Good day. My name is Jack, and I'll be your conference operator today. At this time, I would like to welcome everyone to the MasterCard Third Quarter 2016 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]. Thank you. I would now like to turn the call over to Barbara Gasper, Head of Investor Relations. You may begin.

Thank you, Jack. Good morning everyone and thank you all for joining us for a discussion about our third quarter 2016 financial results. With me on the call today are Ajay Banga, our President and Chief Executive Officer, and Martina Hund-Mejean, our Chief Financial Officer. I’d also like to welcome Warren Kneeshaw, my successor to his first MasterCard earnings call. Following comments from Ajay and Martina, the operator will announce your opportunity to get into the queue for the Q&A session. Up until then, no one is actually registered to ask a question. Even if you think you have already dialled into the queue for Q&A, you will need to register again following our prepared comments. This morning's earnings call and the slide deck that will be referenced on the call can be found in the Investor Relations section of our Web site, mastercard.com. Additionally, the release was attached to an 8-K that we filed with the SEC earlier this morning. A replay of this call will be posted on our Web site for 30 days. Both the release and the slide-deck include reconciliations of non-GAAP measures to their GAAP equivalents. We’ve also added a table at the end of both documents, which provides additional information about the impact of Article A of the EU’s recent payments regulation on our GDV and purchase volume growth rate. Since we are no longer charging de minimis fees on co-batched domestic volume that doesn’t use our network in markets such as France, this volume is no longer included in our reported volume statistics. We saw the partial impact of this in the second quarter, and now have a full quarter of impact in Q3. A table adjusts growth rates for the impact by eliminating the related co-batched volume in prior periods, so that you can see the underlying run rate of our business. Our comments on the call today will be on the basis of these adjusted rates. Finally, as set forth in more detail in today's earnings release, I need to remind everyone that today's call may include some forward-looking statements about MasterCard's future performance. Actual performance could differ materially from what is suggested by our comments today. Information about the factors that could affect future performance are summarized at the end of our press release, as well as contained in our recent SEC filings. Now with that, I will now turn the call over to Ajay.

Thank you, Barbara. And Barbara, thank you once again for your outstanding decade of work for us. And Warren, welcome to the Company. Good morning everybody. Our business continues to perform well. We are very pleased with our strong results this quarter. As you’ve seen, we delivered net revenue growth of 14% and an EPS growth of 19%, after excluding last year’s special items, which was related to the termination of our U.S. employee pension plan. Our perspective of the economy remains largely unchanged since last quarter. You’ve all seen the U.S. GDP growth report this morning. We’ve continued to believe like we said in the previous quarters that U.S. is on a steady growth path with consumer confidence, unemployment, and wages holding firm, of course, unless something unforeseen occurs coming out of the upcoming elections, but basically the U.S. had a steady growth path. Many markets across Europe are showing a gradual recovery, led by Germany, as economic sentiment holds steady. Unemployment rates are continuing to decline. Although uncertainty from Brexit and its impact on Europe remain a concern, I think it's going to take a few years to understand the full implications. Again, you saw the British GDP report, which kind of sees it holding steady. Interestingly, underlying UK consumer demand remains stable. And in fact as a result of the weaker pound, inbound travel to the UK is picking up over this last quarter. In Asia, the picture is still mixed. In China, both exports and imports were down sharply. And you all know the concerns over inflated asset values. In Australia, however, business confidence is up, and India continues its relatively strong growth trajectory. In Latin America, Brazil, even though is expected to remain in a recession for the near future seems to be bottoming out,…

