Marketing strategy of Mastercard: Business Model & Strategy

Domestic assessments are fees charged to issuers and acquirers based primarily on the dollar volume of activity on cards and other devices that carry Mastercard’s brands where the merchant country and the country of issuance are the same. Revenue from domestic assessments contributes ~45% to Mastercard’s revenue.


Cross-border volume fees are charged to issuers and acquirers based primarily on the dollar volume of activity on cards and other devices that carry Mastercard’s brands where the merchant country and the country of issuance are different. Revenue from cross-border volume contributes ~25% to Mastercard’s revenue.
Transaction processing revenue is recognized for both domestic and cross-border transactions, including

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  Switched transaction revenue: Transaction Authorization (in case the issuer cannot be contacted), Clearing (determination and exchange of financial transaction information between issuers and acquirers after a transaction has been successfully conducted), and Settlement (facilitates the exchange of funds between parties)
  
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  Connectivity fees are charged to issuers, acquirers, and other financial institutions for network access, equipment, and the transmission of authorization and settlement messages. 
  
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  Other processing fees include issuer and acquirer processing solutions, payment gateways for e-commerce merchants, mobile gateways for mobile-initiated transactions, and safety and security.
  

Revenue from transaction processing contributes ~60% to Mastercard’s revenue.

Other revenues include value-added products and services often sold with the Company’s payment service offerings. Other revenues include:

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  Cyber and intelligence solutions fees.
  
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  Data analytics and consulting fees.
  
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  Loyalty and rewards solutions fees and Program management services.
  

Revenue from other services contributes ~15% to Mastercard’s revenue.
Rebates and incentives (contra-revenue) are provided to customers and can be either fixed or variable-based. Fixed incentives typically represent payments to a customer directly related to entering into an agreement. Variable rebates and incentives are usually tied to customer performance, such as volume thresholds.
They are recorded as a reduction of gross revenue primarily when volume- and transaction-based revenues are recognized over the contractual term. Rebates & incentives reduce the revenue by ~60%.