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Good day and thank you for standing by. Welcome to the MasterCard Third Quarter 2021 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. [Operator Instructions] Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. 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 Jumarian (ph). Good morning, everyone. And thank you for joining us for Third 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 your 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 in 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. It was released 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 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. Let me start by giving you the highlights of the quarter. Strong revenue and earnings growth continued. The net revenue up 29% and EPS up 48% versus a year-ago. As always, on a non-GAAP currency-neutral basis. On the same basis, Quarter 3 net revenues are now 11% above pre-Covid levels in 2019. We've seen continued strength in domestic spending and overall cross-border volumes are now back at 2019 levels. Though there still remains significant rules for growth in cross-border travel.
We're continuing to execute against our strategic priorities with good progress on the product and deal fronts this quarter and we're excited about our acquisition of CipherTrace in the crypto - services area and our planned acquisition of IOP in open banking. So those are the highlights, looking at the broader economy, domestic spending levels continue to improve even though economies are facing supply chain constraints, rising energy prices, and some other inflationary pressures. According to our quarter 3 Spending Pulse report, just based on all payment types, including cash and check, U.S. retail sales, ex-auto, ex gas were up 5% versus a year-ago and 12% versus 2019, reflecting the return to in-person shopping in the ongoing e-commerce strength. Spending Pulse also indicated an overall European retail sales in quarter three were up 5% and 6% versus 2019.
As it relates to COVID specifically, the outlook continues to get better. The case number's generally improving, new therapeutics in the pipeline, progress in vaccinations and businesses becoming more agile in the phase of remaining restrictions. We're also seeing a general trend with the opening of travel corridors, notably inbound into the U.S. and some easing of restrictions in Asia. Now turning to local business, the pandemic is not fully behind us, but now we're in the growth phase in most markets domestically. And in many markets cross-border spending is up. We will therefore turn the page and move beyond the full phase framework that guided us from the last 19 months and focus on managing the business for the growth opportunity ahead of us. Looking at MasterCard spending trends, switched volumes improved quarter-over-quarter.
We saw particular strength in consumer and commercial credit. Debit spend remains elevated, although it has moderated in recent weeks in part due to wining stimulus benefits. In terms of how people are spending, card-present volumes continue to improve as people are getting out and shopping more. Although we're still seeing sustained strength in card-not-present spent. So regardless of whether people want to shop online or in person, our solutions support that choice and position as well [Indiscernible] full strength. Now let's take a look at cross-border. Overall, cross-border returns with 2019 levels in August, driven by improvements in consumer and commercial travel, as well as the ongoing strength of cross-border card not-present spending it's travel.
Our cross-border travel improved from 48% of 2019 level in the second quarter to 72% this quarter with substantial upside potential still remaining as inland boarders open. Against this backdrop, we're investing in the growth for our business, including the enhancing ends of our leading technology capabilities, like expanding on netbook inch to connect directly to our customers through the cloud, providing faster and easier access to our products and services. And of course, we remain focused on our strategic [Indiscernible]. Number 1, growing our core products while driving the shift to digital. 2 differentiating and diversifying with our services.
And 3, leveraging our mult-rail capabilities to offer choice across [Indiscernible] applications. Let's take them one-by-one. In terms on how we're growing our core products and driving the shifts through digital, through Mastercard installments by winning core deals and by continuing our momentum in the fintech space. First, let me tell you about our recently announced Mastercard installments, our scalable, open loop, buy now, pay later solution. Mastercard installments is differentiated, invented, enables banks, lenders, fintechs and wallets to seamlessly bring buy now, pay later solutions to consumers and merchants. At scale and in a secured tokenized manner. With little to no integration for merchants, our solution avoids the need for the investor engage merchants one-by-one to roll this out, enabled them to deliver more payment options to more consumer faster.
Our solution brings choice at scale delivered through the Mastercard Network. Our consumers will be able to access buy-now pay-later offers through their bank's mobile banking app, at the point of checkout, and soon directly through click-to-pay [Indiscernible] with credit decisioning and enabled consumers to easily choose different repayment options. Mastercard installments with our core payments enable us to provide additional value through services such as data analytics, loyalty, and fraud tools. We've seen strong interests from players on all sides of the ecosystem and look forward to growing our partnerships in this area.
As always, we remain focused on continuing to grow share, and we've won deals across the globe this quarter. In the UK, we're partnering with Chase as the preferred debit partner of DLU digital retail bank. In Canada, it extended our exclusive co-brand of Costco Canada. And in Brazil, we signed the deal with Auto Pass to issue more than 10 million cards to mass trends the users from the Sao Paulo area and along with that open concept acceptance across their subways, trains and city buses. Also building our leading position with Syntex and mobile money providers. Here are few recent examples. PayPal has extended its PayPal business debits cards into our 4 marks in Europe.
