Good day, and thank you for standing by. Welcome to the Fourth Quarter 2021 and Full Year Mastercard Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Warren Kneeshaw, Head of Investor Relations. Please go ahead.

Thank you, Jumaria. Good morning, everyone, and thank you for joining us for our fourth quarter 2021 earnings call. With me today are Michael Miebach, our Chief Executive Officer; and Sachin Mehra, our Chief Financial Officer. Following comments from Michael and Sachin, the operator will announce the opportunity to get into the queue for the Q&A session. It is only then that the queue will open for questions. You can access our earnings release, supplemental performance data and the slide deck that accompany this call in the Investor Relations section of our website, mastercard.com. Additionally, the release was furnished with the SEC earlier this morning. Our comments today regarding our financial results will be on a non-GAAP currency-neutral basis, unless otherwise noted. Both the release and the slide deck include reconciliations of non-GAAP measures to their GAAP reported amounts. Finally, as set forth in more detail in our earnings release, I would like to remind everyone that today's call will include forward-looking statements regarding Mastercard's future performance. Actual performance could differ materially from these forward-looking statements. Information about the factors that could affect future performance are summarized at the end of our earnings release and in our recent SEC filings. A replay of this call will be posted on our website for 30 days. With that, I will now turn the call over to our Chief Executive Officer, Michael Miebach.

