Mastercard

Mastercard Incorporated
Type	Public
Traded as	NYSE: MA; S&P 500 component
Industry	Financial services, payment technology
Founded	1966 as the Interbank Card Association; incorporated and listed 2006
Headquarters	Purchase, New York, United States
Area served	More than 210 countries and territories
Key people	Michael Miebach (chief executive), Merit Janow (chair), Sachin Mehra (chief financial officer)
Services	Payment processing, transaction switching, fraud prevention, data analytics, open banking, cybersecurity services
Revenue	Approximately US$28.2 billion (2024)
Employees	Approximately 35,000
Website	mastercard.com

Mastercard Incorporated is an American multinational payment technology company headquartered in Purchase, New York. It operates a payments network connecting the banks that issue cards to consumers with the banks that serve merchants, processing transactions in more than 210 countries and territories and in approximately 150 currencies. With Visa it forms a duopoly in card payments outside China.

Mastercard does not issue cards, extend credit or hold consumer accounts. Those functions are performed by banks; the company supplies the network over which authorisation, clearing and settlement messages travel, the rules under which participants operate, the brand, and a growing set of services including fraud prevention, identity verification, data analytics and cybersecurity. Its revenue derives from fees charged to the financial institutions on both sides of each transaction, principally a domestic assessment on the value processed and a switching fee on each transaction, with substantially higher charges on cross-border transactions.

The economics of this arrangement are exceptional. The network's cost is largely fixed, each additional transaction costs almost nothing to process, and the company's operating margins exceed 55 per cent, among the highest of any company of comparable revenue.

History

The Interbank Card Association, 1966 to 1979

The credit card as a general-purpose instrument was created by Bank of America, which in 1958 mailed 60,000 unsolicited BankAmericards to residents of Fresno, California, in an operation later called the Fresno Drop. The programme lost a great deal of money initially and eventually succeeded, and Bank of America began licensing it to other banks in 1966.

A group of banks that had not been licensed, or that declined to accept a competitor's brand, formed the Interbank Card Association in August 1966 to create a rival network. Its members included Marine Midland, Wells Fargo, Crocker National, the Bank of California and, subsequently, a very large number of others, and the arrangement was a cooperative owned by the banks that used it.

In 1969 the association acquired the rights to the Master Charge name and the interlocking circles device from the Western States Bankcard Association, and the brand became Master Charge: The Interbank Card. The circles, designed to represent two parties meeting, have remained the company's mark for more than half a century and are among the most recognised symbols in commerce.

The association expanded internationally through affiliation with existing bank card schemes, including Eurocard in Europe from 1968 and Banco Nacional in Mexico, and the name was changed to MasterCard in 1979 to reflect that the product had become more than a charge card.

Competition with Visa and internationalisation, 1979 to 2001

BankAmericard became Visa in 1976, and the two networks have been direct competitors ever since, with Visa consistently the larger.

Both operated as associations owned by their member banks, an arrangement that had an important consequence: the banks that owned the networks also set, through the networks, the interchange fee that one bank paid another on each transaction, and were therefore on both sides of a price they collectively determined. This is the origin of the litigation and regulation that has occupied both companies for four decades.

Mastercard introduced Maestro, an international debit brand, in 1992 with Europay International, and merged with Europay in 2002, which gave it a European organisation and a substantial presence in markets where it had operated through affiliates.

Incorporation and listing, 2001 to 2010

Mastercard restructured in 2002 from an association owned by its member banks into a private corporation in which the banks held shares, and in May 2006 completed an initial public offering on the New York Stock Exchange at US$39 a share, converting the banks' holdings into a minority and placing control with public shareholders and an independent board.

The reasoning was partly legal. A network owned and controlled by the banks that competed through it was exposed to antitrust claims that a company with independent governance was not, and the American courts had already found against the networks' rules restricting banks from issuing rival brands. Visa followed with its own flotation in 2008.