PayPal will also directly leverage miles to cut since the domestic wallet cash-outs and P2P transactions in the U.S. Partnering with Vodafone, in Egypt across all of their mobile money use cases equally cash-outs, P2P, and bill payments. We expanded our strategic partnerships with Yandex in Russia and will be there for third international partner for all of their fintech initiatives. And Synctera, an innovative markets leader that connects U.S. banks and fintechs to get constant financial products into the market and leverage our digital first Finicity [Indiscernible] in cyber security [Indiscernible]. Now, shifting to services. Our services support and differentiate our core products and have played a critical role in enabling many of the wins I just mentioned. Of course, also diversify our business. We've had many wins in this area in this quarter.
Starting with the cybersecurity space, Ethica is helping multiple players, including AT&T and MecardoLibre reduced chargebacks through collaboration, hereby creating purchase transparency. Back on the bulk on trial is using artificial intelligence capabilities to improve consumer experiences, increased profitability, and identifying new opportunities. And in Europe, the term is leveraging new data behavioral biometrics to help thousands of new banks authenticate online transactions. Data analytics, the tourism agencies in Greece, Hungary, and elsewhere are using services like tourism insights and managed services. Together, greater visibility of trends and drive deeper insights to support the tourism campaigns. In the UAE, interest received leveraging our test and learn capabilities to innovate experiments and rolled out new products for better customer engagement.
And then having success in the loyalty space with our innovative digital solutions driving wins with players like the globe's fitness chain varies by First and Saudi National Bank. Now, let's turn to the progress we've made an offering choice to consumers across payment applications with our multi-real capabilities, which would equal from banking, COD and crypto. In open banking, we're happy about our planned acquisition of IOs. IOs' a leading European open banking player whose platform expertise, strong API connectivity, and payment capabilities complement our existing open banking assets. We will combine IOs European footprint [Indiscernible] connectivity in the U.S. and our expansion into other markets like Australia.
This will allow us to extend each organizations' best-in-class capabilities such as credit [Indiscernible], credit scoring, account information services, and payment applications across markets. Talking about the markets, we continue to make progress with our open banking products in Europe, with players like Intercard one of Scandinavia's leading credit card companies. And in the U.S. [Indiscernible] is working with Usio to enable to count opening verifications along with future plans to expand to payments. In B2B, we continued to -- on the track business payment service network with key partners like JPMorgan Chase.
As well as merchant acquirer such as Moneris, the largest acquirer and heating processor of B2B transactions in Canada. And Priority Commercial Payments, a leading payments technology Company in commercial payment solutions in the U.S. We are also adding new functionality to track BPS and partnering with Seneca to launched supply chain finance capability. Dysfunctionality empowers payment agents to provide their business customers with access to affordable working capital directly through the Mastercard track and EPS platform. And in the UK, HSBC will be the first issue a Mastercard track card to account transfer product, an innovative B2B payment solution that allows businesses to use their commercial card program to make payments with any supplier, even if that supplier does not accept card payments.
Again, a true multi-rail offering. And finally, in the crypto space, we're making it easier for crypto players to connect to our network. We signed up a number of new crypto wallet providers and exchanges this quarter, including [Indiscernible] by ZEN.com, Coinmotion and CoinJar. Our crypto program, which is based on [Indiscernible] principles of engagement, allows consumers to easy buy crypto assets with their Mastercard s, spend their crypto balances wherever MasterCard is accepted. Cash-out their proceeds with Mastercard send and earn rewards in the form of crypto or even NFT. We're also seeing a growing services opportunity in [Indiscernible].
Earlier this month we acquired CipherTrace, a security and fraud monitoring Company with expertise technologies, insights into more than 900 cryptocurrencies. Our recently announced [Indiscernible] was also add to our expanding crypto services portfolio. So let me sum this up one more time. We delivered strong revenue earnings growth this quarter, we're seeing continued strength in domestic spending in most markets. And while overall cross-border lobbies are back at 2019 levels, there remains significant room for growth in cross-border travel. We're executing against our strategic priorities with good progress of the product and deal fronts, as you've heard. We're doing all of that while carefully managing our expenses. That's it for me. Sachin, over to you.
Thanks, Michael. And good morning, everyone. Returning 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 29%, reflecting the continued execution of our strategy and the ongoing recovery in spending. Acquisitions contributed 3 ppt to this growth. Operating expenses increased 23% including an 8 PPT increase from acquisitions. Operating income was up 34% and net income was up 45%, most of which include the 1 PPT decrease related to acquisitions.
Further, net income rules were also positively impacted by 60 PPT. Due to the recognition of higher one-time discrete U.S. tax benefits versus year ago. EPS was up 48% year-over-year to $2.37, which includes $0.02 of dilution related to our recent acquisitions offset by a $0.04 contribution from share repurchases. During the quarter, we repurchased $1.6 billion worth of stock and an additional $361 million through October 25th, 2021. So now let's turn to page 4 where you can see the operational metrics for the third quarter. Worldwide gross dollar volume or GDV, increased by 20% year-over-year on a local currency basis. We're seeing continued trends in both debit and credit. U.S.
