Marketing strategy of Mastercard: Business Model & Strategy

Marketing strategy of Mastercard: Business Model & Strategy.

Mastercard is a technology company in the global payments industry that connects consumers, financial institutions, merchants, governments, digital partners, businesses, and other organizations worldwide, enabling them to use electronic forms of payment instead of cash and checks.

Through this strategy story, we will analyze the business model of Mastercard and understand how does it work and make money.

Mastercard enables a wide variety of payment capabilities (including integrated products and value-added service solutions) over its multi-rail network among account holders, merchants, financial institutions, businesses, governments, and others, offering customers one partner for their payment needs.

Mastercard’s core network supports what is often referred to as a “four-party” payments network and includes the following participants:

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  The account holder (a person or entity who holds a card or uses another device enabled for payment).
  
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  The issuer (the account holder’s financial institution).
  
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  Merchant and acquirer (the merchant’s financial institution).
  

Through its core network, Mastercard enables the routing of a transaction to the issuer for its approval, facilitates the exchange of financial transaction information between issuers and acquirers after a successfully conducted transaction, and settles the transaction by facilitating the exchange of funds between parties via settlement banks chosen by Mastercard and Mastercard’s customers.
Interchange Fees: Interchange fees reflect the value merchants receive from accepting Mastercard products and play a key role in balancing the costs and benefits that consumers and merchants derive. Generally, interchange fees are collected from acquirers and paid to issuers to reimburse the issuers for a portion of the costs incurred. 
Issuers incur these costs in providing services that benefit all participants in the system, including acquirers and merchants, whose participation in the network enables increased sales to their existing and new customers, efficiencies in the delivery of existing and new products, guaranteed payments, and improved experience for the customers.