The listing proved enormously profitable for investors. Mastercard shares rose more than fiftyfold in the following eighteen years, and the transformation of the payment networks from bank-owned utilities into independent technology companies with very high margins is among the most consequential structural changes in modern finance.

Banga and the expansion of services, 2010 to 2020

Ajay Banga, an Indian-born executive who had run Citigroup's Asian consumer business, became chief executive in 2010 and led the company for a decade in which its revenue tripled.

His strategic proposition was that the displacement of cash rather than the capture of share from Visa was the company's opportunity: approximately 85 per cent of the world's transactions were still conducted in cash and cheques, and a network that made electronic payment available and cheap in categories and countries where it was not would grow without needing to win anything from its competitor.

The company accordingly pursued government disbursements, transit systems, business-to-business payments, remittances through Mastercard Send, and financial inclusion, committing to bring several hundred million people into the formal financial system and participating in programmes including India's Aadhaar-linked payments and various national identity schemes.

It also began acquiring businesses that sold services alongside the network. Vocalink, acquired in 2017 for approximately £700 million, operates the United Kingdom's Faster Payments and Bacs infrastructure and the LINK ATM network, giving Mastercard ownership of real-time account-to-account payment rails that compete with cards. Ethoca, NuData Security, Brighterion and RiskRecon added fraud, identity and cyber risk capabilities, and Finicity, acquired in 2020, and Aiia added open banking data aggregation.

Banga left in 2021 and became president of the World Bank in 2023.

Miebach and the present, 2021 to 2026

Michael Miebach, a German executive who had led the company's products and innovation, became chief executive in January 2021.

The company has continued to diversify. It acquired Recorded Future, a threat intelligence company, in 2024 for US$2.65 billion, its largest acquisition, extending well beyond payments into general cybersecurity. It has invested in tokenisation, under which a card number is replaced in a transaction by a substitute value useless if intercepted, and has stated an objective of removing manually entered card numbers from online commerce in Europe by 2030.

It withdrew from Russia in March 2022 following the invasion of Ukraine, suspending operations so that cards issued by Russian banks ceased to work abroad and foreign cards ceased to work in Russia, and took a charge against the business. Domestic Russian card payments continued through the state-operated Mir system, which had been established in 2015 precisely because of the risk of such a withdrawal.

Its recent results have been driven by the continued shift from cash, by cross-border travel volumes exceeding pre-pandemic levels, and by the growth of value-added services, which now produce a substantial and rising proportion of revenue and which the company has emphasised because they are less exposed to the regulation of interchange.

How the network works

The four-party model

A card transaction involves four parties and the network that connects them. The cardholder presents a card. The merchant accepts it. The acquirer, a bank or payment processor serving the merchant, receives the transaction. The issuer, the bank that gave the cardholder the card, authorises or declines it and ultimately pays. Mastercard sits between the acquirer and the issuer, routing the authorisation request, clearing the transaction and settling the funds.

The merchant pays a merchant discount, typically between one and three per cent of the transaction, out of which three components are paid. The largest is interchange, which the acquirer pays to the issuer and which Mastercard sets but does not receive; it funds the issuer's costs, its fraud losses, its funding of the cardholder's float and, in the case of premium cards, the rewards. A smaller component is the scheme fee paid to Mastercard, comprising an assessment on volume and a switching fee per transaction. The remainder is the acquirer's own margin.

The structure explains almost everything about the industry's politics. Mastercard sets a price that one of its customers pays to another and takes only a small share of it, which means it has an incentive to set interchange high, since high interchange encourages banks to issue its cards rather than a competitor's, while the cost falls on merchants who are not represented in the decision. Both networks compete for issuers by offering terms favourable to issuers, and the resulting dynamic, in which competition raises rather than lowers the price paid by merchants, is the central finding of the regulatory and academic literature on the subject.

