Mastercard Business Model

Mastercard’s strategy and business model moves around growing its core payments network while diversifying customers and geographies and building new
capabilities through a combination of organic and inorganic strategic initiatives. Thus moving along three key pillars:

Expand payments for consumers, businesses and governments
Extend our services to enhance transactions and drive customer value
Embrace new network opportunities to enable open banking, digital identity and other adjacent network capabilities

Mastercard is focusing on expanding its core payments network to enable payment flows for consumers, businesses, governments, and others across multiple payment rails.

This includes driving growth in consumer payments, capturing new payment flows, and leaning into new payment innovations like Mastercard Installments and solutions supporting digital currencies and blockchain applications.

The company is extending its services, which include cyber and intelligence solutions, insights and analytics, consulting, marketing services, loyalty, processing, and payment gateway solutions for e-commerce merchants.

These services drive value for customers and the broader payments ecosystem, supporting revenue growth in payments and new network opportunities.

Mastercard is embracing new network opportunities by building and managing new adjacent network capabilities to power commerce and payments.

This includes applying open banking solutions to help institutions and individuals exchange consumer-permissioned data securely and easily, and enabling digital identity solutions to instill trust in the digital world.

These priorities are interdependent: payments provide data and distribution to drive scale and differentiation in services and enable the development and adoption of new network capabilities; services improve the security, efficiency, and intelligence of payments, improve portfolio performance, differentiate offerings, strengthen customer relationships, and support open banking and digital identity platforms; new network opportunities strengthen the digital payments value proposition and provide new opportunities to develop and embed services in expanding product offerings.

It’s growth drivers can be summarized as:

People: Mastercard’s success is driven by the skills, experience, integrity, and mindset of its people. The company focuses on attracting and retaining top talent from diverse backgrounds and industries.
Brand: Mastercard’s brands and brand identities serve as a differentiator for the business, representing its values and enabling it to accelerate growth in new areas.
Data: The company uses its data assets, infrastructure, and platforms to create a range of products and services for its customers, while incorporating its data principles in how it designs, implements, and delivers those solutions.
Technology: Mastercard’s technology provides resiliency, scalability, and flexibility in how it serves customers. It enables broader reach to scale digital payment services to multiple channels, including mobile devices.
Franchise: Mastercard manages an ecosystem of stakeholders who participate in its network. The franchise creates and sustains a comprehensive series of value exchanges across its ecosystem.
Doing Well by Doing Good: Sustainable impact is fundamental to Mastercard’s business strategy. The company leverages its employees, technology, resources, partnerships, and expertise to address social, economic, and environmental challenges. Its environmental, social, and governance (ESG) priorities are expressed through three pillars – People, Prosperity, Planet – and all of its work is grounded in strong governance principles.

Table of Contents

Three Key Pillars of Strategy:

Expand Payments for Consumers, Businesses, and Governments:
- Mastercard aims to extend its core payments network across multiple payment rails to facilitate transactions for a wide range of stakeholders, including consumers, businesses, and governments.
- This involves embracing new payment innovations, capturing new payment flows, and leveraging solutions for digital currencies and blockchain applications.
Extend Services to Enhance Transactions and Drive Customer Value:
- Mastercard offers a suite of services beyond traditional payments, including cyber and intelligence solutions, insights and analytics, consulting, marketing services, loyalty programs, and payment processing solutions.
- These services enhance customer value, support revenue growth, and contribute to a more secure and efficient payments ecosystem.
Embrace New Network Opportunities for Open Banking, Digital Identity, and More:
- Mastercard focuses on building adjacent network capabilities that enable open banking, digital identity solutions, and other innovative features.
- By doing so, the company enhances the digital payments value proposition and fosters trust in the evolving digital world.