Thanks Ajay and good morning everyone. Starting with Page 3, you see there are minimal differences this quarter between non-GAAP reported and currency neutral growth rates. The figures exclude the impact of a special item related to the termination of the U.S. defined pension plan taken last year. As you can see from our numbers, we have delivered another strong quarter. Here are a few highlights. Net revenue growth was 14%. Operating expenses grew 12% as we continue to invest in our strategic initiatives. EPS was up $1.08, up 19% year-over-year, driven primarily by our strong operating performance and a slightly lower tax rate. Also, share re-purchases contributed $0.03 per share. As of October 25th, we have $1.8 billion remaining under our current authorization. Lastly, cash flow from operations was $1.4 billion. We ended the quarter with cash, cash equivalents, and other liquid investments of about $7 billion. So, let's turn to Page 4, where you can see the operational metrics for the third quarter. Just a reminder, as Barbara mentioned, the growth rates I am quoting are adjusted for the impact of the new EU regulations. Our worldwide gross dollar volume, or GDV growth, was 11% on a local currency basis, down 2 PPTs from the prior quarter. Overall, our U.S. GDV grew 5%, made up of credit and debit growth of 4% and 6% respectively. As expected, this includes the impact of the USAA roll-off. Total U.S. GDV had less than 1 PPT headwind from lower gas prices. And outside of the U.S., volume growth was 14% on a local currency basis. This is down 1 PPT versus last quarter due to slightly lower growth in each region. Cross-border volume grew 12% on a local currency basis, about 2 PPT higher than the 10% we saw in the…

Thanks Martina. We’re now ready to begin the question-and-answer period. And in order to get to as many people as possible, we ask that you limit yourself to a single question and then queue back in for additional questions. Jack?

[Operation Instructions] Your first question comes from the line of Jim Schneider with Goldman Sachs. Your line is open.

I was wondering if you could maybe give us an update on the B2B payment space, and the opportunity you see there. And specifically can you talk about how Zell [ph] and MasterCard Send fit into the strategy for you?

Sure. I think this whole commercial business continues to be an area of pretty good growth, and you just heard me talk a little bit about Fleet Card and WEX and virtual cards. And I gave you the examples of UBS and Credit Suisse. But what we’re basically seeing in addition to the transaction side of this is we’re seeing an adoption of some of our products, smart data, which is our reporting and reconciliation tool, as well as In-control, which is a virtual card system for commercial payments is getting kind of getting well embedded. I’m also starting to see some increasing interest beyond the typical bank card users. Technology providers will embed commercial payment solutions into their software and their platforms and payment aggregators and verticals, such as construction, insurance. You see these guys coming into play as well. So there is series of things we’re doing in the B2B space, in the D&E space, in the SME space, that are all connected to this effort to drive our commercial efforts. The MasterCard Send product that you just heard us talk about again, what this is, is a payment service that facilitates the delivery of funds very quickly and very securely to consumers, both domestically and internationally. If we take a single connection into this platform, you could be a business, you could be a merchant, you could be a government, and non-profit, an issuer, some other sender, and you can send money to consumers, whether they’re banked or un-banked, most importantly, whether there are domestic or overseas as well. And that’s kind of what we are trying to do here. Because in the overseas markets, we combined with a JV that we had launched some time ago, called HomeSend, sent, not to be confused MasterCard Send. That’s just internal MasterCard confusion. I don’t want you to get confused. And HomeSend is a unique asset for cross-border payments. It kind of expands our reach to billions of bank accounts across more than 70 markets, through their phone numbers and systems. And so the combination of this ability to move money to any bank account in the U.S. through MasterCard Send, whether it’s got a Visa debit or a MasterCard debit card at the front end of the account, combined with HomeSend. which can connect to these billions of bank accounts across 70 markets using phone systems. That’s what we’re up to.

Your next question comes from line of Tien-tsin Huang with JP Morgan. Your line is open.

I was just wondering if you can maybe give us your perspective on why your growth rate reported on constant currency basis has been growing at such a big premium to Visa. Any color there, because actually you’ve been boarding a lot of new clients. So I've been surprised by the magnitude of the premium?

Tien-tsin, you know that we are extremely disciplined when we go the market and when we actually work with clients and the kind of agreements that we are striking. And as we have discussed on Investor Day, we are not just doing a core product deal where we look at the credit product, or debit product, or prepaid product or commercial product, but we are also adding quite a lot of our services on to that agreement. And when you look at the growth rate in the other revenue line item where most of these services are actually residing, that’s where you are seeing the extra juice coming out from these kinds of agreements. So I would say between the discipline that we have, and the services, the differentiated services that we can deliver to our clients, you can actually see that coming though.