GDV increased by 20% with debit growth of 9% and credit growth of 36%. Outside of the U.S., volume increased 20% with debit growth of 23% and credit growth of 16%. To put this in perspective, as a percentage of 2019 levels, GDV is at a 121% up 2 PPT sequentially, with credit at a 111% up 4 PPT sequentially and debit at a 131% flat quarter-over-quarter. Our quarter volume was up 52% globally for the quarter with inquiry on our cross-border volumes up 47% and other growth quarter volumes up 60%, reflecting continued improvement [Indiscernible] of the pandemic last year. In the third quarter, cross-border volume was at 97% of 2019 levels, with [Indiscernible] Europe at a 112% and other cross-border volume at 83% of 2019 levels.
Notably, cross-border volumes averaged at or above 100% of 2019 levels in the months of August and September. Turning on page 5. to page 5, switched transactions grew 25% year-over-year in Q3, and were at a 131% of 2019 levels. Card not present growth rates remained strong, and card present growth continued to improve. Card present growth was aided in part by increases in contactless penetration in several regions. In Q3, contactless transactions represented 48% of in-person purchase transactions globally, up from 45% last quarter. In addition, our growth was 8%. Globally there are 2.9 billion Mastercard and Maestro-branded cards issued. Now let's go 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 29% 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 PPT to net revenue growth. Looking quickly at the individual revenue line items, domestic assessments were up 21% while worldwide GDV grew 20%. Cross-border volume fees increased 59% while cross-border volumes increased 52%, that 70 fee difference is primarily due to favorable mix as higher yielding [Indiscernible] cross-border volumes grew faster than interior cross-border volumes this quarter. transaction processing fees were up 26% generally in line with switched transaction growth of 25%.
Other revenues were up 35%, including a 10 PPT contribution from acquisitions. The remaining growth was mostly driven by our cyber and intelligence and data and services solutions. Finally, rebates and incentives were up 34%, reflecting the strong growth and volumes of transactions and new and renewed deal activity. Moving on to page 7, you can see that on a currency neutral basis, total operating expenses increased 23%, including an HPPD impact from acquisitions. Excluding acquisitions, operating expenses grew 16% primarily due to higher personnel costs as we invest in our strategic initiatives including -- sorry, increased spending on advertising and marketing, and increased data processing costs. Turning to Page 8, let's discuss the specific metrics for the first 3 weeks of October. We are seeing continued strength in growth rates across our operating metrics versus 2020.
In fact, due to the lapping effect related to the pandemic that began last year. To provide you better visibility into planning spending levels, we are once again showing 2021 volumes and transactions as a percentage of the 2019 amounts, when we're not experiencing the impact of the pandemic. So, if you look at spending levels as a percentage of 2019 for switch volumes through the first 3 weeks of October. The recent trends of residue with overall switched volumes at a 134% of 2019 levels, up 3 PPT versus Q3. The U.S. has held steady with some moderation in growth from earlier levels due to the roll-off of stimulus and outside the U.S. we're seeing continued improvement.
Presence, which transactions remains steady and are generally tracking the trends we're seeing in switched volumes. In terms of cross-border, as I noted earlier, spending levels as a percentage of 2019, we're back to pre -pandemic levels starting in August. That improving [Indiscernible] has continued through the first 3 weeks of October as we are now at a 105% of 2019 levels. This improvement is driven by increases in both travel and non-travel cross-border volumes. As it relates to travels, we have seen it picking up in all regions, notably within and to Europe and recently into Canada as well. Turning to Page 9. I want to share our current thoughts looking forward.
First off, our deal momentum and service lines continued to position as well for growth and diversify our revenues and be expected to remain strong progress against our strategic objectives. Domestic spending levels remain healthy, and we are encouraged by the recent resurgence in international travel. We are optimistic about the announced relaxation or border restrictions in cases like the U.S. and the UK, given that we have seen travel pickup when borders are opened in the past. Further the airlines have recently reported increased travel bookings including long-haul travel. With this as context, assuming domestic and cross-board spending trends relative to 2019 continue to improve, we would expect Q4 net revenues to grow at a low 20s rate year-over-year on a currency -neutral basis, excluding acquisitions. As a reminder, spending recovered progressively in 2020. So, we will be facing a more difficult comp of approximately 7 ppt in the fourth quarter relative to the third quarter.
It is also important to point out that this is just one potential scenario as a level of uncertainty remains related to the pandemic and therefor the pace of recovery may not be linear. In terms of operating expenses for the fourth quarter, we expect operating expenses to grow at the low end of low double-digits versus a year ago on a currency neutral basis, excluding acquisitions. This reflects our disciplined approach to expense management on advancing our innovation agenda across payments, services, and promising new adjacencies and continued investment in brand and product marketing. With respect to acquisitions, we are pleased to now have close on the cyclic trace transaction and we expect acquisitions will contribute about 2 to 3 PPT to revenue and 8 PPT to operating expense growth in Q4.
This reflects the integration of several acquisitions in the open banking, digital identity, and real-time payment areas. Other items to keep in mind, already achieved and expected to be about a half a PPT headwinds to boost net revenues and operating expenses in Q4. On the other increment expense line, we are at an expense ground rate of approximately a $120 million per quarter given the prevailing interest rates. This exceed gains and losses on our equity investments, which are excluded from our non-GAAP metrics. And finally, we expect the tax rate of approximately 18% to 19% for the fourth quarter. Thanks. And I hope you will be able to participate in our Virtual Investment Community Meeting on November 10th, we look forward to discussing our future plans with you at that time. And with that I will turn the call back over to Warren.