Thank you, Warren. Good morning, everyone from New York. Starting off with the key highlight for the quarter, we delivered strong revenue and earnings growth as we saw further improvement in our underlying operating metrics. Quarter 4 net revenues were up 28% and EPS up 46% versus a year ago on a non-GAAP currency-neutral basis. On the same basis, quarter 4 net revenues are 19% above pre-COVID levels in 2019. So with that, let's take a look at the macroeconomic front. The outlook remains positive despite the recent supply chain constraints, geopolitical uncertainties, and inflationary pressures. Although there has been a recent surge in COVID cases, there are signs that these may be peaking. By each of these areas' merit monitoring, underlying spending trends remain strong as consumers, businesses, and governments have become more adaptable to a changing environment. In the U.S., economic growth remains solid with low unemployment and healthy consumer confidence. According to our quarter four SpendingPulse report, which is always based on all payment types, including cash and check, U.S. retail sales, ex-auto, ex-gas were up 6.4% versus a year ago and up 10.9% versus 2019. In Europe, GDP growth has been strong, although recently impacted by mobility restrictions. The impact of the Omicron variant reduces, expecting economic growth to pick up in the coming quarters, largely due to considerable pent-up demand from the past year. SpendingPulse shows that overall European retail sales in quarter 4 were up 3.3% versus a year ago and up, 1.3% versus 2019. In Asia-Pacific, vaccination rates continue to improve, and we expect the economic recovery to pick up pace as both governments and businesses ramp up investment. The travel recovery in Asia-Pacific has lagged that of the rest of the world and has significant growth potential. Growth in Latin America is expected to moderate a bit following the rebound in 2021. As it relates to COVID specifically, there are early signs that the Omicron surge will be relatively short-lived. The reality is that the tools we have to deal with the pandemic are more advanced than ever. 60% of the world's population is now at least partially vaccinated. Effective therapeutics are becoming available. And governments are using more targeted measures to limit the spread. More borders have opened and have stayed open despite the recent variant. Although we've always said the path forward will not be linear, there are signs we're moving towards the endemic phase of the disease. Looking at Mastercard spending trends, switched volume growth continued to improve quarter-over-quarter. Both consumer credit and debit continued to grow well. Turning to cross-border, the recovery has continued, with overall quarter 4 cross-border levels now higher than those in 2019. Cross-border travel continued to show improvement relative to quarter 3 levels, aided by border openings in the U.S., UK, and Canada. While Omicron has had some recent impact on cross-border travel, we continue to believe that cross-border travel will return to 2019 levels by the end of this year. Both cross-border and card-not-present spending ex-travel continue to hold up well this quarter. Overall, spending trends are moving in the right direction, with some near-term travel-related headwinds as a result of the variant. Now turning to our business highlights, I outlined in our Investment Committee meeting in November, we remained focused on our grow-diversify-build strategy, and our three strategic priorities which are, expanding in payments; expanding our services; and embracing new networks. Here's an update on how we’re progressing against each of those priorities. First, we're expanding in payments by growing person-to-merchant payments, scaling across other payment flows, and leaning into innovation in new payment technologies. In aggregate, these targeted flows represent $115 trillion in opportunity. First up, we're driving growth in person-to-merchant payments through new wins across the globe. In the U.S., I'm excited to announce that we're partnering with Chase and Instacart, the leading online grocery platform in North America, on a new Instacart Mastercard co-brand program. This partnership marks an additional co-brand win with Chase, quickly following the recent launch of the Chase Aeroplan World Elite Mastercard. In addition, with First Interstate Bank's planned acquisition of Great Western Bank, we will flip Great Western’s consumer debit, credit, and commercial portfolios to Mastercard. I'm happy to note that the consumer credit portfolio of MERIX Bank, over 3 million customers, will transition to Mastercard beginning in the second quarter. MERIX Bank plans to leverage several Mastercard solutions, including our fraud prevention, consulting, open banking, and loyalty services. Over in the Netherlands, we've renewed our partnership with Rabobank, which includes the migration of 8 million Maestro cards to Debit Mastercard. We signed an exclusive deal with Westpac in Australia for the new Banking-as-a-Service platform. This platform will allow new players to leverage Westpac's banking capabilities. Afterpay, the first partner on the platform will connect Debit Mastercards to their Money by Afterpay app. In the UK, the NatWest Debit migration is progressing to plan as it is in the early stages of consumer rollout. We're also expanding in payments by capturing new payment flows, including commercial, B2B accounts payable, bill pay, and cross-border remittances. For example, in the consumer space, we've expanded our relationship with Bank of America, where we'll be the lead brand for new commercial card issuance. We've also renewed and expanded our relationship with WEX, being chosen as their strategic partner and adding open-loop functionality to their millions of closed-loop fleet cards. Turning to accounts payable, we continue to scale Mastercard Track, WEX, BMO, BOK Financial, Melio, and Delux will connect to the platform. We also announced the launch of Mastercard Track Instant Pay, which uses machine learning to analyze and initiate