By Nicholas Vardy, Bull Market Alert

Serving approximately 22,000 financial institutions, think of MasterCard (MA) as a financial toll road, making its money on each of the transactions it processes. In doing so, MasterCard racks up $545 billion in transactions each year.

Even with the U.S. economy in the doldrums, MasterCard has been making a mint from the global trend toward a switch to cashless payments — whether using credit cards or debit cards.

And there is plenty of upside left. Almost nine out of 10 transactions across the globe still take place in cash. And that portion is now even lower in fast-developing markets in Asia, the Middle East and Latin America.

Yet if its current pace of growth continues, China will overtake the United States as the world's largest credit card market by the end of the decade.

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In a sign of things to come, MasterCard is also partnering with Google, Intel and Citigroup to offer smartphone-based transactions through MasterCard's PayPass payment technology.

When consumers use the new system, they will be able to pay for online purchases with a simple tap of their PayPass-enabled card, tag or smartphone on an Ultrabook device.

With online sales reaching $176.2 billion last year in the United States alone, the potential for this technology is vast.

The company recently reported a 38% jump in third-quarter profit and a 27% jump in revenue as spending and transactions made with its credit and debit cards increased. MasterCard is projected to grow earnings by 19.6% next year.

No wonder MasterCard has attracted the attention of Warren Buffett, who recently boosted Berkshire Hathaway's stake in the company.

MasterCard also recently announced that it is buying back roughly 5% of its shares outstanding -- a sure sign of confidence by senior management.

Barclays Capital has a price target of $410.00 on shares of MasterCard. But with the tailwind of U.S. economic recovery behind it, I think it will go much higher than that.

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