Maybe you should Tien-tsin, take another side step. Both our companies are winning clients around the world from each other, but also the growth of geographic expansion, new issuers, new types of issuers coming into the system. It's not my impression that a great deal of growth comes for either of us from just winning a client from each other. I would rather focus on the opportunity that exists in this industry to grow versus so much more there is. Do you remember, 85% of the world’s retail transactions are still in cash and check. And that’s -- I think our focus is giving us the benefit of thinking that through, in a way that's allowing us to build assets and capabilities to aim for the bigger buys, and keep at it over a period of quarters. There will be quarters when we do better. I'm sure there will be quarters when somebody else does better. And I'm fine with that. I'm more focused on where we’re executing for the next few years.

Your next question comes from the line of Jason Kupferberg with Jefferies. Your line is open.

Just wanted to build on Tien-tsin’s question. Obviously, you’ve got 14% constant currency growth year-to-date, if I am not mistaken, but still guiding to low double-digit. So assuming the math on Q4 would imply a lot of detail, is there some rebate timing to consider? Or what other factors should we be building into the Q4 model? And does this put you kind of at high-end of low double-digits at the risk of putting too fine a point on it?

Jason, nice try. No, it's still at the low double-digits. But what you have to consider for the fourth quarter, and you're absolutely right. Year-to-date it's 14%. So actually this is the third quarter this year that we are producing a 14% net revenue growth rate. And we are obviously extremely pleased with that. But yes, you will see a slowdown in the fourth quarter. And you have to consider two factors. One, we have the USAA roll-off, and that will be pretty much complete by the end of the year from what we understand. So of course, that’s a bit more of an acceleration than what we have talked before earlier this year. And secondly, on the rebates in incentive side, it is normal for us in the fourth quarter just before year end to sign a whole bunch of new agreements and renewing agreements. It's actually nothing different than what we’ve seen in prior years. But you should expect that there will be more rebates and incentives coming in, in the fourth quarter. Both of these factors will weigh down on net revenues.

Your next question comes from the line of Don Fandetti with Citigroup. Your line is open.

Ajay, it looks like cross-border is continuing to tick-up here. Could you talk a little bit about the comment on the commercial improvement in Europe? Is that organic or are you seeing marketshare gains? And then also, what are you seeing in terms of outbound China. I know that some of your competitors have talked about some stabilization or improvement.

So the first part, the second part, which is actually a transactional piece of information on outbound China. I think you'll find growth to certain parts of the world, but not to others. It's not coming in through the U.S. and Europe as it used to. It's actually going much more through the Asian markets. So Australia to Japan, to those parts of the world. That's actually similar to what I may have said at Investor Day, but I don't fully recall if that question came up. But that's kind of what we are seeing on the China part of it. The cross-border growth in Europe, remember when we pointed out commercial in Europe because that's the one thing that's different from prior quarters. It's not as though that's the largest reason for our growth. So we're going to take it in context. It's the one thing that's different. And in that, yes, we are seeing the activation of a bunch of programs in commercial in Europe, that we have sanctioned these earlier, they've come on board, there's a series of activation going on. But our cross-border growth is built of really blocking and tackling on a series of portfolios around the world where our account teams engage with the issuers and the merchant community to look at how to work on cross-border opportunity. And this is not a new thing. I think I can recall this for years now. It probably was being done before I even showed-up seven years ago. And I think it's just a series of focus items in MasterCard around cross-border.

Your next question comes from the line of Darrin Peller with Barclays. Your line is open.

I just wanted a question on the thought process around incentive growth. We've had now I think two years of around 20% incentives of rebates growth, and obviously outpacing gross revenues. Obviously, there's been a lot of deals and now I think Martina you just mentioned Q4 probably has a step-up also. Just can you give us a little thought, a process around what's happening in the industry around, is it competitive dynamics, or -- and then really with SunTrust and others, should we expect another type of year like that going forward? Thanks.

