Top 100 Brand in The World – Rank no.97 – MasterCard – US
Corporate logo used 2006–present. It is not used on the cards themselves.
|Traded as||NYSE: MA
Dow Jones Industrial Average Component
S&P 500 Component
|Founded||December 16, 1966 (age 46)(as Master Charge : The Interbank Card)
December 16, 1979 (age 33)(as MasterCard)
|Headquarters||MasterCard International Global Headquarters
Purchase, New York, United States
|Key people||Richard N. Haythornthwaite
Ajaypal Singh Banga (President & CEO)
|Products||Credit cards, payment systems|
|Revenue||US$ 7.391 billion (2012)|
|Operating income||US$ 3.937 billion (2012)|
|Net income||US$ 2.759 billion (2012)|
|Total assets||US$ 12.462 billion (2012)|
|Total equity||US$ 6.917 billion (2012)|
|Parent||United California Bank|
MasterCard Incorporated (NYSE: MA) or MasterCard Worldwide is an American multinational financial services corporation headquartered in the MasterCard International Global Headquarters, Purchase, New York, United States. The Global Operations Headquarters is located in O’Fallon, Missouri, United States, a suburb of Saint Louis, Missouri. Throughout the world, its principal business is to process payments between the banks of merchants and the card issuing banks or credit unions of the purchasers who use the “MasterCard" brand debit and credit cards to make purchases. MasterCard Worldwide has been a publicly traded company since 2006. Prior to its initial public offering, MasterCard Worldwide was a cooperative owned by the 25,000+ financial institutions that issue its branded cards.
MasterCard, originally known as Interbank/Master Charge, was created by several California banks as a competitor to theBankAmericard issued by Bank of America, which later became the Visa credit card issued by Visa Inc.. From 1966 to 1979, MasterCard was called “Interbank" and “Master Charge".
The original banks behind MasterCard were United California Bank (later First Interstate Bank and subsequently merged into Wells Fargo Bank), Wells Fargo, Crocker National Bank (also subsequently merged into Wells Fargo), and the Bank of California(subsequently merged into the Union Bank of California).
In 1966, the aforementioned group of California banks formed the Interbank Card Association (ICA). With the help of New York’s Marine Midland Bank, now HSBC Bank USA, these banks joined with the ICA to create “Master Charge: The Interbank Card". The card was given a significant boost in 1969, when First National City Bank joined, merging its proprietary Everything Card with Master Charge.
In 1968, MasterCard International and Eurocard started a strategic alliance, which effectively allowed MasterCard access to the European market, and for Eurocard to be accepted on the MasterCard network. The Access card system from the United Kingdom joined the MasterCard/Eurocard alliance in 1972.
In 1979, “Master Charge: The Interbank Card" was renamed simply “MasterCard“. In the early 1990s MasterCard then bought the BritishAccess card and the Access name was dropped. In 2002, MasterCard International merged with Europay International SA, another large credit-card issuer association, which for many years issued cards under the name Eurocard (payment card).
In 2006, MasterCard International underwent another name change to MasterCard Worldwide. This was done in order to suggest a more global scale of operations. In addition, the company introduced a new corporate logo adding a third circle to the two that had been used in the past (the familiar card logo, resembling a Venn diagram, remains unchanged). A new corporate tagline was introduced at the same time: “The Heart of Commerce".
In 2012, MasterCard announced the expansion of its mobile contactless payments program, including markets across the Middle East.
Anti-trust lawsuit by ATM operators
MasterCard, along with Visa, has been sued in a class action by ATM operators that claims the credit card networks’ rules effectively fix ATM access fees. The suit claims that this is a restraint on trade in violation of federal law. The lawsuit was filed by the National ATM Council and independent operators of automated teller machines. More specifically, it is alleged that MasterCard’s and Visa’s network rules prohibit ATM operators from offering lower prices for transactions over PIN-debit networks that are not affiliated with Visa or MasterCard. The suit says that this price fixing artificially raises the price that consumers pay using ATMs, limits the revenue that ATM-operators earn, and violates the Sherman Act’s prohibition against unreasonable restraints of trade. Johnathan Rubin, an attorney for the plaintiffs said, “Visa and MasterCard are the ringleaders, organizers, and enforcers of a conspiracy among U.S. banks to fix the price of ATM access fees in order to keep the competition at bay." 