Thanks, Sachin. Drew Maria, we're now ready for questions.
[Operators Instructions]. Please stand by while we compile the Q&A roster. Our first question will come from the line of Lisa Ellis from Moffettnathanson. Please proceed with your question.
Hi, good morning. Thanks for taking my question. Since you launched Mastercard installments now a few weeks ago, can you give some color on what reaction you're seeing from your Fintech and bank partners, and also, are you expecting that some of the specialized BNPL providers may use elements of MasterCard installments, why or why not, l like what would be the trade-off that they will be making there. Thank you.
Thank you, Lisa. Let me take that question first. So, I know [Indiscernible] exciting space. We've talked about it for years, invested with our own installment proposition, [Indiscernible] off to banks 5, 6 years ago. The partnerships and now as of late Mastercard installments as you said. You saw a strong lineup of initial partners, bank partners initially, I mean, it's the thought is to remind everybody, again, here is a proposition that we have built into all our network. So, this is really delivered with no hassle for merchants or for lenders at the point of sale. So, the reaction from banks is strong here in the U.S.
that's where our lineup of U.S. vending partners was. But I've spent time on the roads over the last three weeks in Europe. And similar conversation emerged there it is just a couple of days after the announcement over in Italy, and thanks for saying while, it makes a lot of sense, it's really significant headache for us and get into a space that we all believe is important from a consumer perspective. On the fintech side, Syntex lenders, novel lenders, we lean in with Syntex. Some called them distractors. We feel these are partnerships. We should enable anybody who wants to come on our network. And we're certainly marketing that to ensure that we have the full breadth of what the market has in terms of lending offerings. That's going to be good for consumers and merchants. So, watch this space, more to come. But I think it's a very compelling proposition.
Thank you.
Our next question will come from the line of Don Fandetti from Wells Fargo. Please proceed with your question.
Hi, good morning. Michael, I was wondering if you could talk a little bit about this intermediation. It seems like investors are more focused on it after the square after-pay deal. Can you talk about that and your thoughts on more direct payments out of consumer accounts in the U.S.?
Right, so Don, great question. Choice and payments have been a theme for Mastercard now for I think basically always, but specifically with dollar investments in the account-to-account space over the last 6 years. We see the demand for merchants and from consumers. For the consumer it makes sense because all you spend into you can see it all on one bank account. That will be one aspect to consumers might like that merchant like it. And disintermediation opportunity. I mean, that's certainly something to watch, but we look at it as an opportunity.
We say this could be additional volumes that we've not been involved with. This could be what was historically the consumer finance business. This would be something that was just direct debit business that we've seen in some European countries and so forth. So that's broadly how we look at it. We build a, a full stack around this that helps to get your money from A to B, but that's just half of the story. Probably not even half of the story because it's the whole experience that really matters.
You got to have the security. What happens if you do a push payment, and you want your money back? Some of those best practices that we've learned over the last decades in cards is what we're intending to build here. So, it's interesting to see blogs out there on how account to account might look like. We have for years now in pay by account in the UK. We've got those learnings. We're ahead of the markets here very clearly knowing what works, what the economic model ship looks like, what's the proposition is that would really make a difference. For merchants, for acquirers who will be all playing in this space. So, I don't see a disintermediation risk, I see an opportunity for us to extend our partnerships and gain new flows.
And I will just add on to what Michael just said as it relates to your question around specifically on the thread of fluids loops. Look, we're big believers in the benefit of the open loop system, which we believe is very powerful. I mean, for the reasons that Michael just mentioned, we bring consumers at scale, you bring globally acceptance. I mean, we have north of 80 million merchant acceptance points that's growing rapidly. And the customer acceptance is very competitive. And when you take that [Indiscernible] is open, to which is why payment can be invested in the business very heavily, to drag down by far.
Thank you.
Our next question comes from the line of Bryan Keane from Deutsche Bank. Please proceed with your question.
Hi. Good morning. Wanted to ask about cross-border travel Visa. Yesterday, I was talking about cross-border travel not getting to a 100% on the two-year until summer of calendar year '23. Just wanted to get your thoughts on when you think we will get to reach back to a 100% on cross-border travel. And then secondly, it looks like you guys are running a little bit faster, a little bit ahead of Visas number for cross-border travel. And just wondering if what might be some of the factors that are driving a little stronger demand for you guys so far. Thanks.
Sure. So, Bryan, I'm going to take that. Suppose -- I know you're asking specifically about cross-border travel, but I just want to kind of put the headline out there, which is for cross-border, as a whole, we have seen very strong growth in Q3 as you've seen. And yes, travel has been a big component of that. Specifically travel between Q2 and Q3 has gone from what was 48% of 2019 levels to 72% in Q3. And now in the first 3 weeks of October, it's tracking more like at 77%. And look, what these signals to us very clearly is if people can travel, they will travel.