So Darrin I don't think – for the last couple of years we are really seeing nothing. We have not seen anything different than what we've seen in the last couple of years. Just to remind everybody, in 2015, we had a step-up in rebates and incentives given that we signed some fairly mega agreements; like one agreement with one customer for 10 years, another agreement with another customer for 20 years. And so we did talk in 2015 that we had to step up the incentives. The accounting was a little bit different. So in the early part of the years, we are actually amortizing more of those incentives. You see that second year, so the 2016 number is going to be with us in 2017, et cetera, if you see the same kind of step up. In addition to that when you look at our results this year, you do see some better revenue rate coming in on the growth side. You will see some more contra being dragged with that. What's happening in the fourth quarter from a renewal and plus from new agreements in terms of what I'm seeing from our business people, we're seeing nothing different in terms of how we're actually signing the agreements. It's just the normal activity and the normal terms and conditions by the way that we're seeing in the fourth quarter.

We actually incent issuers to give us a share of their wallet, and that's built into this thinking. So if grow well in numbers, in absolute numbers, and they also grow well in giving us some share, they actually get a higher percentage discount. And so this is actually good for us. And it's good in many ways to help with that.

Your next question comes from the line of Sanjay Sakhrani with KBW. Your line is open.

Martina, when I look at the revenue yields for domestic assessments and cross-borders, those accelerated some and then transaction processing fees decelerated some. I know you mentioned last call that there was some anniversarying of fee increases. But how should we think about the trajectory of those yields going forward?

On the domestic assessment yields, we typically say that they will be trending down over time, simply because of what we have been saying that when you sign larger agreements and you are assessing customers, to be actually given more volumes to you, that should be happening. So you would have to factor the contrary [ph] and take count. If you just look at the domestic assessments for this quarter and for the prior quarters, you have a little bit of a change in mix coming in. Remember we’ve been talking a number of times that when you go and do work in a number of Asian countries, African countries, Russia, Venezuela, et cetera, that those come typically with lower yields. And it depends which quarter, which part of the GDV is growing in which country in terms of how the mix coming in. And in this quarter we have a little bit better mix coming in. So that's all on domestic yield. What was your second question?

I guess even the cross-border number on an adjusted basis was up little bit. Does that just continue? And then the USAA impact, the numbers you quoted, does that include all of it rolling-off, or is there an additional drag that we should expect?

On the cross-border side, we did have a little bit of pricing action in that. And that we’ll be anniversarying very soon. And on the USAA side, we believe that our comments are comprehensively assuming that USAA is rolling-off by the end of the year. Now just you're going to have to take into account that because this happened all this year, that you're going to have a knock on impact to the growth rates in 2017.

Your next question comes from line of Chris Brendler with Stifel Nicolaus. Your line is open.

I have question about Europe. Thanks for the disclosure on the co-batch transaction, but does that mean we exclude this transactions that had very well revenue yield set. Your prior commentary on European revenue yield being in the high teens would actually be in the 20s if you exclude these transactions. And then if you can just summarize, for PSD2, and all the changes that are taking place in Europe, you summarized that fundamental impact on your business, it seems to be positive at this point, and if it is, just give us a little color on why? Thanks.

So, on the European revenue yield, first of all, just to make sure that everybody understands our European revenue yields -- Chris, can you please put us on mute, please?

Yes...

Thank you.

Well, that sounds pretty exciting, wherever you are.

What we have said in the past, our global yield is around 21 basis-points. And we talked about our competitors’ yields because the information was out there, kind of in the 10-9 basis-points, and we are somewhere in between. That [ph] revenue yields will not change, whatsoever, by this particular change in terms of not charging de minimis fees on these co-batched transaction. There will be absolutely no impact to that. So you should not be assuming that our yields on GDV in Europe is changing. It is not.

So PSD2, the first thing we did was to -- for the most part we did was to enable access to the consumer bank accounts through a series of what they call PSPs. Payment System Providers. As we have got at least [ph] to a series of some more competition, more innovation, and that's something we should expect to happen over the next few years. One thing is for sure. ACS will become even more relevant in the PSD2 environment. And you know that we have talked about that when we spoke to you about the reason that we were keen on getting into the ACS phase. We are literally into the fast ACS space. There are other elements of PSD2. There is elements to do with strong customer authentication for the 24 online transactions. But depending on how it actually gets rolled-out, its could actually create either a hindrance to the simplicity of an ecommerce checkout or if it's done very smartly, it could actually make it smooth and safer. And obviously, we'd want the latter. But there's many conversations to be have between here and the actual implementation of the stronger consumer authentication philosophy that PSD2 raises.

