{"id":3951,"date":"2015-12-08T22:15:55","date_gmt":"2015-12-09T03:15:55","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/mastercard-the-cashless-champion-in-the-global-payments-industry\/"},"modified":"2015-12-08T22:22:01","modified_gmt":"2015-12-09T03:22:01","slug":"mastercard-the-cashless-champion-in-the-global-payments-industry","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/mastercard-the-cashless-champion-in-the-global-payments-industry\/","title":{"rendered":"MasterCard: The Cashless Champion in the Global Payments Industry"},"content":{"rendered":"

 <\/p>\n

MasterCard Commercial<\/a><\/p>\n

Payments are an integral part of our lives today. With the industry growing at double digits, the players in this ecosystem are finding ways to innovate in order to avoid disintermediation. Today MasterCard is one of the leaders in the payments industry. The company is at the center of the Four Party Payment System<\/em>– an ecosystem that connects Issuing Banks, merchants, Merchant Acquirers, and the payment processors- to facilitate how we pay for goods and services. Despite growing threats of entrants into the fintech world, MasterCard has found ways to continually grow, innovate, by having an efficient operating model that supports its business model and mission to make payments \u201csafe, simple, and smart\u201d.<\/p>\n

\"Four<\/a><\/p>\n

 <\/p>\n

Revenue Model<\/strong><\/p>\n

MasterCard\u2019s core competencies lie in processing domestic and cross-border transactions in a safe and fast way. Its core business boasts different revenue streams:<\/p>\n

    \n
  1. Domestic Assessment fees: <\/strong>MasterCard receives a percentage of the total amount for each domestic transaction on credit. This percentage or fee varies for the Issuers, the merchant category, and other factors and typically can range from 0.10% to 0.125%. With domestic payment transactions volumes surpassing $3 trillion dollars in 2014, this represents a sizeable business for the company<\/li>\n
  2. Cross Border volume Fees: <\/strong>Similar to domestic fees, MasterCard gets a percentage of the dollar volume of MasterCard branded cards where the sale occurred outside of the Issuer\u2019s country. These percentages are typically higher than domestic transactions and can reach 1% of transaction volume.<\/li>\n
  3. Transaction processing fees:<\/strong> These are fees charged based on the number of transactions<\/li>\n
  4. Other sources of revenues:<\/strong> MasterCard\u2019s business also includes different value-added services sold to its Issuers, Acquirers, and merchants. These include Consulting services, fraud services, loyalty and rewards solutions, and other payment-related services<\/li>\n<\/ol>\n

    \"MasterCard<\/a><\/p>\n

    Operating Model<\/strong><\/p>\n

    MasterCard\u2019s three-prong strategy of growing <\/em>the core, diversifying <\/em>its business while expanding <\/em>into new geographies and verticals requires an agile and lean operating model. Its core processing business is supported by a team of engineers and technology experts to monitor the payment processing network. Furthermore, MasterCard features a team of Account Managers, expert Marketers, and Advisors to serve its clients. Account Managers are in charge of driving client value (Issuers, Acquirers, merchants) by monitoring and evaluating the portfolio, understand client and customer pain-points, and agilely addressing customer requests.<\/p>\n

    To further drive client value, MasterCard has the world\u2019s largest payments consulting firm, MasterCard Advisors. <\/em>This team provides \u201creal-time transaction data, cutting edge proprietary analysis, data-driven consulting, and marketing services solutions to help clients optimize, streamline, and grow their businesses\u201d. It serves clients across three main verticals: Information services (Data intelligence to better understand customer behavior and macro-spending patterns), Consulting services (insights on client portfolios and client operations to provide business and operational solutions), and Managed Services <\/em>(implementation services to drive additional consumer value). A focus on these services will enable the company to further avoid disintermediation by deeply integrating into its core client business.<\/p>\n

     <\/p>\n

    Conclusion<\/strong><\/p>\n

    There are several reasons why MasterCard\u2019s business model is creative and sustainable<\/p>\n

