MA Overview

MasterCard Worldwide (MA) was originally created in 1966 as a number of banks merged to form the Interbank Card Association based in California. From that creation, the name “Master Charge” was licensed by the banks from the First National Bank of Louisville, Kentucky in 1967. today, the company functions as a multinational corporation with its core business operations involved in the payment process between banks and merchants.

With help from New York’s Marine Midland Bank, now HSBC Bank USA, these three organizations collaborated to create “Master Charge: The Interbank Card”. The business really took off after National City Bank joined the ranks in 1969, by merging their proprietary “Everything Card” with Master Charge. In 1979, Master Charge: The Interbank Card was simplified to MasterCard.

Headquartered in Purchase, New York, MasterCard manages and licenses a family of payment card brands under such names as MasterCard, MasterCard Electronic, Maestro, and Cirrus. By the end of 2008, MasterCard serviced nearly 24,000 financial institutions throughout the world.

As mentioned above, the company’s main business operations are engaged in providing transaction processing and related services to customers in support of their credit, deposit access, electronic cash and automated teller machine payment card programs, and travelers check programs.

The company’s payment programs, which are made possible through the company’s brands, include consumer credit and debit programs, commercial payment solutions, prepaid programs, and contract-less payment solutions. Through its three-tiered business model as franchisor, processor and advisor, MasterCard also includes marketing, product development, technology, processing, and consulting and information services within their payment service division.

Looking further into the company’s payment services, MasterCard generates revenues from the fees charged to their customers for providing transaction processing and other payment-related services. The company also generates revenues by charging its customers fees based on the volume of activity in dollars used on the cards.

Lastly, the company operates their MasterCard Worldwide Network within their payment service segment. It is here that the company connects buyers and sellers from around the world through transaction services, allowing cardholders to use their cards in millions of destinations globally. Within a typical transaction over MasterCard’s network, there’re typically four participants involved, including issuers, which is the cardholder’s bank, the acquirer, which is the merchant’s bank, the merchant and the cardholder.

Dealing with the company’s credit card segment, MasterCard offers customized programs to address specific needs from their consumer base. The credit program includes cards that are Standard, Gold, Platinum, World and World Elite MasterCard cards.

Standard cards are general purpose credit cards targeted to consumers with basic needs, while the Platinum cards provide a range of card enhancement services, such as reward programs. MasterCard World cards are offered to consumers that are not required to have preset spending limits.

Within the corporate world, MasterCard offers a wide variety of corporate payment products, including corporate cards, corporate premium cards, corporate purchasing cards and fleet cards that allow corporations to manage travel and entertainment expenses. These services are most often offered to help mid-sized companies, small businesses and public sector organizations to streamline their payment processes, reduce administrative costs and more effectively manage company information.

In May 2006, MasterCard issued its initial public offering (IPO) at $39 per share. Shares surged as high as $320 a share in June 2008, before the economic stranglehold pushed the stock down to its current trading range. For the past six months, the stock has been trading between $120 and $180 per share.

MasterCard currently competes with such well-known companies as Visa Inc. (V), American Express Co. (AXP), Discover Financial Services (DFS), Total System Services, Inc. (TSS), eBay (EBAY), Metavante Technologies Inc. (MV), JCB, China Union Pay, First Data Corporation, Interac, and EFTPOS.

By BetterTrades