MasterCard: Learn the various roles of this market giant

By Jeremy M. Simon

MasterCard acts as a connection between financial institutions and millions of businesses, cardholders and merchants across the globe.  But it is MasterCard's customers, a variety of worldwide financial institutions, who handle the relationships with cardholders and merchants.

MasterCard does not issue cards, set cards' annual fees or establish annual percentage rates -- that is the role of issuing banks.  MasterCard also does not set agreements for merchants to accept cards or decide on discount rates -- that is the role of acquiring banks.

Under its three-tiered business model, MasterCard acts as a franchiser, processor and adviser.

First, as a franchiser, MasterCard markets its selection of brands and products across the globe via thousands of financial institution customers.  Among these are credit card and debit card brand MasterCard, global deposit access brand Maestro, ATM network Cirrus and MasterCard PayPass.  Using its brands and products, MasterCard is able to provide the opportunity for commerce at over 24 million acceptance locations globally.

Next, as a processor, MasterCard offers efficient commerce worldwide.  MasterCard employs a quick, reliable and integrated network that its one of the world's largest VPNs.  Additionally, MasterCard supports the growth of merchants and banks by allowing for the speedy adoption of new payment methods and by providing customized solutions.

Finally, MasterCard acts as an adviser by delivering insight and solutions to make the payment process more rapid, seamless, secure and valuable to all parties.  For example, MasterCard keeps tabs on consumer activity and buying trends, which it offers to customers.  Elsewhere, MasterCard advisers provide strategic and operational solutions for the payments process from end to end.

There are over 1 billion MasterCard payment cards in circulation, allowing MasterCard to serve consumers and businesses in over 210 countries and territories.  MasterCard has partnered with 25,000 of the world's financial institutions, and has approximately 5,000 employees spread across more than 37 MasterCard offices worldwide.

Published: May 14, 2007

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