Growth Drivers:

People:
- Mastercard emphasizes the importance of its skilled and diverse workforce. Attracting and retaining talent from various backgrounds and industries contributes to the company’s success.
Brand:
- Mastercard’s brand identity sets it apart in the market, representing its values and driving growth in new areas and industries.
Data:
- The company leverages its data assets, platforms, and infrastructure to create a range of products and services, while adhering to its data principles.
Technology:
- Mastercard’s technology underpins its ability to serve customers effectively, ensuring resiliency, scalability, and flexibility across various channels.
Franchise:
- The management of an ecosystem of stakeholders who participate in its network creates and sustains a comprehensive series of value exchanges.
Doing Well by Doing Good:
- Mastercard’s commitment to sustainable impact is ingrained in its business strategy. The company leverages its resources, partnerships, expertise, and technology to address social, economic, and environmental challenges.

Sustainable Impact:

Mastercard’s Environmental, Social, and Governance (ESG) priorities are expressed through three pillars: People, Prosperity, and Planet.
The company leverages its resources, technology, and expertise to contribute positively to societal and environmental challenges.
Mastercard’s sustainable impact initiatives are grounded in strong governance principles, ensuring accountability and transparency.

Organizational Structure:

Mastercard operates with a global organizational structure. The company is divided into various divisions and units that focus on different aspects of its business, including:

Core Products and Solutions: This division oversees Mastercard’s core payment products, including credit, debit, and prepaid cards. It also manages the relationships with issuing banks and financial institutions.
Digital Solutions: Mastercard’s digital solutions unit focuses on developing and promoting digital payment technologies, mobile wallets, and contactless payments.
Data & Services: This division specializes in data analytics, insights, and consulting services, providing valuable data-driven solutions to clients.
Cyber & Intelligence: Responsible for cybersecurity solutions, this unit works to protect the company’s payment network and offers security services to clients.
Marketing & Communications: This division handles marketing, branding, and communications strategies to promote Mastercard’s products and services.
Global Markets: Mastercard divides its global operations into regions to cater to specific geographic markets, each with its own leadership structure.

Value Proposition:

Global Payment Solutions: Mastercard offers a suite of global payment solutions that enable individuals, businesses, and governments to make secure, convenient, and efficient transactions worldwide. Through its network of financial institutions and merchants, Mastercard provides access to a wide range of payment products, including credit cards, debit cards, prepaid cards, and digital wallets, facilitating seamless commerce across borders and currencies.
Innovation and Technology: Mastercard is committed to driving innovation and leveraging technology to enhance the payment experience for consumers and businesses. By investing in advanced payment technologies such as contactless payments, biometric authentication, and tokenization, Mastercard delivers cutting-edge solutions that improve security, speed, and convenience in the payment ecosystem.
Financial Inclusion: Mastercard is dedicated to promoting financial inclusion and empowering underserved populations to participate in the global economy. Through initiatives such as Mastercard’s “Start Path” program and partnerships with governments and non-profit organizations, Mastercard expands access to financial services, fosters economic growth, and helps individuals and businesses achieve financial security and independence.
Data and Analytics: Mastercard leverages its vast transaction data and analytics capabilities to provide valuable insights and solutions to its customers and partners. By analyzing transaction patterns, consumer behavior, and market trends, Mastercard helps businesses optimize operations, drive customer engagement, and make data-driven decisions that enhance performance and competitiveness.

Revenue Model:

Transaction Fees: Mastercard generates revenue primarily through transaction fees charged to financial institutions and merchants for processing payments on its network. These fees are typically based on a percentage of the transaction value or a fixed amount per transaction and may vary depending on factors such as transaction volume, geography, and type of card used.
Interchange Fees: Mastercard earns interchange fees from financial institutions for facilitating transactions between cardholders and merchants. Interchange fees are typically paid by the merchant’s acquiring bank to the cardholder’s issuing bank and are based on a percentage of the transaction value. Mastercard shares a portion of these interchange fees with the cardholder’s issuing bank as compensation for the cost of providing credit and other benefits to cardholders.
Licensing and Service Fees: Mastercard generates revenue from licensing its brand, trademarks, and technology to financial institutions, merchants, and other partners. Additionally, Mastercard may charge service fees for providing value-added services such as fraud detection, data analytics, loyalty programs, and consulting services to its customers.
Cross-Border Fees: Mastercard earns revenue from cross-border transaction fees charged to financial institutions and merchants for processing international payments. These fees are typically higher than domestic transaction fees and are based on a percentage of the transaction value to account for currency conversion, settlement, and other cross-border transaction costs.