Debit card swipe fee price fixing
Both MasterCard and Visa have paid approximately $3 billion in damages resulting from a class-action lawsuit filed by Hagens Bermanin January 1996. The litigation cites several retail giants as plaintiffs, including Wal-Mart, Sears, Roebuck & Co., and Safeway.
Antitrust settlement with U.S. Justice Department
In October 2010, Visa and MasterCard reached a settlement with the U.S. Justice Department in another antitrust case. The companies agreed to allow merchants displaying their logos to decline certain types of cards (because interchange fees differ), or to offer consumers discounts for using cheaper cards.
Payment Card Interchange Fee and Merchant Discount Antitrust Litigation
On 27 November 2012, a federal judge entered an order granting preliminary approval to a proposed settlement to a class-action lawsuit filed in 2005 by merchants and trade associations against MasterCard, Visa, and many credit card issuers. The suit was filed due to price fixing and other anti-competitive trade practices employed by MasterCard and Visa. A majority of named-class plaintiffs have objected and vowed to opt out of the settlement. Opponents object to provisions that would bar future lawsuits and even prevent merchants from opting out of significant portions of the proposed settlement. Stephen Neuwirth, a lawyer representing Home Depot, said, “It’s so obvious Visa and MasterCard were prepared to make a large payment because of the scope of the releases being given. It’s all one quid pro quo and merchants like the Home Depot are being denied the chance to opt out of that quid pro quo and say this is a bad deal.” 
Plaintiffs allege that Visa, MasterCard, and major credit card issuers engaged in a conspiracy to fix interchange fees, also known as swipe fees, that are charged to merchants for the privilege of accepting payment cards at artificially high levels. In their complaint, the plaintiffs also alleged that the defendants unfairly interfere with merchants from encouraging customers to use less expensive forms of payment such as lower-cost cards, cash, and checks.
The settlement provides for the cash equivalent of a 10 basis-point reduction (0.1 percent) of swipe fees charged to merchants for a period of eight months. This eight-month period would probably begin in the middle of 2013. The total value of the settlement will be about $7.25 billion.
Anti-trust issues in the United States
Few companies have faced more antitrust lawsuits both in the US and aboard.
MasterCard, along with Visa, engaged in systematic parallel exclusion against American Express during the 1980s and 1990s. MasterCard used exclusivity clauses in its contracts and blacklists to prevent banks from doing business with American Express. Such exclusionary clauses and other written evidence was used by the United States Department of Justice in regulatory actions against MasterCard and Visa. Discover has sued MasterCard for similar issues.
In 1996 about 4 million merchants sued MasterCard in federal court for making them accept debit cards if they wanted to accept credit cards and dramatically increasing credit card swipe fees. This case was settled with a multi-billion dollar payment in 2003. This was the largest anti-trust award in history.
In 1998, the Department of Justice sued MasterCard over rules prohibiting their issuing banks from doing business with American Express or Discover. The Department of Justice won in 2001 and the verdict withstood appeal. American Express also filed suit
On August 23, 2001, MasterCard International Inc. was sued for violating of the Florida Deceptive and Unfair Trade Practices Act.
On November 15, 2004, MasterCard Inc. paid damages to American Express, due to anticompetitive practices that prevented American Express from issuing cards through U.S. banks, and paid 1.8 billion dollars for settlement.