Products

Credit cards permit deferred payment and generate the highest interchange, funding the rewards programmes that make premium cards attractive. Debit cards draw directly on an account and carry lower interchange, subject in the United States to a statutory cap on cards issued by large banks. Prepaid cards carry a stored balance and are used for disbursements, payroll, government benefits and gifts.

Maestro, the international debit brand, was retired in Europe for new cards from 2023 as chip and contactless made a separate brand unnecessary. Cirrus serves ATM access.

Mastercard Send moves money to a card account rather than from it, and is used for disbursements, insurance payouts, gig economy earnings and remittances. Click to Pay provides a common online checkout across networks. Mastercard Installments offers buy-now-pay-later functionality through issuers.

Value-added services

Approximately a third of revenue now comes from services sold alongside the network, a proportion the company has increased deliberately.

Cyber and intelligence includes fraud scoring on transactions in flight, identity verification, dispute resolution through Ethoca, third-party risk assessment through RiskRecon and, since 2024, general threat intelligence through Recorded Future. Data and services sells analytics derived from aggregated and anonymised transaction data, including the Mastercard SpendingPulse retail sales estimates, which are published and widely cited, and consulting through Mastercard Advisors. Loyalty operates rewards programmes for issuers. Open banking, through Finicity and Aiia, supplies the connections by which financial applications read account data with the customer's permission.

The strategic purpose is to reduce dependence on interchange-linked revenue, which regulators have capped in an increasing number of jurisdictions, and to build relationships with issuers and merchants that are not contingent on which network a card carries.

Regulation and litigation

Mastercard has been the subject of more competition proceedings than almost any company, in a very large number of jurisdictions, and substantially all of them concern interchange.

United States

The Department of Justice sued both networks in 1998 over rules preventing member banks from issuing American Express or Discover cards, and the courts found the rules unlawful in 2001 and 2003; the restriction was removed and American Express began issuing through banks.

Merchants brought antitrust claims over interchange that were consolidated in 2005 and produced a proposed settlement of US$7.25 billion in 2012, rejected on appeal in 2016 because it purported to bind merchants who could not opt out of injunctive relief. A revised damages settlement of approximately US$5.6 billion was approved in 2019, and negotiation over the rules has continued, with a proposed settlement in 2024 reducing rates and permitting surcharging rejected by the court as inadequate and renegotiated subsequently.

The Durbin Amendment to the Dodd-Frank Act of 2010 capped debit interchange for banks with assets above US$10 billion at approximately 21 cents plus a small percentage, well below prevailing rates, and required that each debit card be enabled on at least two unaffiliated networks so that merchants could choose the cheaper. The effect on the networks was material and the effect on consumers is contested: banks reduced free checking and rewards in response, and evidence that merchants passed savings to customers is limited.

The proposed Credit Card Competition Act, introduced repeatedly since 2022, would extend the routing requirement to credit cards. The networks and the issuing banks have opposed it very heavily, arguing that it would end rewards programmes and reduce security, and merchants have supported it as strongly.

Europe

The European Commission found in 2007 that Mastercard's cross-border interchange fees infringed competition law, a decision upheld by the Court of Justice in 2014. The Interchange Fee Regulation of 2015 capped interchange at 0.2 per cent for debit and 0.3 per cent for credit across the European Union, a reduction of roughly two thirds in many markets, and the Commission fined Mastercard €570 million in 2019 over rules that prevented merchants from obtaining better terms from acquirers in other member states.

The United Kingdom retained the caps after leaving the Union, and the Payment Systems Regulator has conducted market reviews finding that scheme and processing fees, which are not capped, rose very substantially after interchange was capped, and proposing remedies.

Merricks v Mastercard, a class action brought on behalf of approximately 46 million British consumers alleging that interchange fees had raised retail prices, was the first collective action under the Consumer Rights Act 2015 and proceeded through the Supreme Court before settling in 2024 for £200 million, an outcome criticised by consumer advocates as a fraction of the sums claimed.