automatic virtual card payments, streamlining processes for buyers and improving cash flow for suppliers. We're addressing new payment flows in consumer bill payments as well. We recently announced the acquisition of Arcus to help deliver bill pay solutions and other real-time payment applications in Latin America. Arcus enables digital payments for the majority of households built in Mexico and its connections with banks, fintechs, and digital wallet providers across the region. Finally, we continue to capture new flows in cross-border remittances. This quarter, we established a partnership with Travelex in Brazil, who will use Mastercard's cross-border services to send P2P transfers to the U.S. and Europe. For domestic disbursements in the U.S., we partnered with fintech processor TabaPay to make Mastercard Send easily available to fintechs and merchants across multiple use cases. Now shifting gears, we're also expanding in payments by leaning into payment innovation in areas like installments, contactless acceptance, and cryptocurrencies. Our open-loop Mastercard Installments program that we announced last quarter has been very well received. The U.S. launch is on schedule for quarter one. We're actively bringing new partners into the program, as we announced in the Middle East and Africa earlier this week - watch this space. Now we're making great progress in expanding contactless acceptance by turning the world's billions of active smartphones into potential acceptance devices, enabling people to buy and sell whenever and wherever they want. We now have 100 deployments of Tap on Phone in over 50 markets with leading partners globally. Contactless penetration increased to one in two of our in-person switch transactions globally this quarter. This is up from approximately one in three prior to the pandemic. And with that, the potential for accelerated acceptance growth, financial inclusion, and consumer convenience is substantial. We're also bringing capabilities, experience, and reach to help enable the crypto ecosystem. Our new collaboration with Coinbase will allow consumers to use their Mastercard to purchase NFTs; I tried that myself. Our work with ConsenSys will make it easier for software developers to increase the scale, efficiency, and speed of transactions on Ethereum and permissioned blockchains. Our CBDC Sandbox Test Platform, which we launched in 2020, continues to gain traction. We're helping central banks, financial institutions, and fintechs simulate the issuance and distribution of CBDC along with the integration of CBDCs with our card network, our real-time payment modules, and native blockchain wallets. Now shifting to services, our services support can differentiate our core products and have played a critical role in aiding many of the ones I just mentioned. The group services revenue was up 25% in 2021 on a currency-neutral basis. We will continue to extend our service capabilities to enhance the value of payments, even further accelerating our growth by expanding into new areas and new use cases, particularly through our Data & Services and Cyber Intelligence propositions. Again, a few examples for you. In December, we announced an agreement to acquire Dynamic Yield from McDonald's. Dynamic Yield uses enhanced AI to deliver customized product recommendations, offers, and content to consumers. Their customer set includes over 400 global brands ranging from financial services companies like Synchrony to retailers like Lands' End. When combined with SessionM's loyalty platform and our Test & Learn experimentation software, we will be able to offer a unified consumer engagement and loyalty hub to our customers. McDonald's is a great example of a company who is using all three of these platforms today with plans to further scale and integrate Dynamic Yield's capabilities globally. Additionally, our Ethoca platform continues to experience strong traction in preventing unnecessary chargebacks, a real pinpoint. We added new customers in every region in 2021 for Ethoca. Recently, we launched Ethoca Consumer Clarity, which gives consumers detailed information about purchases on their mobile banking app. Submission is live with issuers across the U.S., UK, and several European markets, including OTP Bank, Central Cooperative Bank, and Paybox Bank. Now beyond expanding in payments and expanding in services, our third strategic priority area is embracing new networks. Specifically, we are leveraging our expertise in payments to build out new networks, with a current focus on open banking and digital identity. On the open banking front, we closed the acquisition of Aiia in November, which brings strong API connectivity to over 2,700 banks across Europe. Combined with Finicity's North American connection, which covers more than 95% of deposit accounts in the U.S. market, Mastercard has an unparalleled footprint in the key open banking regions upon which we are building solutions to solve a wide range of use cases. One example is in the mortgage verification space, where Finicity has signed deals with several new partners, including LoanPro. In the digital identity space, we're helping our customers with fast, frictionless identity verification services. Ekata has performed strongly over the last quarter, expanding through strategic partnerships with companies such as ZIP and Equifax, as well as growing its global footprint with leading fraud providers Tongdon and AirClick in Asia-Pacific. Combined, open banking and digital identity extend our value before and after the payment transaction. These are large, attractive, and growing opportunities, and we are uniquely positioned to be a leader in both. So in summary, we delivered strong revenue and earnings growth this quarter. The macroeconomic outlook remains positive with a few areas that we're monitoring. We're executing against our three strategic priorities—expanding in payments, expanding our services, and embracing new networks—and all that with substantial progress on the product and deal front this quarter. Now Sachin, over to you and the numbers.