Anti-trust investigations in Europe
The European Union has repeatedly criticized MasterCard for monopolistic trade practices. In April 2009, MasterCard reached a settlement with the European Union in an antitrust case, promising to reduce debit card swipe fees to 0.2 percent of purchases. In December 2010, a senior official from the European Central Bank called for a break-up of the Visa/MasterCard duopoly by creation of a new European debit card for use in the Single Euro Payments Area (SEPA).
WikiLeaks published documents showing that American authorities lobbied Russia to defend the interests of Visa and MasterCard. In response MasterCard’s blocked payments to WikiLeaks. Members of the European Parliament expressed concern that payments from European citizens to a European corporation could apparently be blocked by the United States, and called for a further reduction in the dominance of Visa and MasterCard in the European payment system.
As of 2013, MasterCard is under investigation by the European Union for the high fees it charges tourists who use their cards in Europe, and other anti-competitive practices that could hinder electronic commerce and international trade, and high fees associated with premium credit cards. The EU’s competition regulator said that these fees were of special concern because of the growing role of non-cash payments. MasterCard charges non-European tourists much more than customers using cards issued in Europe. MasterCard could be fined up to 10 percent of its 2012 revenue or around $740 million. MasterCard was banned from charging fees on cross-border transactions conducted wholly within the EU via a ruling by the European Commission in 2007. The European Commission said that their investigation also includes large differences in fees across national borders. For instance, a 50-euro payment might cost 10 euro cents in the Netherlands but eight times that amount in Poland. The Commission argues that MasterCard rules that prohibit merchants from enjoying better terms offered in other EU countries may be against anti-trust law.
The European Consumer Organisation (BEUC) praised the action against MasterCard. BEUC said interbank fees push up prices and hurt consumers. BEUC Director General Monique Goyens said, “"So in the end, all consumers are hit by a scheme which ultimately rewards the card company and issuing bank." 
Regulatory action in Australia and New Zealand
In 2003, the Reserve Bank of Australia required that interchange fees be dramatically reduced, from about 0.95% of the transaction to approximately 0.5%. One notable result has been the reduced use of reward cards and increased use of debit cards. Australia also prohibited the “no surcharge" rule, a policy established by credit card networks like Visa and MasterCard to prevent merchants from charging a credit card usage fee to the cardholder. A surcharge would mitigate or even exceed the merchant discount paid by a merchant, but would also make the cardholder more reluctant to use the card as the method of payment. Australia has also made changes to the interchange rates on debit cards and has considered abolishing interchange fees altogether.
As of November 2006, New Zealand was considering similar actions, following a Commerce Commission lawsuit alleging price-fixing by Visa and MasterCard. In New Zealand, merchants pay a 1.8% fee on every credit card transaction.
Blocking payments to WikiLeaks
In December 2010, MasterCard blocked all payments to WikiLeaks due to claims that they engage in illegal activity. In a response, a group of online activists calling themselves “Anonymous" organised a denial-of-service attack; as a result, the MasterCard website experienced downtime on December 8–9, 2010. On December 9, 2010 the servers of MasterCard underwent a massive attack as part of an Operation Avenge Assange for closing down payments of whistleblowing platform WikiLeaks. According to several news sites, security of thousands of credit cards was compromised during that attack due to a phishing-site set up by the attackers. However, MasterCard denied this, stating that “cardholder account data has not been placed at risk". WikiLeaks spokesman said: “We neither condemn nor applaud these attacks." U.N. High Commissioner for Human Rights, Navi Pillay said that closing down credit lines for donations to WikiLeaks “could be interpreted as an attempt to censor the publication of information, thus potentially violating WikiLeaks’ right to freedom of expression".
The company that enables WikiLeaks to accept credit and debit card donations said it would take legal action against Visa Europe and MasterCard. Iceland-based IT firmDataCell said it would move immediately to try to force the two companies to resume allowing payments to the website. DataCell had earlier[when?] said that suspension of payments towards WikiLeaks is a violation of the agreements with their customers. On July 14, 2011 DataCell announced they had filed a complaint with theEuropean Commission claiming the closure by Visa and MasterCard of Datcell‘s access to the payment card networks violated the competition rules of the European Community.