      \n
    1. It follows country growth trends and technology. Because MasterCard gets a fixed fee of total cards spend, its revenues are indexed to inflation. Government policies to reduce cash handling costs and move towards a \u201ccashless society\u201d directly benefits MasterCard.<\/li>\n
    2. High profit margins: With revenues of $9.4 Billion and net income of $3.6 Billion in 2014, MasterCard\u2019s business model is extremely profitable, allowing the company to invest its excess cash on its technical capabilities and innovation to avoid disintermediation<\/li>\n
    3. Global in nature: MasterCard processes payments in more than 150 currencies in more than 210 countries and territories. This is a critical advantage in that the company has data from so many countries to evaluate consumer behavior through spending.<\/li>\n
    4. Fast network with on-soil processing: MasterCard boasts both a centralized and sophisticated processing hub that also provides value-added services (such as fraud monitoring) to its Issuers. Because of regulation in certain countries dictating that payment processors must process on-soil, MasterCard has enabled local payment processing. This becomes a key competitive edge, especially against its big competitor Visa<\/li>\n
    5. Forward thinking and innovation; With global mobile penetrations above 80%, mobile payments are the future in the industry. MasterCard is already betting in this future trend by partnering with Apple and Samsung in their Apple Pay <\/em>and Samsung Pay <\/em>mobile payment gateways.<\/li>\n<\/ol>\n

      While the industry shifts greatly and many players continue to enter and play in this ecosystem, MasterCard benefits from 50 years of global operations and strong alliances with the leaders of the future of this ecosystem.<\/p>\n

       <\/p>\n

      \"MasterCard<\/a><\/p>\n

       <\/p>\n

      Sources<\/strong><\/p>\n

        \n
      1. MasterCard Website<\/li>\n
      2. MasterCard Annual Report 2014<\/li>\n
      3. Forbes Profile of MasterCard: http:\/\/www.forbes.com\/companies\/mastercard\/<\/a><\/li>\n
      4. The Tool Booth of Visa and MasterCard:<\/li>\n
      5. http:\/\/www.fool.com\/investing\/general\/2015\/02\/21\/the-14-billion-difference-how-visa-mastercard-and.aspx<\/a><\/li>\n
      6. http:\/\/www.pymnts.com\/in-depth\/2015\/apple-pays-business-model-blues\/<\/a><\/li>\n
      7. http:\/\/www.mastercardadvisors.com<\/a><\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