And I think that's really important to recognize. And then when you overlay that with what's going on in the nature of announcements around opening up orders will specific. space what would be like burdens from quarantining standpoint, which is what we're seeing right now. People have said that they will travel, and they've demonstrated that through Q3.
So net use when I tell you, I think travel is something which people want to do. They're showing that willingness to do it. Now it's a question of which or the other countries which we will open up in addition to the borders I've just talked about. And you're seeing this we reflected in the bookings, which analyzer boarding as well so we remain optimistic on this front. I can't really tell you specifically which day which month, it's going to reach up to a 100% of 2019 levels. But generally, the trend is more moving in the right direction.
Right, and you’re coming back to being on the road for quite a few weeks. You'll start to see also the mix changing. While initially this was a leisure travel, you start to see business travel really kicking in. That gives us another signal that it really the point of demand is coming across all channels. People want to see their customers, they wanted to see their family first, now they want to see their customers. It's happening. And just one final point I'll make. You remember over the last few quarters we've talked about how in anticipation for the return of travel, we have been investing and boosting our capabilities from our travel standpoint. And we've been doing this actually for many years now, but even through the pandemic, we've been winning deals in travel, and also our teams have been very focused on the ground in terms of making sure we're optimizing our travels portfolio to the best we can. We're ready to actually jump on this as soon as we start to see the strength come back, which we are seeing now.
Great. Thanks for taking the question.
Sure.
Our next question will come from the line of George Mihalos from Cowen. Please proceed with your question.
Great. Thanks for taking my question, guys. Maybe dovetailing a little bit onto Bryan's question. I just wanted to focus a little bit on how we should be thinking maybe about rebates and incentives going forward, Sachin should we be thinking this level is sort of similar. 4Q was similar level to 3Q. And then again, not asking for guidance for next year, obviously. But as you do have cross-border revenues coming back strongly and actually eclipsing 2019 in aggregate, should that sort of a cap on rebates and incentives as a percentage of revenue, meaning should it, kind of be flash, kind of maybe even a little bit down from '21. Thank you.
Sure. So, George, couple of things I kind of just point out on rebates and incentives. I think you know all of this, but I'll just kind of state it here. [Indiscernible] Rebate and incentives is very dependent on the timing of deals and how volume and mix play out. And it goes to your point around what's the mix between domestic and cross-border, and how you model that and bring that in there. In Q4, we expect rebates and incentives as a percentage of growth to be up sequentially due to increased deal activity. This is pretty normal for us in Q4, and that's what you should expect also going into Q4 of this year. So, at the end of the day, a lot is going to depend upon, like I said, what's the mix is going to look like. We have said in the past that cross-border revenues are [Indiscernible] index from a rebates and incentive standpoint. So again, depending on mix between domestic and cross-border, that's double informer kind of views around where rebates and incentives will go on a going forward basis. Of course, new and renew deals, which we remain very active in the markets on Ultra is going to be a contributing factor.
Great. Thank you.
Our next question will come from the line of Tien-Tsin Huang from JPMorgan, please proceed with your question.
Hey thanks so much. Good morning, guys. Just wanted to ask on the Europe front with the discontinuance of the 400 million Maestro cars that's been in the press here. What are the implications there from I'm trying to think from a P&L perspective, as you look to convert at a time when open banking is really heating up here, just trying to better understand that? Thanks.
Tien-Tsin, let me start on that and then Sachin can come in on the P&L side of things. We've been on this journey of Maestro to debit MasterCard conversions around the world, you've heard us talk about this for a number of years. In Europe, we've really made substantial progress on that front over the years, and we felt it would be important to put a stake in the ground and give assurance to consumers as well as other ecosystem participants, banks, so forth, banking associations, of when we see the end of life for the Master products. Why are we doing that, we're doing it because here's 450 million consumers who cannot use a Mastercard online because it doesn't work online. David's Mastercard is now in its latest form available in a digital first form.
You don't even need a physical card any longer if that's what you want to do. Or if you wanted just to contact them. It gives you the full breadth of choice. So that is why we're doing this. The timing is right. The reaction was essentially, okay, it has to do in some of the leading European tabloids, we made it onto the front page with that news. It is big news in Europe as you rightly said. But it's just a right thing to do. With what we've seen from a performance perspective, it is a more engaging payment tool in your hands. And people use it across all channels. And that's what we want to be very encouraged about that. And then Sachin, you can look at the start of this.
this will not take effect until 2023. And Mike, you talked about approximately 400 million Maestro cards globally. Again, this is Europe-specific. There's been a trend which is currently been underway for some time now. And the reality is it's about not issuing new Maestro cards. Existing Maestro cards will be continuing to be in operation. We've been on this migration path. It makes imminent sense. It just provides better utility for our products in the increasingly digital world. The reality is -- a view of this is as a step in the right direction and we've been on this journey we'll continue on this path. Right, and one last aspect here is what we've learned here over the last couple of years as were moving to shift from Maestro debit Mastercard is how do we use this as an opportunity to not only retain our business that we have on the debit front, but also to expand our business on the debit front, so we don't have any concerns on that front.
Understood. Thanks for the fronts.
