Core Viewpoint - The People's Bank of China aims to enhance cross-border payment connectivity and develop a more open, secure, and efficient domestic QR code payment network, promoting a diverse and competitive market environment through self-regulation and market-oriented measures [1] Group 1: Payment Industry Development - The payment services have significantly improved in quality and efficiency for the real economy due to the continuous efforts of various industry stakeholders [1] - The governance of the industry has deepened, and the financial infrastructure has been strengthened, contributing to the progress of a modern payment system [1] Group 2: Cross-Border Payment Initiatives - Following the interconnection of the mainland and Hong Kong rapid payment systems in June, a unified cross-border QR code gateway began trial operations at the end of July [1] - The unified gateway adheres to principles of publicness, inclusiveness, and accessibility, supporting eligible market institutions to engage in cross-border QR code payment services [1] Group 3: Technological Innovation and Security - The payment industry is urged to accelerate technological innovation to enhance digital payment levels and maintain a leading edge [1] - There is a strong emphasis on balancing security and development, ensuring that innovation progresses within compliant frameworks to solidify the foundation for high-quality development in the payment industry [1]

Core Viewpoint - The speech by Lu Lei, Deputy Governor of the People's Bank of China, emphasizes the significant progress in the payment industry, highlighting the need for high-quality development through payment interconnectivity and technological innovation [1] Group 1: Industry Development - The payment services have significantly improved in quality and efficiency, supporting the real economy [1] - Continuous efforts from various industry stakeholders have led to deeper governance and robust financial infrastructure [1] - The construction of a modern payment system has achieved new results, with high-level openness being continuously promoted [1] Group 2: Cross-Border Payment Initiatives - The interconnectivity of payment systems between mainland China and Hong Kong was achieved in June, followed by the trial operation of a unified cross-border QR code gateway in July [1] - The unified gateway adheres to principles of publicness, inclusiveness, and accessibility, allowing qualified market entities to engage in cross-border QR code payment services [1] - The People's Bank of China will guide industry stakeholders to further promote cross-border payment interconnectivity, enhancing global financial networks [1] Group 3: Technological Innovation - The payment industry is urged to accelerate technological innovation to enhance digital payment levels and maintain a leading edge [1] - A balance between security and development is emphasized, with a focus on maintaining safety standards while promoting innovation [1] - Industry stakeholders are encouraged to innovate within compliance frameworks, ensuring that development outcomes reinforce safety foundations [1]

Financial Performance - The company reported a 16% increase in net revenues and a 12% increase in adjusted net income year-over-year on a non-GAAP currency neutral basis [6][33] - Operating expenses rose by 14%, with operating income increasing by 17% [34] - Net income and EPS increased by 12% and 14% respectively, with EPS at $4.15, including a $0.09 contribution from share repurchases [34] Business Line Performance - Payment Network net revenue grew by 13%, driven by domestic and cross-border transaction growth [38] - Value-added services and solutions net revenue increased by 22%, with acquisitions contributing approximately 4 percentage points to this growth [38] - Worldwide gross dollar volume (GDV) increased by 9%, with U.S. GDV up by 6% and international GDV up by 10% [35] Market Performance - Cross-border volume increased by 15% globally, reflecting growth in both travel and non-travel related spending [36] - Card present transactions grew significantly, with contactless transactions now representing 75% of all in-person switch purchase transactions [37] - The company continues to expand acceptance in various markets, including launching tap-to-pay in the Shanghai Metro [13] Company Strategy and Industry Competition - The company is focused on diversifying its business model and enhancing partnerships with leading merchants and fintechs [8][10] - New programs are being launched in various markets, including partnerships with American Airlines and Walmart [9][10] - The company is leveraging its data and product capabilities to differentiate its offerings and capture adjacent revenue opportunities [27][29] Management Commentary on Operating Environment and Future Outlook - Management remains positive about growth outlook, citing healthy consumer spending supported by low unemployment and wage growth [7][45] - The company is tightening its full-year net revenue outlook to the high end of the previously shared range, expecting low teens growth on a currency neutral basis [47] - Ongoing geopolitical and economic uncertainties are acknowledged, but the company maintains a diversified business model to mitigate risks [46] Other Important Information - The company repurchased $2.3 billion worth of stock during the quarter, with an additional $1 billion planned [34] - The effective tax rate is expected to be in the 20% to 21% range for both Q3 and the full year [49] Q&A Session Summary Question: Impact of lapping portfolios on growth metrics - Management confirmed that the lapping impact from portfolios like Citizens and Wells Fargo has become more pronounced and will continue through Q3 and Q4 [55][56] Question: Differentiation in value-added services - The company highlighted its focus on cybersecurity and personalized engagement solutions as key differentiators in its value-added services [62][66] Question: Cross-border volume growth expectations - Management noted that cross-border volumes are well diversified and continue to grow, with travel volumes representing about 60% of total cross-border volumes [95] Question: Client incentives and rebates - Management indicated that rebates and incentives as a percentage of payment network assessments are expected to increase in Q3, driven by a competitive market [101] Question: Update on Recorded Future performance - Management expressed excitement about the integration of Recorded Future, emphasizing its potential in threat intelligence and cybersecurity solutions [84][87] Question: Market share in regions with strong local players - The company is focused on differentiating its product set and building partnerships in markets like Brazil to capture cash transition opportunities [114]