap-on-Phone acceptance capabilities. We're scaling our contactless technology in areas like transit, and we are driving the ongoing conversion of Maestro to Debit Mastercard.
Let's dig into one, online shopping. It must be simple, and it must work on all devices and all channels. That's why we are leaning into a new area of one-click payments. We announced that we will phase out manual card entry for e-commerce payments in Europe by 2030 in favor of a one-click checkout button. There are three foundational components to this effort, all anchored on driving simplicity and security. First, tokenization. Tokenization replaces payment credentials with a digitally secure token. When deployed, fraud rates decrease, and approval rates improve. So launching a decade ago, the technology has been broadly adopted around the world. In fact, we surpassed 22 billion tokenized transactions in the first half of 2024, up 49% versus a year ago.
Second is Click to Pay. Click to Pay simplifies online guest checkout by eliminating the need to manually enter payment credentials. Guest checkout becomes as easy as remembering your e-mail address. It also makes checkout more secure using the token technology I just mentioned. We are working with our merchants and bank partners to drive adoption. Click to Pay transactions more than doubled year-over-year in the first half of 2024. And third, payment passkeys. Passkeys eliminate the need for passwords or text for onetime pass codes. They allow consumers to authenticate online, purchase using a fingerprint or facial features that you use every day when opening your phone. When combined, these powerful technologies are enabling us to deliver on our promise of a simple and secure one-click online checkout experience for consumers.
We also continue to enhance in-store checkout. For example, we are scaling our biometric checkout program to new regions. In Europe, we're partnering with Polish fintech PayEye to allow shoppers to pay with a simple glance. And in Latin America, we are working with Ingenico so that consumers that participate in supermarkets can pay with a wave.
We're also working at pace to migrate Maestro cards to Debit Mastercards outside the United States. Shifting to Debit Mastercard is a critical element of our strategy as we see a 2x spend lift on cards once they are migrated. This is primarily due to the ability to capture both cross-border and online spend on debit Mastercard. In the first half of 2024, we converted over 14 million cards, which brings us to almost 300 million cards migrated since 2016. These innovations are examples of the investments we are making to differentiate the Mastercard experience versus other payment methods like P2P or local payment schemes.
We also continue to capture the large secular opportunity in targeted new payment flows. Today, I will focus on commercial, starting with accounts payable payments. We are operating from a position of strength. Our market-leading virtual card capabilities have been deployed with over 90 issuers worldwide. Additionally, we are integrating our technology into four of the top five leading global procure-to-pay solution providers. We completed the integration of our virtual card technology into Oracle Cloud ERP and commenced invoice payments for the first HSBC corporate customer in [Indecipherable].
On the supplier side, we signed several acquirers onto Mastercard Receivables Manager. This includes Elavon, whose customers are using our AI-powered platform to streamline the process of accepting virtual cards. We also continue to expand distribution of our virtual cards, signing new deals with Brex and Ant Group's WorldFirst.
On commercial point of sale, we're increasing the distribution of our commercial card products worldwide. In the U.S., the Wells Fargo small business credit card portfolio migration is now complete. In Europe, we've extended our partnership with Virgin Money to continue growing our small business portfolio. And our partnership with SAP Concur, which automatically integrates our corporate card data into Concur expense is yielding results. Large insurer SCOR Re awarded their T&E card program to Mastercard based on the value delivered through this joint offering.
And finally, we're executing against our strategy to penetrate new B2B verticals. This quarter, we signed an exclusive partnership with Latin America with CBC, the largest Pepsi distributor in the region, and the fintech enabler [Indecipherable] payments. This partnership will provide car distribution acceptance and financial education to almost 2 million retailers. These small businesses can now use their Mastercard small business cards to purchase inventory and other items.
In the health care space, we signed an exclusive partnership with the Medical Tourism Association. They will now accept cards from consumers and utilize virtual cards to make cross-border payments to medical providers. Separately, we are working with Square to broaden card acceptance amongst smaller health care providers in the U.K.
Now turning to services. Payments support our services and vice versa. Services played an important part in winning many of the deals I just mentioned. And the strong payments drivers helped fuel services growth. That, coupled with strong demand drove 19% value-add services and solutions net revenue growth in the second quarter on a year-over-year currency neutral basis, this is our powerful flywheel turning. I'm excited about our momentum and the future potential whether it's deepening penetration of existing customers, launching new capabilities or distributing our services in new ways and across new customer and transaction types.
A few examples. First, our services help to improve Mastercard issuer portfolio performance, thereby supporting our customers' core business objectives. For example, SEB in the Baltics is building their customer loyalty strategy together with Mastercard. And Revolut is working with us to develop and execute their marketing strategy, launching campaigns across the U.K., Ireland and Italy. We're also deploying our services across non-FIs, helping to diversify our business and capture a new set of growth opportunities. Customers as vary as Paramount and McDonald's in Taiwan are using our Test & Learn capabilities to address core business needs, including media measurement and new product introductions. And we're working with LATAM Airlines in Brazil to optimize their co-brand portfolio and develop innovative marketing campaigns.
We're partnering to distribute our capabilities in new and more efficient ways, Salesforce has integrated our dispute resolution services into its financial services cloud. This enables banks and other financial institutions to handle disputes and prevent chargebacks more effectively. And KPMG Norway has partnered with the Norwegian government to distribute our RiskRecon capabilities. The solution will help hundreds of local governments evaluate their cyber risk posture and that of their suppliers.
Turning to open banking. We continue to make strong progress in scaling new use cases. I'll use our account opening and account linking use case as an example. Klarna in the U.S. is now using Mastercard's open banking for this purpose. PayPal will leverage account linking, balance check and transaction history for their wallet in the U.S. and Jack Henry will distribute these capabilities to streamline the account opening process for hundreds of issuers they support.
So with that, I'll wrap it up. In summary, we delivered another strong quarter of revenue and earnings growth. We're driving growth by winning and retaining deals, we're penetrating the substantial secular opportunity, and we continue to see strong demand for our services. Now our differentiated capabilities, diversified business model and focused strategy position us well to capitalize on the significant opportunity ahead of us.
Sachin, over to you.