Our next question comes from the line of Darrin Peller with Wolfe Research, please proceed with your question.
Thanks, guys. Nice job. Listen, when we look at a couple of quick lenses on in, first on inflation and what the impact to your business model would be. Thinking about it from a perspective of how much is obviously basis points volume-driven, but also, we are using pricing power in your model to change. And then second question would be, when you think that the structural impacts from the pandemic and where you are now and thinking ahead of the Investor Day a minute, I mean, is the long-term or medium-term growth potential similar, different, better, worse than it was last time we entered Investor Day, out of curiosity?
Sure. So, Darrin, I'll take your question on inflation. So, look, I mean, there's been obviously a lot of bulk recently about high inflation levels, whether it's permanent, whether it's loan term, whether it's just transitionary. The reality is the structure of our business model is quite conducive because of the way we price, right. I mean, we've got basis points, we've got cents per transaction as it relates to how we going to price. So, we view the following, which is to the extent that inflation is moderate, right. We think that tend to be a positive tailwind painter goes to our business again, gradual and moderate inflation is going to be helpful.
And the reason I bring that up is any sort of shock to the economy, any sort of hype wind industry event oftentimes comes with drastic measures from an interest rate standpoint and comes in with cost pressures which come along with that. So can you extend this [Indiscernible] It's moderately positive for our business. The other thing I would say is it's important to actually see in the basket of goods and services what are the products and services which are subject to depletion. And what is the amount of electronification of the flows which are taking place and relevance to our business. So, to the extent that inflation, general inflation taking place in categories which are unrelated to card payments. I mean, that’s a [Indiscernible] for us to the extent it's on things which relate to consumer spending which have been electrified and goes back to my point around moderate inflation being amount positive here.
All right, now, Darrin, on your second question, structural changes are they here to last, what makes a trend? Fascinating question, I don't want to upfront the Investor Day, but since you asked the question, I'll give you a couple of highlights on how we're thinking about that. So, the first thing is it helps to understand the psyche of the changing consumer of the small business. So, everybody was independent space as an end user, and we now have 19 months of studies looking at this and the numbers have really not changed. Somewhere around 70% of people and business are saying more digital banking will be what they will be doing going forward. More online shopping is what they will be doing going forward and more contactless. The circular trend that was playing in our favor for years has clearly accelerated.
And if you just look at this quarter's numbers, we talked about sustained e-commerce strength while in-person shopping is coming back. Behavior is truly sticking. I think that's the most fundamental point that we're seeing coming through. The race to this digital economy it's on. And what that also means is a lot of players want to come in. There is structural change in the sense that the competitive playing field is opening up. More partners are coming in. Which for B2B 2C player like us is a great opportunity to facilitate the entry of all of these partners, so that's what we're doing. Then you start to look around and say, well, who else is looking at these trends and these developments? Most notably governments.
Governments are looking at this and they have found that over the last 19 months that payments are in deep national critical infrastructure. So that comes with government engagement, which is not always necessarily positive. But what we're seeing is, is a real drive to modernize payment infrastructure. And that is where we are invited to the table because we're a true multi-rail network. And they're saying, hey, you're locally invested, you're a locally relevant partner. Let's talk about how we make this better in our country. So that is certainly a structural change as in -- Tien-Tsin asked earlier about new payment flows coming in, open banking, etc.
in Europe. So, we're playing on all of those trends going forward. So, I think that is what is happening. I could go on for a while longer. B2B, including digitizing supply chains is a drive that, yeah, is in focus. We're seeing that. Data analytics and cybersecurity that's the last point I want to make on this. With the rate towards a more digital economy is going to be more data that is available, more business will seek to use that data and run their business in a better way to find more customers. Our test and learn capabilities, our data analytics capabilities help on that. So again, that's a structural trend that's helpful and the same applies for cyber and security. More digital transactions need to be made safe, more people need to be authenticated as they use these tools. Again, that plays into our offering. So structural changes really driven by COVID accelerating the rates to digital.
Our next question will come from the line of David Togut from Evercore ISI, please proceed with your question.
Thank you. Good morning. What are your expectations over the next year for the pace of European adoption of account-to-account payments under open banking? Especially given the shift online that you've really underscored during COVID and, in particular, I'm wondering if you see strong customer authentication, which is really a key to account-to-account payments in Europe, being rolled out broadly enough to really affect, let's say broader adoption of account-to-account payments throughout Europe?
[Indiscernible], let me start on that and maybe Sachin wants to chime in. So, the journey towards account to account in Europe, I think it's still early days. So, if you look at how PSD2 has rolled out in Europe starting in September 2019, including the strong customer authentication has been a long journey. Dates have been moved on multiple occasions to give time to the industry to get this right and get right means that the transaction isn't so secure that nobody can use it any longer. So, the trade-off between consumer experience and security is actually found in a balanced way. And what we're seeing in our engagements in Europe is that balance is starting to be struck.