Your next question comes from the line of Andrew Jeffrey with SunTrust. Your line is open.

I think its notable Ajay that you are calling out services -- not the first time obviously -- as a differentiating point when you bid for business and win business. Given the success you’ve had over an increasing standard period of time now, do you see competition, whether from traditional competitors or perhaps new entrants. I don’t know off the top of my head, who those might be, but do you see folks trying to replicate the services success we had. And if you could comment a little bit on the competitive barriers you think you’ve erection that can continue to share gains?

Actually I do see people coming into the system. But our services are not services generically. They are services that are very tightly connect back to the idea of an authentication clearing and settlement system that gives us the insight into a payment transaction. So on our services, be it loyalty and rewards, be it safety and security, be it the data analytics business or our managed services that we do with advisors, all of these connect back from that idea of being connected to the payment transaction, and the moment of truth when that happens. So I think we do a relatively good job of tying the two things together when we speak in terms of the logic of why a service we provide would be incremental value-add to the carrying authorization and settlement stream. In a number of ways, competitive barriers are only as good as the investment you keep putting into them, they keep staying ahead in terms of both, technology and innovation. I mean, take safety and security. Anybody who will tell you that they figured it out of safety and security is probably somebody you should run a mile from, because there is no such right answer. There is a continuous effort of people trying break in to everyone systems. You read that all the time. So you're only as good in safety and security as the efforts you keep putting into it to keep your clients having products and capabilities that keep them -- keeping their promise to their consumers. So we recently launched a series of products that use our official intelligence and machine learning in the safety and security space. We're going to keep doing that. We’ve been -- I would tell you that we're in the first innings of a baseball game on that kind of space. We’re a little better when it comes to tokenization. We’re well into the middle of a game. We are better when it comes to EMVs, where we're well into the latter part of the game. So different aspects of safety and security have got different levels of maturity, in terms of what they're solving for, and therefore require different levels of investments to keep them growing and competitive. And I think our competitive edge is that we have been allocating capital to these areas, and expenses for the last seven years. And it's one of the reasons why I keep telling you I'd like to make sure that you take the expansion of margin off the table as a permanent effort of this Company, and instead give you a really healthy margin, but use the revenue growth of the Company to invest back in creating competitive and frankly great differentiators for future revenue from where they’re going.

Your next question comes from the line of James Friedman with Susquehanna. Your line is open.

Martina, at the Investor Community Day in September, you had discussed the same topic of services. And you had said that the services division did a 40% combined margin, if I'm remembering right. But the thing I want to get as you said that it would scale -- the services margins would scale over-time, I was wondering if you could help dimensionalize that. Like what's going on with service margins? Did they just scale because this was a really good quarter? Or how should we be thinking about services margins over time.

So here we are, just a few weeks after ICM, and you think there will be something different than what you’re paying on services. First of all, there is no such thing as a services division. There're many different services that we are actually providing and here I called out three, but they a ton of other ones, right. So I don't want you to just bundle this together. We bundle it together, because it's an easier way of contrasting it to our core business. So in terms of what I said on the margin is that when you add all the services with their many different margin profiles right back to what Ajay has been actually explaining on this, on the safety and security side, together, if you were to add that together, the margin as a whole at this point in time is 40%. And what I also said is that -- and by the way this is not on a fully loaded basis. So things like corporate costs, et cetera, are not in there. But I also said that over-time as we are scaling these services, that we would believe that the margin would increase. And just to remind you, there was this one charge in ICM where it actually showed which services are at a higher margin level versus which services are lower margin level. And the safety and security side was actually really at the higher level. And then we kind of worked our way down, advisors was the next one down, below 80 [ph] was the next one down, and processing was actually on the lowest side. So all of those services, we are working to scale and re-scale, you will be getting some better margin on these businesses.