Thanks, Michael. So turning to Page 3, which shows our financial performance for the quarter on a currency-neutral basis, excluding special items and the impact of gains and losses on our equity investments. Net revenue was up 28%, reflecting the continued execution of our strategy and the ongoing recovery in spending. Acquisitions contributed 3 percentage points to this growth. Operating expenses increased 19%, including a 7 percentage point increase from acquisitions. Operating income was up 37%, which includes a 1 percentage point decrease related to acquisitions. Net income was up 44%, which includes no impact from acquisitions as the impact of acquisitions on operating income was offset by a one-time acquisition-related tax benefit. EPS was up 46% year-over-year to $2.35, which includes a $0.04 contribution from share repurchases. During the quarter, we repurchased $1.3 billion worth of stock and an additional $528 million through January 24, 2022. So let's turn to Page 4, where you can see the operational metrics for the fourth quarter. Worldwide gross dollar volume, or GDV, increased by 23% year-over-year on a local currency basis. We are seeing continued strength in debit and credit. U.S. GDV increased by 23% with debit growth of 15% and credit growth of 34%. Outside of the U.S., volume increased 23% with debit growth of 25% and credit growth of 20%. To put this in perspective, as a percentage of 2019 levels, GDV is at 125%, up 4 points quarter-over-quarter, with credit at 116%, up 5 points sequentially, and debit at 134%, up 3 points sequentially. Cross-border volume was up 53% globally for the quarter, with intra-Europe cross-border volumes up 45% and other cross-border volumes up 63%, reflecting continued improvement in travel-related cross-border as several borders opened during the fourth quarter. In the fourth quarter, cross-border volume was 109% of 2019 levels, with intra-Europe at 122% and other cross-border volume at 98% of 2019 levels. Turning to Page 5, switched transactions grew 27% year-over-year in Q4 and were at 132% of 2019 levels. Card-present growth continued to improve while card-not-present growth rates remained strong. Card-present growth was aided in part by increases in contactless penetration in several regions. In addition, card growth was 9%. Globally, there are 3 billion Mastercard and Maestro branded cards issued. Now let's turn to Page 6 for highlights on a few of the revenue line items, again described on a currency-neutral basis unless otherwise noted. The increase in net revenue of 28% was primarily driven by domestic and cross-border transaction and volume growth, as well as strong growth in services, partially offset by higher rebates and incentives. As previously mentioned, acquisitions contributed approximately 3 percentage points to net revenue growth. Looking quickly at the individual revenue line items, domestic assessments were up 24%, while worldwide GDV grew 23%. Cross-border volume fees increased 61%, while cross-border volumes increased 53%. The APPD difference is primarily due to favorable mix, as higher-yielding ex intra-Europe cross-border volumes grew faster than intra-Europe cross-border volumes this quarter. Transaction processing fees were up 28%, generally in line with switched transaction growth of 27%. Other revenues were up 30%, including a 9 percentage point contribution from acquisitions. The remaining growth was mostly delivered by our Cyber & Intelligence and Data & Services solutions. Finally, rebates and incentives were up 38%, in line with our expectations, reflecting the strong growth in volumes and transactions and new internode deal activity. Moving on to Page 7, you can see that, on a currency-neutral basis, total operating expenses increased 19%, including a 7 percentage point impact from acquisitions. Excluding acquisitions, operating expenses grew 12%, primarily due to increased spending on advertising and marketing, higher personnel costs to support the continued investment in our strategic initiatives, and increased data processing costs. Turning now to Page 8, let's discuss the specific metrics for the first three weeks of January. First, as a point of process we continue to provide volume and transaction metrics both on a year-over-year and as a percentage of 2019 basis. However, it is important to note that as we turn the calendar and move into 2022 the index versus 2019 metric now looks back three years and therefore includes a compounding improvement relative to the 2021 index metric. This compounding impact must be taken into consideration when considering the sequential trend from Q4 to January. So at the highest level, Omicron has had a minimal impact on overall switched volumes and transactions and has caused some moderation in cross-border travel. Going through the metrics in turn, starting with switched volumes. Through the first three weeks of January, we are now at 149% of 2019 levels, up 13 points versus Q4. This increase is primarily driven by the compounding effect I just referred to. After adjusting for this compounding effect, switched volumes are tracking similarly to what we saw in Q4. The underlying trends in switched transactions adjusted for the compounding effect are generally tracking the trends we are seeing in switched volumes. In terms of cross-border volume growth. As I mentioned earlier, spending levels as a percentage of 2019 in Q4 are now above pre-pandemic levels. The Omicron variant, which hit partly through December, impacted the strong cross-border travel momentum we saw in November. That impact has carried over into January. This has been partially offset by an increase in cross-border card-not-present ex-travel. Overall, cross-border volume through the first three weeks of January is now at 116% of 2019 levels, up 7 points versus Q4. In this case, the compounding effect is partially offset by the impact of the Omicron virus on cross-border travel in January. Turning to Page 9, I want to share our thoughts on the upcoming year. While there is some uncertainty related to Omicron and potential future variants, our overall expectations for 2022 are positive. The macroeconomic outlook is for continued growth and domestic spending levels have firmed up well despite the recent surge in cases. The recovery in cross-border travel was progressing well prior to Omicron, and we expect the recovery in cross-border travel to resume as the surge passes. As Michael just noted, the tools available to deal with the pandemic have improved with time. Although the path forward may not be linear, there are signs we are moving toward the endemic phase of this disease. Many countries have relaxed their border restrictions, and we continue to expect cross-border travel to recover to 2019 levels by the end of 2022. Our recent deal wins, travel-enabled portfolios and diversified set of services position us extremely well to capitalize on these trends. Turning to our expectations for the full year 2022, our base case scenario is for net revenues to grow at the high end of a high teens rate on a currency-neutral basis, excluding acquisitions. Acquisitions are forecasted to add about 1 percentage point to this growth, while foreign exchange is expected to be a headwind of 1 to 2 percentage points for the year, primarily due to the strengthening of the U.S. dollar relative to the euro. In terms of operating expenses, we continue to carefully manage our spending as we invest in our payments, services and new network priorities to drive short and long-term growth. For the year, we expect operating expenses to grow at the low end of a low double-digit rate on a currency-neutral basis, excluding acquisitions and special items. Acquisitions are forecast to add about 4 to 5 percentage points to this growth, while foreign exchange is expected to be a tailwind of approximately 1 percentage point for the year. Turning now to the first quarter, year-over-year net revenue growth is expected to be at the high end of a high teens rate, again, on a currency-neutral basis, excluding acquisitions. This reflects some sequential improvement in cross-border travel spending trends within the quarter relative to 2019, as the impact from Omicron starts to recede as the quarter progresses. Acquisitions are forecast to add about 2 percentage points to this growth, while foreign exchange is expected to be a headwind of 2 to 3 percentage points for the quarter. From an operating expense standpoint, we expect Q1 operating expense growth to be at the high end of a high-single digit range versus a year ago on a currency neutral basis, excluding acquisitions and special items. Acquisitions are forecast to add about 6 percentage points to this growth, while foreign exchange is expected to be a tailwind of approximately 1 percentage point for the quarter. As a reminder, we discretely disclosed the impact of acquisitions for the year-end they close and the subsequent year, after which time we do not split them out. For instance, Finicity, which closed in November of 2020 is now folded into the base. We are pleased to have closed the acquisitions of both Aiia and Arcus in November and anticipate closing the pending acquisition of Dynamic Yield in the first half of 2022. Other items to keep in mind regarding income and expenses, we have an expense run rate of about $115 million per quarter, considering the current interest rates and debt levels. This does not include gains and losses from our equity investments, which are omitted from our non-GAAP metrics. We also anticipate a tax rate between 17% and 18% for the year based on our current geographical business mix. Moving on, I'd like to provide an update on our three-year performance objectives for the 2022 to 2024 period, first introduced last November at our investment community meeting. Overall, there is no change, although our starting point for earnings is slightly higher due to our strong performance in Q4 2021. These objectives are set on a currency-neutral basis, excluding special items, gains and losses from equity investments, and acquisitions finalized after 2021. Using 2021 as our base for the 2022 to 2024 period, we project a net revenue compound annual growth rate in the high teens. This is based on an annual target market volume growth rate of 10% to 11%, a return to pre-COVID levels of cross-border travel by the end of 2022, and our services revenues growing at a rate of over 20% annually. From the perspective of operating margins, we will maintain our goal of achieving a minimum annual operating margin of 50%. However, I want to stress that we believe it is crucial to invest for long-term growth while also achieving positive operating leverage, and we will continue to adhere to this philosophy. Finally, we expect an EPS compound annual growth rate in the low 20s on a currency-neutral basis, excluding the effects of special items, gains and losses from equity investments, and future acquisitions. Now, I will turn the call back to Warren.