Elsewhere

Australia capped interchange from 2003, and the Reserve Bank's reforms there are the most studied example of intervention in the market. Comparable caps or negotiated reductions operate in Canada, Brazil, India, China, where domestic card payments run on UnionPay and the networks were admitted only in 2020 and have made little progress, and a considerable number of other countries.

Competition

Mastercard's principal competitor is Visa, which is approximately twice its size by payment volume and which operates on the same model. The two have competed for issuers for sixty years and have been sued together, regulated together and analysed together for most of that period, and their market positions have been remarkably stable.

American Express and Discover operate three-party models in which the network also issues the card and serves the merchant, which allows them to set their own economics and which has historically produced higher merchant fees and correspondingly narrower acceptance. Capital One acquired Discover in 2025, creating a vertically integrated issuer and network of substantial scale and the first genuine structural change in the American network market in decades.

Outside the card system, the competitive threats are of a different kind. Account-to-account payments, in which money moves directly between bank accounts in real time, bypass the card networks entirely, and their adoption in India through the Unified Payments Interface, in Brazil through Pix, and across Europe through instant payments regulation has been very rapid; in India and Brazil such systems now carry the majority of retail transactions. Mastercard's response has been to own the infrastructure where it can, through Vocalink, and to sell services on top of rails it does not own.

Digital wallets and platforms including Apple Pay, Google Pay, PayPal and, in China, Alipay and WeChat Pay, sit between the consumer and the card and could in principle route transactions elsewhere; in practice most of them run on the card networks, which has preserved the networks' position. Stablecoins and blockchain settlement represent a further possibility, and both networks have built capability in them rather than resisting.

The economics of card payments

The card networks are the standard textbook example of a two-sided platform, and the theoretical literature on them, developed principally by Jean-Charles Rochet and Jean Tirole, was among the work for which Tirole received the Nobel Memorial Prize in Economic Sciences in 2014.

A two-sided platform serves two groups that need each other and sets prices to both. Its distinguishing property is that the price structure matters as much as the price level: the platform may charge one side little or nothing and recover the cost from the other, because attracting the first side is what makes the platform valuable to the second. In card payments the cardholder is subsidised, receiving rewards, interest-free periods and protection, and the merchant pays, because merchants cannot decline a payment method their customers expect.

The efficiency question is whether the resulting price structure is socially optimal. The industry argues that it is, that cards reduce the cost of handling cash, reduce theft, increase sales and extend credit, and that the merchant fee is a fair price for those benefits. Regulators and merchant organisations argue that the structure is distorted by the honour-all-cards rule, which prevents merchants from declining expensive cards; by no-surcharge rules, which prevent them from passing the cost to the customers who impose it; and by the fact that the price is set by the networks in competition for issuers rather than negotiated between the parties who pay it.

A further criticism, made increasingly, concerns distribution. Merchants recover the fees in their prices, which are the same for every customer, so that consumers paying in cash or with debit cards subsidise the rewards of holders of premium credit cards, who are on average considerably wealthier. Research by the Federal Reserve Bank of Boston estimated the resulting transfer at several hundred dollars a year from the poorest households to the richest, an argument that has become prominent in the American legislative debate.

Financial inclusion and development

Mastercard has made financial inclusion a stated objective and has pursued it in ways that are commercially motivated and, on the evidence, effective in part.

It committed in 2015 to bring 500 million people into the financial system by 2020 and subsequently to one billion by 2025, working through governments, aid organisations and mobile network operators to supply payment credentials to people without bank accounts. Its Mastercard Aid Network, which supplies digital vouchers for humanitarian assistance in places without connectivity, has been used by aid agencies in refugee settings, and the company has participated in national identity and benefit distribution systems in India, Nigeria, Egypt and elsewhere.

The criticisms made are that inclusion on a card network is not the same as access to finance; that the systems concerned create dependencies on a private foreign company for national payment infrastructure; and that the commercial motive, expanding the addressable market, is the actual driver and should be described as such. The company's own position is that the two objectives coincide, which is accurate and does not dispose of the objection.