Interestingly, I don't look at these as one unit. That's a really important issue. I don't look at the P&L that way. I don't look at the business that way. It is broken up among a bunch of different people. They come in and they talk to me on our monthly and quarterly business reviews. Each of them has a different conversation about what they are doing with their independent units and their businesses and that's how it is constructed all the way. What the real implication actually, is that our sales force on the front-end is learning how to sell something that’s way beyond our traditional credit-debit, prepaid, and frankly even commercial is not as traditional. But these are completely non-traditional in a selling process. And some things they can do themselves, some of them they need experts to come help them. So we have that kind of sales structure built, and it's constantly changing as well to keep pace with where this space is going. So it's a mix of many things that are going into services. I just feel that so long as we can keep it tightly connected to our off siding [ph], clearing and settlement business, we’re actually building yet another leg of a stool for our Company for the next couple of decades to come.

Your next question comes from line of David Koning with Baird. Your line is open.

And I guess mainly my question is just around the PIN share gains that you mentioned. That’s how the process transaction growth accelerate. I guess, first of all, is that share gain sustaining into Q3? And isn’t that lower yielding, because your transaction yield was actually up 1% sequentially, but I would have thought this was lower yielding?

So you are absolutely right. In the United States, PIN debit is lower yielding, absolutely. There is no question about it. How did they take him in, and we already talked about this at the last earnings call is that we did win a couple of PIN agreements. So we’ve showed up at the back of the card. And then you have to remember in the PIN debit market as the merchants are actually then aligning the routing, they’re choosing the routing over which network to route. So there is a second thing that you have to think about in terms of yes you can buckle in the back of the card but then, do you actually get to see the transaction and we have a very analytical methodology in terms of trying to see how many transactions we want to see and that actually influences the pricing that we put out in the market every day. And so you will see our picture going up and down. So you saw it in the third quarter going up. There is this new agreements coming in. You saw in our three weeks in October, it’s coming a little bit down. That’s why you’re seeing a little bit less process transactions. So you should expect it goes up and down.

By the way on the previous earnings call or somewhere, I once explained that we go to some of the larger merchants. The level of sophistication that goes into the decision making of routing of a PIN debit transaction is way beyond the price. The price is interesting and it kind of stable-states but they do an enormously sophisticated thinking on the time taken for approval, on the number of turndowns on all kinds of aspect s. And you can move up and down the routing table, five times a day in some of these merchants, depending on what’s going on. And so it's a little difficult to predict where that goes, but it’s lower yield business. So the overall impact on the revenue stream of the Company tends to be buffered or let’s say shock absorbed. But it’s an interesting learning for all of us.

Your next question comes from the line of Tim Willi with Wells Fargo. Your line is open.

Just wanted to touch on the comments around loyalty, and just in general, when you sort of talk with merchants, with banks about that topic, is there any sort of new dynamic or way that they are thinking about approaching it particularly with the continued evolution of mobile payments, shopping, in store? Just anything you might be able to add there and sort of how you think about the momentum around that business line?

There's actually a series of things going on in loyalty and rewards. One of those you've actually picked the correct topic, which was e-commerce, digital mobility, the whole space. If you think about this, it is almost like simple things like cash back become even more attractive. But even voucher management and the management of keeping track of your loyalty rewards card number and how it all accumulates into that, all those become very important, even more so than in the physical world. The loyalty business has got many elements to it. It's got the accumulation of rewards. It’s got the offers every day that go into the system. It's got the aspect of what’s funded by banks and what’s funded by merchants. It's got the aspect of are you a complete program manager in some markets or are you only providing a portion of the service, and only a portion of the value chain. As you know, we bought Pinpoint in Asia and Australia. Pinpoint is a complete program manager. Truaxis on the other end is a merchant reward generating engine, which is not a complete program manager. And it's something we bought a couple of years before Pinpoint. So we’ve got to see the different capabilities now in the Company. And in some ways, we are probably one of the more interesting global players on loyalty and rewards. But you've got to package it very tightly with as I said the clearing, authorizing and settlement business, whether in digital or in the physical space.

Your next question comes from the line of Tom McCrohan with CLSA. Your line is open.