Thank you, Sachin. Jumaria, we’re now ready for the question-and-answer session.

Your first question will come from Rayna Kumar with UBS.

Good morning. Thanks for taking my questions. So with cross-border spending now above pre-pandemic levels, are you anticipating any pent-up demand in travel spend in your financial guidance, particularly as we get through the travel months in the summer?

Hi, Rayna. This is Michael. Let me kick this off. So as I said in my remarks earlier, we do see pent-up demand. We've seen pent-up demand in the last year and the year before, and it continues. People want to travel and get out whenever they can, and it has been proven again and again. So there is an assumption there. And we've been pretty vocal about that, that we do continue to believe that cross-border travel will return to pre-pandemic levels by the end of the year. Sachin?

Yes. I think Michael, you pretty much covered it. The only thing I'd just add is we just need to go back to 2021, where we saw that when people have the ability to travel, they express their intent to travel. And we do believe that the impact of Omicron is going to be short-lived. As borders start to relax a little bit more and people get a little bit more comfortable around this, people will get out there and express the demand for travel, back to what Michael was just saying.

In fact, I'm heading to Europe tonight, so there you go.

Great. Thank you.

Your next question will come from Harshita Rawat with Bernstein.

Good morning. Thank you for taking my question. Michael, I want to ask about FedNow. It looks like it will be live in the U.S. in 2023. Domestic RTP systems in many countries are used for payments other than consumer to business. But then you have examples like the ones in India with UPI, which is used for retail payments. How do you see that playing out with FedNow? And how can you participate in terms of services enablement for that? Thank you.

Right, thank you, Harshita. So FedNow, we'll have to see when it actually comes live. But broadly speaking, if we go with our experience in other countries, we believe there is demand for real-time payments as alternatives to current solutions. There is demand by government, demand by businesses, and consumers. The ISO 20022 Standard allows us to carry more data, which is another reason why this makes sense. To your question about participation, when we bought Vocalink in 2016, it was a conscious decision realizing exactly what I just said. We want to play, and we have to have those alternatives. If I look at it from a use-case perspective, there are some use cases where cards are simply an excellent answer today. Its ecosystem drives huge value. Yes, there might be alternatives, but we continue to invest in that and focus on that. At the same time, there’s a whole range of use cases where real-time payments account-to-account make more sense than basic ACH or cash. That's a displacement opportunity that we certainly want to engage in, particularly in cross-border remittances and bill pay.

Thank you.

Your next question will come from Darrin Peller with Wolfe Research.

Thanks, guys. Michael, when we think about the parts of your business that are outperforming partly because of the pandemic, but partly given where we are within the acceleration on spending on electronic payments, can you just walk through that in terms of what kind of sustainability you see to the parts of the business that have sustainable upside now? In other words, debit volume is now probably bigger than you would have otherwise thought it would be. Services is another piece that's probably higher than it otherwise could have been. Are those sustainable? And then maybe remind us of the parts of the business besides just cross-border that can catch up as we see the recovery again? Thanks, guys.

Alright, thanks, Darrin. So I'll start that off and then maybe Sachin can kick in. First of all, the secular shift has gotten a real push from COVID, where we had to spend online. And when I look at that, I think that is a fundamental structural trend: more online commerce, more online banking, more online everything. What has really come out over the last two years is that this is a lasting trend. Every bit of consumer research we do shows that people have learned to like it and will continue to do so. So I think that is an accelerated growth opportunity. This forms a big assumption in our three-year long-term guidance that we continue to believe the race towards a more digital economy will be a positive driver for us. So, sustainable growth driver. This is evident in our build-out of acceptance, with 19% acceptance growth too. We continue to find pockets and opportunities in flows in segments that are simply not penetrated with our solutions yet. This is why expanding in payments is pillar one of our strategy. You pointed to services, now services in a world that is more digital, throws up more data; in a more digital world, many more people need to be safe in that digital environment. Our C&I services, our security service solutions - we can't run fast enough. That has been outperforming. I cited the growth rate for 2021 at 25%, that's definitely an elevated growth rate, and we continue to see that very positively. More data means more companies will want to do something with that data. A merchant will understand now that they have more - more merchants are entering the digital space. How do they find customers in an easy way? How do they retain customers? That's where Dynamic Yield comes in - a perfect tool to do more of that. All of that data will fuel the world of open banking, which is part of our new network strategy. Those are sustainable opportunities. The catch-up opportunity, it remains travel: domestic travel has been leading, leisure travel has been leading. But cross-border travel and corporate travel are on different timeframes. There's significant catch-up opportunity for us.

Helpful. Thanks, guys.

Your next question will come from Lisa Ellis with MoffetNathanson.

Hey. Good morning, guys. I was hoping to ask about net yields. Just looking back, pre-pandemic Mastercard net yields were steadily increasing about 0.5 basis, 1 basis point a year. But then over the last two years, have dropped, first in 2020, then again somewhat over in 2021. Can you just help parse for us a bit, how much of the pressure on yields recently is due to cross-border travel weakness versus perhaps competitive pressure or something like that? And kind of what gives you confidence in one versus the other? And I guess, looking out into 2022, are you now expecting yields to move back the other direction? Thank you.