On 12 July 2012 a Reykjavík court ruled that Valitor, Visa and MasterCard’s partner in Iceland, had to start processing donations within fourteen days on pain of daily fines to the amount of ISK 800,000 (some $6000) for each day after that time, to open the payment gateway. Valitor also had to pay DataCell’s litigation costs of ISK 1,500,000.
Prepaid debit cards
MasterCard, Comerica Bank, and the U.S. Treasury Department teamed up in 2008 to create the Direct Express Debit MasterCard prepaid debit card. The federal government uses the Express Debit product to issue electronic payments to people who do not have bank accounts, who are often referred to collectively as the “unbanked”. Comerica Bank is the issuing bank for the debit card.
In June 2013, MasterCard announced a partnership with British Airways to offer members the Executive Club Multi-currency Cash Passport, which will allow members to earn extra points and make multi-currency payments. The Passport card allows users to load up to seven currencies (euro, pound, U.S. dollar, Australian dollar, Canadian dollar, New Zealand dollar and South African rand) at a locked-in rate. When used, the card selects the local currency to ensure the best exchange rate, and if the local currency is not already loaded onto the card, funds are used from other currencies.
MasterCard’s current advertising campaign tagline is “Priceless“. The slogan associated with the campaign is “There are some things money can’t buy. For everything else, there’s MasterCard." The Priceless campaign in more recent iterations has been applicable to both MasterCard’s credit card and debit card products. They also use the Pricelessdescription to promote products such as their “priceless travel" site which features deals and offers for MasterCard holders, and “priceless cities", offers for people in specified locations.
The first of these Priceless ads was run during the 1997 World Series and there are numerous different TV, radio and print ads. It was idealized by Stewart Emery.MasterCard registered Priceless as a trademark. Actor Billy Crudup has been the voice in the US market; in the UK, actor Jack Davenport is the voice. The original idea and concept of the campaign stems from the advertising agency of McCann Erickson (as it was named in 1997).
The purpose of the campaign is to position MasterCard as a friendly credit card company with a sense of humor, as well as responding to the public’s worry that everything is being commodified and that people are becoming too materialistic.
Many parodies have been made using this same pattern, especially on Comedy Central, though MasterCard has threatened legal action, contending that MasterCard views such parodies as a violation of its rights under the federal and state trademark and unfair competition laws, under the federal and state anti-dilution laws, and under the Copyright Act. Despite these claims, however, noted US consumer advocate and presidential candidate Ralph Nader emerged victorious (after a four-year battle) in the suit MasterCard brought against him after he produced his own “Priceless" political commercials. In the election ads Nader had criticized the corporate financing of both the Bush and Gore campaigns. Using the theme and some of the language behind the MasterCard “Priceless" campaign the election specified the dollar amounts contributed by corporate interests to both candidates and then summed it up with “finding out the truth … priceless". MasterCard sued Nader’s campaign committee and filed a temporary restraining order to stop the ads. The TRO was not granted and Nader defended the ads by claiming they were protected under the fair use doctrine.
Through a partnership with an Internet company that specializes in personalized shopping, MasterCard introduced a Web shopping mall on April 16, 2010 that it said can pinpoint with considerable accuracy what its cardholders are likely to purchase. The MasterCard MarketPlace site relies on technology developed by Next Jump, a company that monitors customer behavior from thousands of retailers and uses the data it gathers to help merchants tailor their product offerings.
MasterCard engages in the sponsorship of major sporting events throughout the world. These include the New Zealand All Blacks the country’s rugby team, the UEFA Champions League, the PGA Tour’s Arnold Palmer Invitational Presented by MasterCard, the Canadian Hockey League’s Memorial Cup and recently announced a new sponsorship deal with Australian Cricket team and is also the founding sponsor of IPL cricket team Mumbai Indians.