The Mastercard Foundation's activity, which is independent of the company, is of a different order: its endowment exceeds that of all but a very small number of foundations, and its concentration on youth employment in Africa makes it among the largest single funders of education and skills on the continent.

Notable episodes

The WikiLeaks blockade of December 2010, in which Mastercard, Visa, PayPal and others ceased processing donations to the organisation following American political pressure and without any judicial order, was an early demonstration of the networks' position as a chokepoint. It prompted retaliatory denial-of-service attacks by the group Anonymous, litigation in Iceland in which a court found that the processor DataCell's contract had been wrongly terminated, and a continuing argument about whether payment processing should be treated as a common carrier obligation.

The Russian withdrawal of March 2022 demonstrated both the networks' reach and its limits. Cards issued by Russian banks ceased to function outside the country within days, and foreign cards ceased to function within it, which was disruptive; domestic payments continued without interruption on the Mir system, built after the 2014 sanctions specifically to remove that dependency, which was instructive for other governments.

The Target and Home Depot breaches of 2013 and 2014, in which the card details of well over a hundred million American customers were taken from merchants' systems, accelerated the adoption of chip cards in the United States, which had lagged the rest of the world by a decade because the cost of replacing terminals exceeded the fraud losses until the networks shifted liability for counterfeit fraud to whichever party had not adopted the technology.

Timeline

Key dates include the founding of the Interbank Card Association in August 1966; the acquisition of the Master Charge name in 1969; the change of name to MasterCard in 1979; the introduction of Maestro in 1992; the Department of Justice action of 1998 and the courts' findings against the exclusionary rules in 2001 and 2003; the merger with Europay in 2002 and the conversion to a private corporation; the initial public offering in May 2006; the European Commission's interchange decision in 2007; the Durbin Amendment in 2010 and Ajay Banga's appointment in the same year; the consolidated merchant settlement of 2012 and its rejection in 2016; the acquisition of Vocalink in 2017; the European Interchange Fee Regulation from 2015 and the €570 million fine in 2019; the approved US$5.6 billion settlement in 2019 and the Pornhub decision in December 2020; the acquisition of Finicity in 2020; Michael Miebach's appointment in January 2021; the withdrawal from Russia in March 2022; the Merricks settlement and the Recorded Future acquisition in 2024; and the completion of Capital One's acquisition of Discover in 2025.

Technology

Mastercard's network processes authorisation messages in a matter of milliseconds and is designed for availability rather than for throughput records: a payment network that is unavailable causes transactions to fail in shops and at ATMs, and the company reports availability figures of more than 99.999 per cent.

Its principal technical undertakings are fraud prevention, which applies machine learning to each transaction in flight, assessing the probability that it is fraudulent against the cardholder's history, the merchant, the device and a very large number of other signals, and returning a score to the issuer before the authorisation decision is made; tokenisation, in which a card number is replaced by a token specific to a device or merchant, so that a compromised token is useless elsewhere, which underlies Apple Pay, Google Pay and card-on-file arrangements and which the company has stated it intends to make universal; and 3-D Secure, the authentication standard used to verify a cardholder online, now in a version designed to authenticate silently in most cases rather than by challenging the user.

The company has also invested in biometric authentication, in artificial intelligence applied to dispute resolution and to the detection of card testing, and in quantum-resistant cryptography, since a network whose security depends on public key cryptography must plan for the possibility that it is broken.

Marketing

The Priceless campaign, created by McCann Erickson and launched in October 1997, is among the longest-running and most widely imitated advertising campaigns in existence. Its structure, an enumeration of the costs of the items in a scene followed by the assertion that some experience is priceless and that for everything else there is Mastercard, has been reproduced in more than a hundred countries and has entered general speech as a rhetorical form.