Sure, Lisa. I'll take that question. So look, the short answer to your question is, the vast majority of what you've seen in terms of net yields has been driven by the changing mix of the business over the pandemic, primarily cross-border volumes coming down and the impact of that. As you know, cross-border volumes and revenues are less indexed from a rebates and incentive standpoint. So you have the impact of that playing through. I would say fundamentally we've always operated in a competitive environment. We see no real change in the level of competition relative to what we've seen over the past few years. So candidly, I would tell you our assumption going into our planning cycle, and entering 2022, as well as our three-year performance objectives has been one of minimal net pricing, which is net of rebates and incentives. We continue to believe that to be the case, like we did a couple of years ago. So the point is that much of what you are observing in the net revenue yield is being driven by the changing mix, particularly cross-border. Services continue to do really well and have been accretive to our yield in the past. We expect that, given the opportunity, services will continue to contribute going forward.

Terrific. Thank you.

Your next question will come from Sanjay Sakhrani with KBW.

Thanks. Good morning. I have another follow-up question on the cross-border. I guess when we think about Omicron, I know there's been a small impact. But I'm just curious if there's any learning from it. Do you feel like the resiliency of the consumer, and obviously, the tools that we have, put us in a better position than we were when you provided your expectations, understanding your expectations haven't changed? And then I'm just curious, as we've seen the U.S. inbound travel improve, were there any learnings from that? Thanks.

Alright, Sanjay. I'll kick that off. So clearly, there have been learnings and across the whole industry. You may have followed some of the airlines during the earnings season. This thoughts about the time period between a surge, a case surge, and how bookings are coming back is narrowing. The first learning is that consumers have become more adaptable. It’s not just consumers; it's also businesses and governments. Governments have learned how to apply social distancing measures and quarantine rules in a more targeted way nowadays. As I said, more borders have stayed open. When the U.S. opened in November, surges were going on in Europe. There were no hurdles for entry at this point. I said I'm traveling to Europe. There's no hurdle at all, it’s pretty easy to get back. The combination of vaccination rates going up, learnings from governments contributes to a more benign mix to deal with whatever comes our way. This is a significant assumption that we took as we looked at the rest of the year. More routes are being opened, more people want to get out whenever they can. So I think the desire and the ability to travel mix to result in positive outcomes.

And Sanjay, I'll just add to what Michael just said. I think you'll remember at our November investment community meeting, we had shared with you that the U.S., UK, and Canada inbound cross-border travel corridors represented, in Q3 of 2019, they represented roughly 20% of total cross-border travel volumes, which we have said. And we said they were tracking at roughly 50% of 2019 levels. This data was shared at the ICM meeting. Just as an update, as we progressed through the quarter in November, we saw these borders open, which Michael talked about, U.S., UK, Canada. The same metric, which is the U.S., UK, and Canada in Q4, is now at 70% of 2019 levels. So that's just an expression of our confidence about how, when people can travel, they will travel.

And I just want to add one more point. I shared some macro learnings. Sachin just talked about the upside potential. Now taking both of that, what we’ve learned from our customers that are active in the travel space is that everybody is of the same opinion, hence leaning into the travel sector, winning more co-brands and consumer engagement so that customers book with our partners versus others is all in motion. You see the whole range of wins. The JetBlue renewal was one of the more recent ones, the Aeroplan launch with Chase, IAG last year, etc. So there are a lot of learnings by the travel industry itself on how to engage and truly make these co-brand programs worthwhile, which we appreciate.

That's perfect. I have my fingers crossed. Thanks.

Your next question will come from Tien-Tsin Wong with JPMorgan.

Thank you. Good morning, Michael and Sachin. I wanted to ask about your macro view hasn't changed too much from what you discussed at the investment community meeting aside from some of the near-term travel headwinds. I just want to check your Q1 outlook here for high-teens revenue growth when it looks like your January trends are growing above that, nicely above that. Any call-outs there? Or is that just conservatism?

Look, I mean, Tien-Tsin, here's what I would say. In what I shared with you in terms of our Q1 thoughts, you got to factor in, there is the headwind, which is coming in from the strengthening U.S. dollar, which I kind of talked about what our estimate around that is. That would be one call. But other than that, all we're kind of expressing is where we're seeing our current metrics and how we're assuming the recovery of Omicron will come through over the course of the first quarter, which I shared with you in my prepared remarks. Really nothing else going on there. I will emphasize one more time what you're seeing in terms of the first three weeks of January, indexed back to 2019, has a compounding effect. You have to consider that when looking at the sequential trends and impact of Omicron.

Understood. Thank you.

Your next question will come from David Togut with Evercore ISI.

Thank you. Good morning. What are your expectations this year for the pace of account-to-account payments rollout in Europe under open banking? How do you see this affecting credit and debit card growth in Europe? As a follow-up, I would appreciate your perspective on Amazon's very public negotiation with Visa over credit card acceptance at Amazon UK, and whether this reflects more payment options, for example, account to account, or is this a one-off negotiation between two corporates?

