Full Description

MasterCard Incorporated (MasterCard), incorporated in May 2001, is a global payment solutions company that provides a variety of services in support of the credit, debit and related payment programs of over 24,000 financial institutions and other entities that are its customers. Through its three-tiered business model as franchisor, processor and advisor, the Company develops and markets payment solutions, process payment transactions, and provides support services to its customers and, depending upon the service, to merchants and other clients. It manages a family of payment card brands, including MasterCard, MasterCard Electronic, Maestro and Cirrus, which it license to its customers. The Company conducts its business principally through MasterCard Incorporated’s principal operating subsidiary, MasterCard International Incorporated (MasterCard International). In December 2008, it acquired Orbiscom Ltd., a payments solutions software provider for financial institutions.

Payment Services

The Company provides transaction processing and other payment-related services to its financial institution customers. It generates revenues from the fees it charges the customers for providing transaction processing and other payment-related services. The Company also earns revenues by charging its customers assessments based on the gross dollar volume (GDV) of activity on the cards that carry its brands. The Company operates the MasterCard Worldwide Network, which links issuers and acquirers around the globe for transaction processing services and, through them, permits MasterCard cardholders to use their cards at millions of merchants worldwide. A typical transaction processed over its network involves four participants in addition to the Company, which include issuers (the cardholder’s bank), acquirer (the merchant’s bank), merchant and cardholder.

The Company facilitates the authorization, clearing and settlement of the transactions and similar transactions through the MasterCard Worldwide Network. In April 2008, it introduced MasterCard Integrated Processing Solutions (IPS), a MasterCard-engineered debit processing platform. IPS is designed to provide an issuing financial institution with a processing solution to help create differentiated products and services and allow quick deployment of payments portfolios across banking channels. The Company provides transaction processing (authorization, clearing and settlement) services for customers in its Europe region through its subsidiary, MasterCard Europe sprl (MasterCard Europe). Its transaction processing services are managed principally through its Global Technology and Operations headquarters in O’Fallon, Missouri. Its transaction processing services are available round the clock.

MasterCard Programs

MasterCard offers a range of payment solutions to enable its customers to design, package and implement programs targeted to the specific needs of their customers, the cardholders. Its principal payment programs, which are facilitated through its brands, include consumer credit and debit programs, commercial payment solutions, prepaid programs, contactless payment solutions and emerging technologies. The Company’s issuer customers determine the features for the cards issued under its programs, including interest rates and fees. MasterCard offers a number of consumer credit and charge (pay later) programs that are designed to meet the needs of its customers.

The Company offers customized programs to customers to address specific consumer segments. Its consumer credit programs include Standard, Gold, Platinum, World and World Elite MasterCard cards. Standard MasterCard cards are general purpose credit cards targeted to consumers with basic needs for a credit card. Platinum MasterCard cards provide a range of card enhancement services, such as loyalty reward programs. World MasterCard cards are offered to affluent consumers, and are required to have no preset spending limit and the option to revolve a designated portion of the charges made. Maestro is the Company’s global online debit program.

MasterCard offers commercial payment solutions that help corporations, mid-sized companies, small businesses and public sector organizations to streamline their payment processes, manage information and reduce administrative costs. It offers various corporate payment products, including corporate cards, corporate premium cards, corporate purchasing cards and fleet cards that allow corporations to manage travel and entertainment expenses, and provides corporations with additional transactional detail. The MasterCard Corporate Multi Card is an integrated card program that combines the functionality of one or more of its MasterCard corporate programs into a single card or account. Its Multinational Corporate Program allows issuers to manage and consolidate these corporate card programs for multinational organizations that require commercial cards in more than one country. The Company also offers public sector entities a variety of payment programs that are similar to the travel, purchasing, fleet and Multi Card programs offered to corporations.

Prepaid (pay before) programs involve a balance that is funded with monetary value prior to use. MasterCard customers may implement prepaid payment programs using any of the MasterCard family of brands (MasterCard, MasterCard Electronic, Maestro or Cirrus). MasterCard provides processing services, including authorization, clearing and settlement, in support of either magnetic stripe or chip-enabled prepaid card programs. MasterCard PayPass is a contactless payment solution that enables consumers simply to tap or wave their payment card or other payment device, such as a phone, key fob or wristband, on a specially equipped terminal. PayPass utilizes radio frequency technology to securely transmit payment details wirelessly to the payment card terminals for processing through the Company’s network.

The Company competes with Visa, American Express, Discover, JCB, China Union Pay, First Data Corporation, Metavante Corporation, Interac, EFTPOS, Total System Services, Inc. and eBay.