So, we'll reach a point where such strong customer indication in costs, it's whether other forms of payments will be actually a reality in Europe. That's the first thing I want to say. When it comes to open banking specifically, it's been over the last 2 years really a focus on driving connectivity in Europe in terms of getting the open banking ecosystem stood up. That's exactly what we put out in our connectivity product in June 2019. That was the first lead into the region as we've been quite busy with that. Use cases emerging on the basis of that really started in 2020, the UK being ahead of Continental Europe on that while this was still one Europe. UK is still pushing ahead.
You heard us talk about Lloyd's card repayments, about our partnership with Tesco. So, the payment capability part of all open banking is really leading in the UK and here our proposition is very well positioned. So, we start to see that. I see the wave coming over to Continental Europe as connectivity is now there, our acquisition of Huya is perfectly timed here. We expect to close this by the end of the year. So not bring in additional owned you bring in additional connectivity, but also additional payment capabilities because I do see. This is not just a data capability, it's a big data. A kind of a data play, account aggregation, personal finance management, and so forth, but it's also a payment opportunity.
Thank you very much.
Our next question comes from the line of Harshita Rawat from Bernstein. Please proceed with your question.
Hi. Good morning. Thanks for taking my question. Mike, I want to follow-up on your comments on Crypto. This year you've made several announcements and including the recent one with Bakkt and the acquisition. And frantically, can you talk about how you see the overall ecosystem evolving? In what ways Mastercard come back to survey [Indiscernible] the growth of Crypto and potentially CBDC when they become live. Thank you.
Yes, Harshita. Always an exciting topic and we could not have an earnings call without talking about Crypto, so I'm happy you brought it up. Looking at this from a number of perspectives other than that it's -- there's a lot going on in the space. We are pretty clear on how we want us to play in this. The first is we see significant volumes in terms of people actually investing in Crypto and selling Crypto. As an asset class, there's a lot going on. And I think we have a role to play to facilitate consumers wanting to do that, if that's what they choose to do. These partnership programs on exchanges -- Crypto exchanges and wallet partners and so forth, have been quite important for us and that is good from a volume perspective, there is real activity.
When it comes to crypto as a payment tool, then we take a somewhat differentiated view on that versus we just step into that. We're saying at this point in time, the most likely chance of this kind of technology to work for payments is issued through a government. In a form of Central Bank digital currency. We've said that on a couple of calls before. and we said we will make our network ready to do that as and when our government is ready to put out a Central Bank digital currency identical exist alongside the dollar or the euro in Settlement Currency in our network.
So, we've done that but that's easily said. How will the government test that? How will a country figure out between the private sector banks and the governments how to do this? That's where our sandbox comes in, so we can provide a safe space for government and private sector banks to figure out how that would actually work. Questions like the last mile, how do you bring utility into the hands of your citizens if you put out a Central Bank digital currency acceptance questions and so forth. So, facilitating investments as an asset class, we do that, and we get readying for CBDC should there be a private sector stable coin, we mind also do that, but we have very strict principles on when to do this and when not. Now, let me talk about the CipherTrace for a moment, because this space is already an interesting space in so many ways, questions on data privacy, questions on authentication.
We just touched on that in the context of Europe and strong customer authentication. You have to expected Europeans will say, well strong customer authentication will of course play a role in Crypto transactions as well, which is where we always be the security and trust. I mean, that is really synonymous with the name of Mastercard when it comes to payments that we have to do the same role. Mastercard services opportunity. CipherTrace 900 Cryptocurrencies. What the [Indiscernible] actually do, they drive compliance and AML checks into Crypto transactions. We can't run fast enough right now to get into [Indiscernible] a lot of other people are deep into Crypto, and these questions are not resolved. So, asset class, CBDC s, and services opportunity, those are 3 ways that we feel we want to play, and we need to play, and we're -- have the differentiated assets yourself.
Thanks Michael.
Our next question comes from the line of Dan Dolev from Mizuho. Please proceed with your questions.
Hey. Thanks for taking my question.
Hello.
So how did the new offering vary [Indiscernible] with the acquirers or any event, say, potential disruption there impacted Mastercard and the networks in general? And what is the congenital strategy around it? But we're getting a lot of calls on this topic. Thank you.
So, I think I touched a little bit on an earlier question that we had on this topic. So, here's over the long post to describe account to account. We have account to account technology really since the acquisition of Vocal ink. And we learned how that works, we liked it because it's an additional choice that has provided to consumer and to merchants. And we also have all the learnings. And the learning stall around like, how do you create acceptance into that? How do you make it easy for our merchant? How do you actually convince a consumer that actually likes the card proposition? So, all of that it is about standing up an ecosystem. What we believe is this should be something that is built into our network, into our multi-rail capabilities and its actually how we're approaching it.
We're leaning into this. I don't see this as a disruption. That's been our stated strategy, and we have 5 years of learning. And I think that's what ahead of the curve to make this a reality. I think this is an interesting alternative when it comes to consumer payments in store. And we have it, we build it, and it's for us to really figure out whether the economics settle. What other capabilities that are currently built into our card franchise can we extend into the world of accounting, account payments for example, chargebacks, those data protection and so forth. That's the direction that we are taking. not really a disintermediation question. And interesting blog, good things we've done in reality.