Alright. Let me start, David, with that. So account-to-account in Europe. When you look over the years, it's been relatively slow-paced in terms of consumer adoption and rollout. We've invested heavily across that with Aiia on the open banking side of account-to-account payments, with Nets, with Vocalink. We're deep in this space. We generally like what we see in terms of direction. On the subject of account-to-account payments, I view it as a significant opportunity for cards in Europe, but we see long-term growth in account-to-account too. Our partnerships with Tesco and Lloyd's are looking very positive. Your question about Amazon is fundamentally one for Visa and for Amazon. We have seen these kinds of public negotiations over the years, relatively short-lived, and they've been resolved. These particular news did not involve us at all. We have a strong and longstanding relationship with Amazon. We believe in consumer choice. That's why we have a multi-rail strategy, and we will deliver a differentiated set of products.

Thank you.

Your next question will come from Bryan Keane with Deutsche Bank.

Hi, guys. Good morning. Just two quick ones for Sachin. Looking at switched volume on the January month-to-date in the U.S. At 15%, that's down a little bit from where it was running before. I don't know if that's just an anniversarying of some of the comps. I know the three-year percentage still increased to 139. But just thinking about on a year-over-year basis, that 15%, anything to call out there? And second, on rebates and incentives. Any guidance you can give us for fiscal year '22 as a growth rate or as a percentage of revenue? Thanks.

Sure, Bryan. On the first point, you're referring to the 15% year-over-year growth in the first three weeks of January. You're looking at the sequential trends there. Well, it is a tougher comparison ratio. This goes back to the impact of economic stimulus, which enabled better spending back in the comparable period last year, and that's what you're seeing there. On your second point, look, the whole rebates and incentives matter is dependent on the timing of deals and how the volume and mix play out through the year. In Q1, we expect rebates and incentives as a percentage of growth to be similar to Q4. That encapsulates the extent I can share regarding guidance.

Got it. Thanks so much.

Your next question will come from Ramsey El-Assal with Barclays.

Hi. Thanks for taking my question this morning. I wanted to ask about supply chain pressure and whether you're seeing any changes. With that pressure abating, would that be contemplated in your full-year guidance? Separately, I was wondering if you could help us contextualize your exposure to Russia, and what we should expect there if sanctions tighten due to political unrest in Ukraine, potentially.

Alright. Yeah, Ramsey, let me start with the supply chain and address Russia quickly. Supply chain pressures are clearly there; you're seeing chip shortages and various factors affecting the supply chain. We continue to believe that these are relatively short-lived, as the supply chain stabilizes, that’s the first thing I'd say. So there's no huge assumption in our outlook around that. Particularly through the holiday season, we noted pretty significant holiday spending; positive season and people spent what they could. If they couldn't buy something, they purchased something else, leading to shifts in categories. From that perspective, again, pent-up demand is an important aspect here. Regarding Russia, it's very early to tell how this will unfold. This was one of the points I referred to earlier regarding geopolitical uncertainties that we have to keep in mind. We have seen sanctions applied in prior years, and we manage through that. Russia is a substantial and strategically important market for us. We'll have to wait and see how this will play out.

Alright. Thanks so much.

Your next question will come from Dan Dolev with Mizuho.

Hey, good morning. Thanks for taking my question. There was a question before on overall yield. I want to ask about domestic assessments specifically. If I look at Q4, I believe you were running at about 13.1 basis points. Historically, the number was higher, more closer to 14. Is there anything to call out on that front? Thank you very much.

Hey Dan, look, I mean on domestic assessments, what you've observed seasonally—what we've seen is that typically, in Q4, we see the yield of domestic assessments drop off a little bit. That's just what we've historically analyzed. There are a variety of moving parts going on in that, and there's nothing unusual to highlight.

Got it. Thank you so much.

Your next question will come from Moshe Orenbuch with Credit Suisse.

Great. Thanks. You did discuss the account-to-account side of things a little bit, but I'm just wondering, given how frequently this comes up in discussions with investors, we've seen issues from some domestic players from a regulatory standpoint. Any thoughts about how that might affect the evolution of that product advantage, perhaps being part of Mastercard might be for Tink and Aiia? Any thoughts about the growth of that in Europe and the U.S.?

Right. Moshe, excellent question. There is clearly an interest from regulators in new types of payments. Regulators aim for security, data protection, and consumer protection. That’s always in focus. We saw this recently with the buy now, pay later trend. The UK regulator is running a consultation. Various regulators have shown interest in getting that space regulated. In account-to-account, you should expect something similar. We know from Vocalink and Pay by Account in the UK that this is very much in focus. It differentiates an established player like us. We provide organized solutions with very clear data principles; we don't sell data. We strongly believe in consumer consent, and that creates a differentiator.

I'll just add to what Michael stated. You’ll remember when we discussed our ventures into open banking, we were very deliberate about how we engage there. That applies to how we secure data from banks, and it was all through APIs. This has been our philosophy. You have to approach it in the right way, avoiding scraping. Doing this through APIs allows comprehensive, sustainable, and secure long-term products you can offer.

Great. Thank you, Michael and Sachin.

Thank you.

Your next question will come from Dave Koning with Baird.