Just trying to get a sense of trajectory of operating expense growth going forward, and just looking at history as averaging high single digits or higher than at this year, and I know you don’t want to give forward guidance at all. But maybe you can just maybe speak to maybe the intensity of investment spending? Has it gotten more intense recently, given all geographic expansion, all the digital changes, everything that’s going on in the space? Thanks.

Clearly, Tom over the last couple of years, I would say, over the last three years, the authenticity of the investments has really taken-off. Just imagine what have all happened in the digital space, a significant amount of spend into the digital space. But then in addition for us to do be developing all of the services, so what we did from an advisor point of view, from a data analytics point of view, from a loyalty and from a safety and security investment point of view, some of the investments that Ajay was talking earlier about, was very important for us to do. Some of the numbers are masked in terms of when you look at the foreign exchange hedging activity that came in, in 2016, which actually was a benefit there for us. And in 2016, it was a drag. So when you actually take that out, our operating expense growth is relatively similar. We would continue to expect that we will have to invest. And again, I am not going to go into 2017, but as you can see for 2016, we really have not changed our forecast at all in terms of how we think we are rounding out this year, which is the low double-digit growth number that we gave on a currency neutral basis.

I'll add one element to that conversation. This discipline that Martina has in our Company around acquisition is that at the end of two years, the acquisition becomes part of our base. When we talk to you, we’re talking about our base expenses as well. The acquisitions we are doing, because it’s the kind of industry we are in, don’t exactly come fully loaded with revenue and unloaded in expense. They tend to come with capabilities that bring expenses and revenue that we need to build over a period of years by putting them together with what we sell. Typically the lag in that, the driving [ph] lag of that creates a higher growth rate in expenses than on revenues for the first few years of owning that property. That’s part of what we are talking about when we talk about putting investment, capital and expense dollars to work. The acquisitions are all in areas of strategic growth opportunity for us, and a number of them are in the services space that Martina was loosely talking about a little while ago. And that's what we're putting our capital to work at. But a lot of our expenses, aside from the acquisitions tend to go into the digital space, because that’s where a lot of opportunity will get laid out over the next decade. Revenue is not as much as stating our capabilities right now.

Your next question comes from the line of Chris Donat with Sandler O'Neill. Your line is open.

Ajay, I wanted to go back to something you said in your prepared remarks about inbound cross-border volume into the UK being strong. I'm just trying to understand how sustainable this might be. And I'm wondering if you can comment on anything from historical examples of devaluations or sort of the opposite case where the Swiss franc appreciated in January 2015, and how that affected outbound volumes with Switzerland. Just trying to understand if UK is going to see a lot of inbound volumes for months or years here?

So first of all, I'm glad you called them prepared remarks. Barbara's always when I'm speaking because she's tracking all that I've said. I don't always follow the script. But I will use your comment as proof of my being relatively helpful. The second part is the UK. I was thinking of the other question, I'm just cracking up a little. I'm taking it out on Barbara for 10 years of this. So the UK, be careful about assuming that a lower currency will necessarily lead to inbound travel, either tourist related or business related. It works in a place like the UK because it is one of the world's most attractive tourism destinations. If you drop the currency value in Venezuela, it doesn't lead to anything. But it does in the UK because of the nature of the UK being what it is as an attractive location. And in addition, and what we're seeing really in the third quarter, I don't know whether I can tell you right now off the top of my head - I actually don't know whether the break-up is commercial traffic or tourist traffic. So I guess Martina knows that. I don't know it today. But I do know that you can't assume that tourist traffic or even business traffic will necessarily follow the pattern of a currency moving around. Right now, there's no doubt that in the UK tourism is up one. Two, there is a great deal of re-interest in acquiring assets in the United Kingdom. Because if you were sitting outside of the UK, the values of assets in the UK has not only gone down by the change in the currency, they've also gone down by the extreme reaction that the market had to the fears around Brexit. That has also created a lot of interest in people travelling in to look at assets in the UK. Again, I don't know if that will persist because the latest UK GDP report actually shows the Brexit response to be kind of enhancing, which will take time to come. It won't happen this quarter in terms of real GDP change. And so this may change the valuation of market assets in the UK. I haven’t drawn too many conclusions either from the past or even the UK specifically about where this is going.