Previously it also sponsored FIFA World Cup but withdrew its contract after a court settlement and its rival Visa took up the contract in 2007. In 1997, MasterCard was the main sponsor of the MasterCard Lola Formula One team, which withdrew from the 1997 Formula One season after its first race due to financial problems.
Management and Board of Directors
Prior to its IPO in 2006, MasterCard was an association that had a board of directors composed of banks. The current Board of Directors includes the following individuals:
- Richard Haythornthwaite, Chairman of the Board MasterCard Incorporated, President, PSI UK Ltd
- Ajay Banga, President and Chief Executive Officer, MasterCard Worldwide
- Silvio Barzi, Former Senior Advisor and Executive Officer, UniCredit Group
- David R. Carlucci, Former Chairman and Chief Executive Officer, IMS Health Incorporated
- Steven J. Freiberg, Senior Advisor, The Boston Consulting Group
- Nancy J. Karch, Director Emeritus, McKinsey & Company
- Marc Olivie, President and Chief Executive Officer, W.C. Bradley Co.
- Rima Qureshi, Senior Vice President Strategic Projects, Ericsson
- Jose Octavio Reyes Lagunes, Vice Chairman, Coca-Cola Export Corporation, The Coca-Cola Company
- Mark Schwartz, Vice Chairman, The Goldman Sachs Group, Inc., Chairman, Goldman Sachs Asia Pacific
- Edward Suning Tian, Chairman, China Broadband Capital Partners, L.P.
- Jackson P. Tai, Former Vice Chairman and Chief Executive Officer, DBS Group and DBS Bank Ltd.
In June 2013, MasterCard has announced the promotion of Gilberto Caldart to head of Latin America and Caribbean division. Ann Cairns, the president of MasterCard’s international markets division, stated that she is certain that Gilberto, as the new regional head will continue to help customers grow their business, and provide MasterCard cardholders with innovative payment products and solutions. Caldart joined MasterCard from Citi Brazil in 2008, where he served as country business manager and oversaw the retail bank, consumer finance and cards business. He holds a bachelor’s degree in business administration and accounting, as well as a master’s degree from Duke University.
|This section is outdated. Please update this article to reflect recent events or newly available information. (July 2013)|
MasterCard issued by theCommonwealth Bank of Australia. Semi-transparency shows PayPass antenna, connecting to RFID chip.
MasterCard PayPass is an EMV compatible, “contactless" payment feature based on the ISO/IEC 14443 standard that provides cardholders with a simpler way to pay by tapping a payment card or other payment device, such as a phone or key fob, on a point-of-sale terminal reader rather than swiping or inserting a card. PayPass can currently be used on transactions up to and including £20.00 GBPor $50.00 USD.
In 2003, MasterCard concluded a nine-month PayPass market trial in Orlando, Florida with JPMorgan Chase, Citibank, and MBNA. More than 16,000 cardholders and more than 60 retailer locations participated in the market trial. In addition, MasterCard worked with Nokia,AT&T Wireless, and JPMorgan Chase to incorporate MasterCard PayPass into mobile phones using Near Field Communicationtechnology, in Dallas, Texas. PayPass is expected to be integrated into mobile phones soon. In 2005, MasterCard began to roll out PayPass in certain markets. In 2012, MasterCard rolled out another mobile payment app, named QkR, which is already being deployed in Australia and tested at Yankee Stadium.
MasterCard operates Banknet, a global telecommunications network linking all MasterCard card issuers, acquirers, and data processing centers into a single financial network. The operations hub is located in St. Louis, Missouri. Banknet uses the ISO 8583 protocol.
MasterCard’s network differs significantly from Visa‘s. Visa‘s is a star-based system where all endpoints terminate at one of several main data centers, where all transactions are processed centrally. MasterCard’s network is an edge-based, peer-to-peer network where transactions travel a meshed network directly to other endpoints, without the need to travel to a single point. This allows MasterCard’s network to be much more resilient, in that a single failure cannot isolate a large number of endpoints.