The campaign's durability is attributed to its solving a specific problem: a payment network has no product a consumer experiences, and Priceless attached the brand to the occasions on which the card was used rather than to the card itself. The company has extended it into experiential marketing, offering cardholders access to events, restaurants and sporting occasions that cannot be bought, which serves the same purpose commercially.

Mastercard has sponsored the UEFA Champions League since 1994, the Rugby World Cup, the Masters Tournament, and a large number of other properties, and its 2019 decision to introduce a sonic identity, a short musical signature played at the point of payment, was an early instance of a practice now common.

In 2016 it removed its name from the logo in some applications, relying on the interlocking circles alone, a change made possible by the mark's recognition and which the company described as an acknowledgement that the symbol no longer required explanation.

Corporate affairs

Governance and ownership

Mastercard has been a public company with independent governance since 2006, and the member banks that founded it hold no special rights. A residual class of shares held by the Mastercard Foundation carries limited voting rights and is subject to disposal restrictions.

The Mastercard Foundation, created at the time of the flotation and endowed with approximately 10 per cent of the company's shares, is one of the largest private foundations in the world, with assets that have grown with the share price to tens of billions of dollars. It is independent of the company, operates principally in Africa, and its Young Africa Works programme aims to enable 30 million young people, principally women, to obtain dignified work by 2030. Its scale relative to the countries in which it operates has made it a significant actor in African education and employment policy, and its independence from the company whose shares fund it is comparable to the relationship between the Wellcome Trust and GSK.

Employees and locations

The company employs approximately 35,000 people. Its headquarters are at Purchase, New York, and it operates technology centres in O'Fallon, Missouri, which houses the principal processing operations, in Pune and Vadodara in India, in Dublin, in Vancouver and in Sydney, together with regional offices in a very large number of countries.

It has consistently ranked highly in employer surveys and was among the earlier companies to publish pay equity data and to extend comprehensive benefits, including for gender transition and for adoption and surrogacy.

Finances

Mastercard reported net revenue of approximately US$28.2 billion in 2024 with operating margins above 55 per cent and net income above US$12 billion. Its revenue is reported net of rebates and incentives paid to issuers and merchants, which are very substantial and which represent the cost of winning and retaining portfolios; gross revenue before these is considerably higher.

Its growth is driven by three factors: the continuing displacement of cash, which the company measures as its addressable opportunity and which remains very large in absolute terms; cross-border volume, which carries fees several times those of domestic transactions and which is therefore disproportionately important to earnings; and value-added services.

It carries modest debt, converts almost all of its earnings into cash, and has returned very large sums through repurchases, reducing its share count substantially.

Controversies

Content and acceptance policies

Mastercard and Visa determine, through their rules, what may be bought with their cards, and the exercise of that authority has become contentious.

In December 2020 both networks ceased processing payments for Pornhub following reporting in The New York Times alleging that the site hosted material involving minors and non-consensual content, and the site removed all unverified uploads, some 10 million videos, in response. In 2021 Mastercard introduced requirements for adult content merchants covering age and consent verification, content review and complaint procedures.

The measures have been defended as necessary and criticised on two grounds: that a payment network exercises censorship without process or appeal, affecting lawful businesses and independent performers whose income depends on platforms it declines to serve; and that the pressure has been applied by advocacy organisations rather than by law. Comparable pressure has been applied to firearms retailers, to gambling and to particular publishers, and the networks' position, that they set rules to protect the brand and to manage risk, does not address the objection that they constitute a chokepoint over lawful commerce that no legislature created.

Data and privacy

The company's sale of analytics derived from transaction data has been examined by regulators in several jurisdictions. Mastercard maintains that the data is aggregated and anonymised and that no individual is identifiable, and researchers have demonstrated that transaction records are in principle re-identifiable from a small number of known purchases. The United Kingdom's competition authority found in 2019 that a data arrangement with Google had been adequately disclosed, and European data protection authorities have examined the practice without imposing penalties.