So just one thing to add, for the main travel destinations, we are seeing some of this over the last 10 years. So when you look for instance where the dollar is trading versus where the pound is trading, versus where the euro is trading, tourists are actually relatively sophisticated, who go to these kind of locations and we have seen that the tourism travel is getting adjusted. If people are coming to the New York or people coming to London or people going to Paris, the people are adjusting their travel plans because of some of the factors of the currency. We’ve seen that over the last 10 years. But as Ajay said, that does not expand to many other countries. It’s really for the top tourist destinations.

Kind of shopping destinations. The U.S. right now inward tourist traffic is down with the dollar being strong whereas outdoor travel by Americans is quite strong. And so those are all just natural things that we ought to do as well.

Operator, I think we have time for one last question.

Your last question comes from the line of Lisa Ellis with Bernstein. Your line is open.

One quick, Martina question, it did look like underneath the covers, Asia volumes were a little bit unusually low this quarter. I was curious what was driving that? And then for Ajay, it looks with this flurry of announcements around wallet interoperability and convergence that kind of gets little bit complicated in terms of what’s going to be accepted where. How do you just envision how MasterPass will play into the overall wallet landscape and how you see it evolving? Thanks.

Lisa, first on the volumes you are absolutely right. On the Asia Pacific the volumes year-over-year are little bit lower. China plays into that. We are now at low single digits from China growth point of view that was higher last year. Australia, India and Indonesia, also had a little bit of lower growth.

MasterPass, my view is that on a small mobile screen, it's unlikely that merchants on their checkout page for browsers, I am talking browser right now, which is still the largest portion of digital commerce. That probably will be a very large portion for the next four-five years. It's very unlikely that you are going to find them putting many different wallets up in the checkout page, because the total space available on a mobile phone is relatively restricted. And therefore there is going to be some kind of trend towards creating the right infrastructure wallet acceptance overtime. And I think you will find the kind of things we are trying to do, we are trying to ensure that one of the brands in the checkout page is MasterPass, because if you could put your user digital wallets, as well as user wallets to all using MasterPass as an acceptance brand then that's a good thing. In our view and I've said this many times, MasterPass is not a B2C effort. It is a B2B effort. What I am doing is not just building wallets, because a bank could have their own wallet, a merchant could have their own wallet, or they could take a wallet from us private-label to open APIs, that doesn't matter. It all can come through in a safe secure way using token come through a MasterPass acceptance path. And the idea is to build all our services capabilities onto open APIs, and we have already done that in a substantial way. If you go to mastercard.developer.com, or developer.mastercard.com, I think I'm mixing up what came first and what came later. But I think developer.mastercard.com, you'll find that it's relatively easy if you do strike a deal with us to get the cryptogram to unlock the API to then connect it up to your capabilities, either as a merchant or an issuer. So, I would see MasterPass not as a wallet, that’s just for the long time, I see MasterPass as a digital strategy and as a future brand for our Company. I see the MasterPass system as an acceptance system that enables safe secure payments, that enables open APIs to be connected to that for services. And that’s the offering which is very partner centric and enables issuers to own their consumer experience by making it digital-by-default and connecting it to their online banking applications. It enables digital giants to create a seamless acceptance system, and it enables merchants to not have to repeat their acceptance capability time-after-time, because once they’re on MasterPass, they can accept the others. That is what we are trying to do.

Ajay, some closing comments...

Yes, sure. So, couple of closing thoughts. And just to sum up, I think our business continues to perform well. I think you see that reflected in our strong revenue and earnings growth, and that’s despite the usual uneven global economy that everyone talks about. I think we are executing well against our strategy. We have our ups and downs, but we are executing consistently, growing our share, continuing to leverage services as a strategic differentiator to further drive our core business around the world. We’re in a very dynamic industry and I was just talking to Lisa, we are working very hard to deliver secure digital payment experience for our consumer using MasterPass across all devices all channels. And of course I continued to believe in the long runway driven by strong secular growth opportunities that we have and we continue to hopefully position ourselves well for that future. So, thank you for your continued support of the Company. Thank you for joining us today.

This concludes today's conference call. All participants may now disconnect.