Executive Suite: MasterCard's Ajay Banga

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Ajay Banga leads a company that is synonymous with plastic, yet he encourages his staff to focus on cash.

The chief executive of MasterCard Inc., based in upstate Purchase, sees the fact that 85 percent of all transactions around the world still take place in cash as an opportunity. He argues that targeting those purchases and payments provides far bigger growth prospects than competing for the comparatively small share of debit and credit transactions already handled through processing networks like the one he runs.

Here are excerpts from a broad conversation.

What do current consumer spending patterns say about the U.S. economy?
There is definitely, for the last six to nine months, something changing in terms of spending. Whether it will persist for another year or two will depend greatly on how employment behaves. And it will depend greatly on how housing prices actually behave. Housing prices are the one I'm most nervous about right now, because I don't know where the bottom is.

The reason spending is picking up is, I believe, that the 90 percent of the people who are employed, compared to the 10 percent who are not, no longer believe their jobs are at risk. And therefore their willingness to spend a little has changed compared to six, nine months ago.

Do you think gas prices are what's encouraging more people to shop online?
I think you'll only be able to conclude that there actually is a real impact from rising gas prices if we were able to show that e-commerce sales were growing in the segment of consumers who earn less. Because that's when a gas tank that costs $50 becomes $55, and five bucks makes a difference. It's like food. If you paid an extra 10 cents for your milk carton, you probably didn't notice. But if you were living on a very tight budget, you would notice when you finished shopping that day at Costco and you spent 70 bucks instead of 55, right?

Your first anniversary as chief executive is approaching on July 1. You took the helm of a company that has a bit of a staid reputation. Is it difficult to create a culture of innovation?
It's always difficult to nurture innovation, even in a non-staid company. Because when times are tough, the first budget to get cut is marketing. The next budget to get cut is R&D, unless you're a pharmaceutical company, in which case you'd die without it. And so even in a relatively prosperous company with a degree of innovation built into its DNA, it's not easy to sustain.

We have one group within the company focusing [in] what I call growth-sustaining innovation, or "stealing shamelessly." It's a very simple thing. If somebody in the company did something in Singapore and it worked well, there's no reason why it can't work in at least 20 other countries, because people are more alike than different when it comes to dealing and interacting with money.

How would you describe your management style?
I'm very passionate, but I take time to work my passion. I mean I study something, and I try to understand both sides of the debate, because if you've been a banker and worked around the world long enough, you kind of have to understand both sides of the debate. But you have to have a point of view, and so I believe in having a point of view on an issue and not ducking the issue.

I encourage my colleagues to say things to me that they would never have had a chance to say to most bosses. That is because I spend too many hours in an office, and they spend too many hours in the office to be stressed out at each other. It's not the . . . army. It's a company; they choose to be here. They could all go away and join somebody else. So if I behave like a -- my father was a general in the army -- if I behave like a general in the army, I will get soldiers.

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