Fees and transparency

Merchant organisations have maintained for decades that the networks' pricing is opaque, that scheme fees have risen to replace capped interchange, and that the rules prevent merchants from steering customers toward cheaper payment methods. Regulators in the United Kingdom and the European Union have substantially accepted the first two propositions, and the honour-all-cards rule, which requires a merchant accepting any Mastercard to accept all of them including the most expensive premium cards, remains a principal grievance.

Security and fraud

Card fraud is the network's principal operational problem and the source of a substantial part of its value to issuers.

The categories are distinct. Counterfeit fraud, in which a card is cloned from magnetic stripe data, was largely eliminated by the EMV chip standard, developed jointly by Europay, Mastercard and Visa from 1994 and adopted in Europe in the 2000s and in the United States after 2015. Lost and stolen fraud is limited by PIN verification. Card-not-present fraud, conducted online where no physical card is required, has become the dominant category as the others have been addressed, and is countered by tokenisation, by 3-D Secure authentication and by the transaction scoring the network performs.

Account takeover, in which a criminal obtains control of a genuine account, and authorised push payment fraud, in which a victim is deceived into sending money themselves, are the categories growing fastest, and neither is addressed by card security measures at all, since the transaction is genuine. Regulators in the United Kingdom introduced mandatory reimbursement for authorised push payment fraud in 2024, an arrangement the industry resisted and which shifts the cost of deception onto the institutions best placed to detect it.

Fraud rates on card payments are low in absolute terms, in the region of six to seven basis points of transaction value, and the networks argue that this is the principal justification for the fees they charge, since a merchant accepting a card is guaranteed payment and bears none of the credit risk.

The company's position in the payment landscape

Mastercard's place is best understood by what it is not. It does not lend, so it carries no credit risk. It does not hold deposits, so it is not a bank and is not subject to capital requirements. It does not acquire merchants directly in most markets, so it does not bear merchant credit exposure. It does not issue cards, so it does not compete with its own customers, a discipline it has maintained more consistently than American Express and which is the reason banks are willing to build businesses on it.

What it owns is a set of rules, a brand, a switch and a very large installed base of terminals and cards that accept them. The rules determine who may participate and on what terms; the brand determines whether a merchant in an unfamiliar country will accept a traveller's card; the switch is a piece of software; and the installed base is the thing no entrant can replicate.

The arrangement produces a company with the economics of a toll road and the regulatory exposure of a utility, and the company's strategy for twenty years has been to add businesses that have neither.

Reception

Mastercard is among the best-regarded companies in finance by the conventional measures. It appears consistently in rankings of the most valuable brands, its returns to shareholders since 2006 place it among the most successful listings of the century, and its treatment of employees and its foundation are both cited favourably.

Its public standing among merchants and among those concerned with the cost of payments is considerably lower, and the objections are consistent across forty years and several continents: that the fees are high, that they are set by an entity none of the payers can negotiate with, that the rules prevent merchants from responding, and that the structure transfers money from ordinary customers to the holders of premium cards.

Both assessments are accurate, and the persistence of the second alongside the first is the principal fact about the industry: a business may be extremely well run, widely admired and highly profitable while the arrangement that permits it remains contested.

Assessment

Mastercard is among the most profitable large companies in the world and occupies a position that is extremely difficult to attack: a network requires both cardholders and merchants, neither joins before the other, and the incumbents have both in every country outside China.

Its vulnerability is regulatory and structural rather than competitive. Interchange has been capped in most large economies; account-to-account payment systems built by central banks in India, Brazil and Europe carry very large volumes at a fraction of the cost and do not require a card network at all; and the political salience of card fees in the United States has produced legislation that, if enacted, would alter the economics of its largest market.

The company's response, to build a business in services that are sold to the same customers but are not priced against interchange, has been executed with considerable success and is the reason its revenue has grown faster than payment volume. Whether services can replace the network as the source of profit, in a world where the network itself is progressively regulated and in places bypassed, is the question its strategy is directed at.