        \u201cA bag of chips: $3. Frozen yogurt: $2. A grilled Salmon sandwich from Spangler for dinner: $8.75. \u00a0An HBS section retreat to Vermont: $200. Performing to Beyonce\u2019s \u201cSingle Ladies\u201d during your section retreat: Priceless. \u00a0There are some things money can\u2019t buy. For everything else, there\u2019s MasterCard\u201d.<\/p>\n","protected":false},"author":611,"featured_media":4009,"comment_status":"open","ping_status":"closed","template":"","categories":[],"class_list":["post-3951","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/the-tom-challenge-tom-winners-and-losers-assignment\/","yoast_head":"\nMasterCard: The Cashless Champion in the Global Payments Industry - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/mastercard-the-cashless-champion-in-the-global-payments-industry\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"MasterCard: The Cashless Champion in the Global Payments Industry - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"\u201cA bag of chips: $3. Frozen yogurt: $2. A grilled Salmon sandwich from Spangler for dinner: $8.75. \u00a0An HBS section retreat to Vermont: $200. Performing to Beyonce\u2019s \u201cSingle Ladies\u201d during your section retreat: Priceless. \u00a0There are some things money can\u2019t buy. For everything else, there\u2019s MasterCard\u201d.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/mastercard-the-cashless-champion-in-the-global-payments-industry\/\" \/>\n<meta property=\"og:site_name\" content=\"Technology and Operations Management\" \/>\n<meta property=\"article:modified_time\" content=\"2015-12-09T03:22:01+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/MasterCard-Logo.png\" \/>\n\t<meta property=\"og:image:width\" content=\"2272\" \/>\n\t<meta property=\"og:image:height\" content=\"1704\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/mastercard-the-cashless-champion-in-the-global-payments-industry\\\/\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/mastercard-the-cashless-champion-in-the-global-payments-industry\\\/\",\"name\":\"MasterCard: The Cashless Champion in the Global Payments Industry - Technology and Operations Management\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/mastercard-the-cashless-champion-in-the-global-payments-industry\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/mastercard-the-cashless-champion-in-the-global-payments-industry\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/wp-content\\\/uploads\\\/sites\\\/4\\\/2015\\\/12\\\/MasterCard-Logo.png\",\"datePublished\":\"2015-12-09T03:15:55+00:00\",\"dateModified\":\"2015-12-09T03:22:01+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/mastercard-the-cashless-champion-in-the-global-payments-industry\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/mastercard-the-cashless-champion-in-the-global-payments-industry\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/mastercard-the-cashless-champion-in-the-global-payments-industry\\\/#primaryimage\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/wp-content\\\/uploads\\\/sites\\\/4\\\/2015\\\/12\\\/MasterCard-Logo.png\",\"contentUrl\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/wp-content\\\/uploads\\\/sites\\\/4\\\/2015\\\/12\\\/MasterCard-Logo.png\",\"width\":2272,\"height\":1704},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/mastercard-the-cashless-champion-in-the-global-payments-industry\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Submissions\",\"item\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"MasterCard: The Cashless Champion in the Global Payments Industry\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/#website\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/\",\"name\":\"Technology and Operations Management\",\"description\":\"MBA Student Perspectives\",\"potentialAction\":[{\"@type\":\"性视界Action\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"MasterCard: The Cashless Champion in the Global Payments Industry - Technology and Operations Management","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/mastercard-the-cashless-champion-in-the-global-payments-industry\/","og_locale":"en_US","og_type":"article","og_title":"MasterCard: The Cashless Champion in the Global Payments Industry - Technology and Operations Management","og_description":"\u201cA bag of chips: $3. Frozen yogurt: $2. A grilled Salmon sandwich from Spangler for dinner: $8.75. \u00a0An HBS section retreat to Vermont: $200. Performing to Beyonce\u2019s \u201cSingle Ladies\u201d during your section retreat: Priceless. \u00a0There are some things money can\u2019t buy. For everything else, there\u2019s MasterCard\u201d.","og_url":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/mastercard-the-cashless-champion-in-the-global-payments-industry\/","og_site_name":"Technology and Operations Management","article_modified_time":"2015-12-09T03:22:01+00:00","og_image":[{"width":2272,"height":1704,"url":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/MasterCard-Logo.png","type":"image\/png"}],"twitter_card":"summary_large_image","twitter_misc":{"Est. reading time":"4 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/mastercard-the-cashless-champion-in-the-global-payments-industry\/","url":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/mastercard-the-cashless-champion-in-the-global-payments-industry\/","name":"MasterCard: The Cashless Champion in the Global Payments Industry - Technology and Operations Management","isPartOf":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/#website"},"primaryImageOfPage":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/mastercard-the-cashless-champion-in-the-global-payments-industry\/#primaryimage"},"image":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/mastercard-the-cashless-champion-in-the-global-payments-industry\/#primaryimage"},"thumbnailUrl":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/MasterCard-Logo.png","datePublished":"2015-12-09T03:15:55+00:00","dateModified":"2015-12-09T03:22:01+00:00","breadcrumb":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/mastercard-the-cashless-champion-in-the-global-payments-industry\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/d3.harvard.edu\/platform-rctom\/submission\/mastercard-the-cashless-champion-in-the-global-payments-industry\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/mastercard-the-cashless-champion-in-the-global-payments-industry\/#primaryimage","url":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/MasterCard-Logo.png","contentUrl":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/MasterCard-Logo.png","width":2272,"height":1704},{"@type":"BreadcrumbList","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/mastercard-the-cashless-champion-in-the-global-payments-industry\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/d3.harvard.edu\/platform-rctom\/"},{"@type":"ListItem","position":2,"name":"Submissions","item":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/"},{"@type":"ListItem","position":3,"name":"MasterCard: The Cashless Champion in the Global Payments Industry"}]},{"@type":"WebSite","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/#website","url":"https:\/\/d3.harvard.edu\/platform-rctom\/","name":"Technology and Operations Management","description":"MBA Student Perspectives","potentialAction":[{"@type":"性视界Action","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/d3.harvard.edu\/platform-rctom\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"}]}},"_links":{"self":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/hck-submission\/3951","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/hck-submission"}],"about":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/types\/hck-submission"}],"author":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/users\/611"}],"replies":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/comments?post=3951"}],"version-history":[{"count":0,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/hck-submission\/3951\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/media\/4009"}],"wp:attachment":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/media?parent=3951"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/categories?post=3951"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}