Marketing Strategy:

Mastercard’s marketing strategy is characterized by its iconic “Priceless” campaign, which emphasizes the value and experiences that its payment solutions enable.

Key elements of Mastercard’s marketing strategy include:

Brand Recognition: Mastercard leverages its well-known brand identity and logo, reinforcing trust and recognition among consumers and businesses.
Customer-Centric Approach: The company’s marketing efforts focus on enhancing the customer experience and providing value to cardholders.
Sponsorships and Partnerships: Mastercard sponsors major global events and forms partnerships with organizations, sports leagues, and cultural events to increase its brand visibility.
Digital and Social Media: The company utilizes digital channels and social media to engage with customers and promote its products and services.

Key Takeaways

In summary, Mastercard’s strategy is built around expanding its payments network, extending value-added services, and embracing new network opportunities.
The company’s growth drivers include its people, brand, data assets, technology, franchise ecosystem, and commitment to sustainable impact through ESG initiatives.
This comprehensive approach positions Mastercard as a leading player in the evolving landscape of payments, technology, and societal contribution.

Element	Description
Value Proposition	Mastercard offers a range of value propositions for its customers: – Global Payment Network: The brand provides access to a vast and secure global payment network. – Convenience: Mastercard offers convenient and efficient electronic payment solutions. – Security: The company prioritizes the security of transactions and data. – Acceptance: Mastercard cards are widely accepted by merchants and businesses worldwide. – Financial Inclusion: The brand supports financial inclusion by providing access to digital payments. – Innovation: Mastercard continually innovates with new payment technologies and solutions.
Core Products/Services	Mastercard’s core products and services include: – Payment Cards: The brand issues credit, debit, prepaid, and commercial payment cards. – Payment Processing: Mastercard facilitates payment processing for card transactions. – Digital Payments: The company offers digital payment solutions like Masterpass and contactless payments. – Data and Analytics: Mastercard provides data and analytics services to businesses and financial institutions. – Financial Inclusion: The brand supports financial inclusion efforts through various programs. – Cybersecurity: Mastercard focuses on cybersecurity to protect cardholders and merchants.
Customer Segments	Mastercard’s customer segments include: – Cardholders: Individuals and businesses using Mastercard cards for payments and transactions. – Merchants: Businesses and retailers accepting Mastercard cards as a payment method. – Financial Institutions: Banks and financial institutions partnering with Mastercard to issue cards and offer financial services. – Government Entities: Government agencies and entities leveraging Mastercard’s payment solutions for disbursements and collections. – Developers: Developers and businesses integrating Mastercard’s APIs and technologies for payment solutions. – Global Businesses: Large multinational corporations with complex payment needs.
Revenue Streams	Mastercard generates revenue through several revenue streams: – Interchange Fees: Revenue comes from interchange fees paid by merchants to card-issuing banks for card transactions. – Processing Fees: Mastercard earns processing fees for facilitating electronic payment transactions. – Data and Analytics Services: Revenue is generated from data and analytics services provided to businesses. – Licensing Fees: Mastercard charges licensing fees to financial institutions for card issuance. – Digital Payments: Revenue may come from fees associated with digital payment solutions. – Consulting Services: Revenue is generated from consulting services provided to financial institutions and businesses.
Distribution Strategy	Mastercard’s distribution strategy focuses on partnerships, digital channels, and a global reach: – Partnerships: The brand partners with financial institutions to issue Mastercard cards and offer financial products. – Merchant Acceptance: Mastercard cards are widely accepted by merchants and businesses, expanding their reach. – Digital Channels: Mastercard promotes digital payment solutions through online and mobile channels. – ATM Network: Mastercard has a vast network of ATMs worldwide, offering cash access to cardholders. – Global Presence: Mastercard operates globally, making its payment network accessible in numerous countries. – Developer Ecosystem: Mastercard provides APIs and tools to developers for integrating payment solutions. – Advertising and Promotion: The brand engages in advertising and promotional activities to increase awareness and usage of Mastercard cards. – Government Partnerships: Collaborations with government entities for payment solutions.