And Don, just add to that, just we've never remembered right, there's a sizable TAM out there and a fair amount of that TAM is likely not going to be able to be reached by card products. This is where our multi-rail the loss of the IND strategy as well as our ability to provide choice across various rails, one of which would be an open banking real use for payment services. It's very helpful that it helps an open up the TAM, which is available to us from what used to be primarily card-focused to much more than card-focused. And we do see that opportunity come through here in open banking as well.
Our next question comes from the line of Bob Napoli from William Blair. Please proceed with your question.
Thank you. And good morning. A follow-up on the cross-border business. I mean, obviously, very important business for Mastercard. As you look at that business and as we get to full recovery, do you think that the economics of that business will be similar to what they were prior to the pandemic? I mean, as the ads, the continued development of blockchain and other technologies for account-to-account. Is that going to pressure the economics of that business?
[Indiscernible], which they will generate should be any different, given that the value we delivered previously, if anything has already [Indiscernible]. The reality is we're participating in them today. But it happened to be going -- after [Indiscernible] which are not [Indiscernible], they're not [Indiscernible] -- final Company called [Indiscernible] in --. We'll participate in gross flows, but those are separate and distinct from what goes on at the point-of-sale with our Cloud partners today. So, net-net, I kind of view the whole cross-borders phase. From a card standpoint and in the meantime.
Next question comes from the line of Jason Kupferberg from Bank of America, please proceed with your question.
Good morning, guys. A follow-up on cross-border, I guess in the third quarter, the volume growth ex entry Europe with 60%, it was again a very, very good proxy for the overall cross-border revenue growth in the quarter. So now we look at October month-to-date trends. If those holds hypothetically through the rest of Q4, it seemed like cross-border revenue growth could again be around 60% this quarter and arguably that would be it before most of the potential benefits of the U.S. reopening since so is all that a fair characterization. Are there other moving parts and should we be aware of, and can you just comment on which quarter are the highest yielding in your system?
Yeah. So, I think the answer to the first part of your question, I think you've touched upon in the second part of your question, which talked about how revenues are realized, and cross-border is very much a function even in that extra inquiry [Indiscernible] category will depend on every quarter. Every quarter will start different yields and depending on which ones come back first, which was come back after, the numbers from a cross-border revenue standpoint will move around. As it relates to what we're seeing, I mean, I will tell you pre -pandemic important quarters for Mastercard included obviously U.S.
to Canada, the U.S. to the U.K. The U.K. to various parts in Continental Europe. These are all very important corridors. We've seen Central Europe come back pretty nicely. The U.S. inbound is still to happen. I mean, there's a little bit happening, but there's more to come as boarders open. Canada has started to open up. As you know, Canada opened up in the third quarter. We've seen signs of recovery taking place in terms of inbound into Canada as well. And these are important corridors for our business. The one area which I'll say is still a little bit yet to be seen is the Asia-Pacific. In Asia-Pacific, recovery in cross-border has still been somewhat muted. We'll see how boarders open up there and what that shapes up to be. Net debt is very clearly from a yield standpoint, intra-Europe low yielding, at Central Europe high yielding. In the Central Europe bucket, they use very biased corridors. Drew Maria, I think we have time for one last question.
Our next question will come from Sanjay Sakhrani from KBW. Please proceed with your question.
Thanks. Good morning. I think Michael mentioned the waning impact of U.S. stimulus and we've seen the U.S. volumes sort of stabilized here in terms of the growth. I'm just curious how you guys feel about the other side, which is credit rebounding? And I'm just thinking through the economic impact as lending comes back, lending-related volumes come back. Thanks.
Okay, Sanjay, let me just start on the rebound of credit back to changing in how people spend. Start to see more in-person and our in-person will certainly include T&E discretionary. Those are all use cases that are very much oriented for its credit. So that is what is driving that. The impact of stimulus on the debit side, we still see an elevated use of sustained use of debit going forward. So, it's not a zero-sum game yet again, it's balancing out in a way that one is coming back and the other remains elevated, really comes down to the size of the available -- of wallet that's consumers have. Such that you have any other thoughts on that.
I think it's interesting if you take us back to a couple of quarters ago, maybe 3 or 4 quarters ago. We talked about the same question as to what our views around credit and debit mix is going to look like. And we're going to maintain that we think that there will be a solution to the mean as economies come back and as discretionary spending picks up, and that's exactly what we're seeing right now. I mean, as people are spending more in discretionary categories, lodging, travel, restaurants. Credit is definitely coming break back to top of wallet. And do you expect that as the economy continues to recover in different positive [Indiscernible] we'll continue. And that's kind of view as it relates to how our credit plays out over the near to medium-term.
All righty, good. Thanks, everybody. Thank you for your questions. We are going to close the call now. I hope to see you at the investor community meeting. Generally, on these calls it's not only the analyst’s community listening, but the investor community is also our staff. So, I want to thank our staff for everything they have done through this quarter again, it feels like a bit of -- like a marathon as we turn out of COVID. See you at the ICM and please do to tune in. Thank you very much everybody. Bye-bye.
Thank you.
This concludes today's conference. That's call. Thank you for participating. You may now disconnect.