Yeah. Hey, guys. Thank you. I noticed U.S. average ticket size in Q4, I think it was only up 2%. The prior three quarters were up 6% to 7%. You would think with inflation, it would be accelerating, not decelerating. Is that just consumers returning to card-present maybe lower transaction sizes or just splitting transactions? And what's the impact? That seems positive to you, right?

Yeah, Dave, again, I want to make sure I got the question. But what we've observed, if you look at our trends for how switched volume and switched transactions are trending, you'll see effectively that the improvement quarter-over-quarter in switched volumes from 131% of 2019 to 136% is a 5-point improvement compared to switched transactions, which have improved from 131% to 132%. That should signal to you that there is a higher ticket size taking shape; especially when people travel more, they generally spend more and engage with credit products which tend to see higher ticket sizes. Additionally, as e-commerce grows, you generally see that effect. Therefore, it’s not looking much different for U.S. trends than what I've just shared globally.

Alright. Thank you.

Your next question will come from Andrew Jeffrey with Truist Securities.

Hi. Good morning everybody. One of the more discussed topics in the market today is inflation. I wonder if you could just touch on if we do see persistent embedded global inflation, whether that's a positive for your business from a volume and/or yield standpoint?

Right, Andrew. So definitely a significantly-discussed topic, numerous views on it. Here’s our take. First of all, we generally distinguish between macro issues happening in particular markets and their policymakers' responses. We heard the U.S. policymakers talk about this yesterday. Then there are broader impacts that go beyond our immediate business, like wage growth and how all that affects consumer spending capacity. There’s a lot to consider on the macro side. On the micro side, it’s not homogeneous. Inflation affects our business differently than the overall CPI. If you expect inflation in rents, that’s generally not running through our rails hugely, painting a different picture. All of that taken into account, notwithstanding inflation’s effects, it could negatively impact consumers and businesses. There is an effect on GDV if moderate inflation is expected, which likely shows in our figures.

Okay. I assume that's been factored into your guidance.

Right.

Your next question will come from Jamie Friedman with Susquehanna.

Hi. Thank you for taking my question. I just wanted to ask about the difference between other revenue and services revenue. I know services did great, up 28% for the year, 28% for the quarter. But other actually grew a little bit faster. So Sachin, maybe if you could remind us what the nuance difference is? I know one is a subset of the other.

Yeah. In other revenue, we have a bunch of our services revenue, but there's other stuff going on in that as well. Some Vocalink revenues sit there. The Nets acquisition would sit in there too. And so if you're looking at the other revenue growth rate of 30%, remember 9 percentage points came from acquisitions, which is just basically a lapping effect of the fact that we didn't have those acquisitions last year at this time than we do at this time now. So just so you understand, what you're seeing is a combination of strong services growth plus acquisitions, which is driving that up.

Got it. Thank you for the clarification.

Sure.

Your next question will come from George Mihalos with Cowen.

Great. Thanks for taking my questions, guys. Just very quickly, Sachin, I’m curious, as you look through the weekly trends year-to-date through January, are you seeing considerable variability, meaning do you see a bigger pickup as we go through the month? Additionally, if you could talk a little bit about what you're seeing in the rest of the world.

Sorry, what did you say? Are you asking what we’ve seen in the rest of the world? If so, it looks like, if you look at your volumes for credit at least, the worldwide volume is starting to accelerate a little bit and pick up. We’re seeing that come through in the last couple of weeks.

So you are seeing that come through in numbers over the last few weeks.

Yes. The weekly trends can bounce around because there are many factors influencing this nature of weekly data. I’m not seeing anything particularly unusual in our data for the first three weeks of January in relation to the trends, but there is volatility week over week. You’ll expect that to be the case sometimes due to comp issues or timing, so you have to consider the underlying spend levels.

I think we have time for just one final question.

And we'll take our final question from Jason Kupferberg with Bank of America.

Thanks, guys. I wanted to ask a question about how we should think about quarterly cadence here of net revenue growth. Obviously, you told us about Q1. It sounds like Omicron and FX and rebates are somewhat headwinds there. Your year-over-year comp is much harder in Q2 than in Q1, but at that point, Omicron headwinds won’t be an issue. I wanted to calibrate expectations for modeling through the first half of the year.

Yeah, Jason. We've given you thoughts on Q1 and for the full year to get you started. We will discuss further quarters as the year progresses. But here’s my take: we expect that cross-border travel recovery will resume as the surge passes, and we’ll see it recover back to 2019 levels by the end of 2022. We continue to be very active on the deal front and needs to factor into your expectations. However, I’d highlight that the pace of cross-border travel recovery will be a key determinant to how that cadence plays out. More details to come as the year unfolds.

Great thanks, Sachin. Michael, any final comments?

I was hoping the last question would be for me. Anyway, thanks for all your questions. As you see, we’re optimistic about the outlook. We reaffirmed our three-year guidance that we gave you in November. I don’t think there’s any need to repeat anything we said. I’d like to thank you for your support. As usual, a shoutout to the people that make all this happen. Thank you and speak to you next quarter.

This concludes today's conference call. Thank you for participating. You may now disconnect.