MasterCard 2008 Annual Report Download - page 26

Acceptance Initiatives
We estimate that, as of December 31, 2008, cards carrying the MasterCard brand were accepted at more
than 28.5 million acceptance locations, including 1.5 million ATMs, as well as other locations where cash may
be obtained. Information on ATM and manual cash access locations is reported by our customers and is partly
based on publicly-available reports of payment industry associations, government agencies and independent
market analysts in Canada and the United States. Cards bearing the Maestro brand mark are accepted at many of
these same locations.
Merchants are an important constituency in the MasterCard payment system and we are working to further
develop our relationships with them. We believe that consolidation in the retail industry is producing a set of
larger merchants with increasingly global scope. These merchants are having a significant impact on all
participants in the global payments industry, including MasterCard. We believe that the growing role of
merchants in the payments system represents both an opportunity and a challenge for MasterCard. Large
merchants are supporting many of the legal, legislative and regulatory challenges to interchange fees that
MasterCard is now defending, since interchange fees represent a significant component of the costs that
merchants pay to accept payment cards. See “Risk Factors—Legal and Regulatory Risks” and “Risk Factors—
Business Risks—Merchants are increasingly focused on the costs of accepting card-based forms of payment,
which may lead to additional litigation and regulatory proceedings and may increase the costs of our incentive
programs, which could materially and adversely affect our profitability” in Item 1A of this Report. We may be
required to increase the amount and scope of incentives that we provide to merchants to encourage the
acceptance and usage of our cards, which may adversely affect our business. Nevertheless, we believe many
opportunities exist to enhance our relationships with merchants and to continue to expand acceptance of our
cards. In 2004, we made available directly to merchants our rules that apply to card acceptance and related
activities, thereby increasing the level of transparency and predictability of our payment system for merchants. In
2006, we published the interchange rates applicable to merchants in the United States and in 2007, we introduced
a cap on interchange fees on fuel purchases at petroleum retailers. In 2008, we published our entire set of
operating rules on our website. As an additional example, we have an advisory group which brings together
merchants, acquirers, issuers and processors twice a year to examine payments innovation at the point of
interaction, and to seek to enhance the experience for merchants and consumers at the point of sale or in an
online shopping environment for a retail sales transaction. Furthermore, we also hold meetings with merchant
advisory groups that have been established in key global markets including the United States, Canada, South
Africa and Australia, and we continue to strengthen our acquirer and merchant sales teams around the world.
We seek to maintain unsurpassed acceptance of MasterCard-branded programs by focusing on three core
initiatives. First, we seek to increase the categories of merchants that accept cards carrying our brands. We are
focused on expanding acceptance in electronic and mobile commerce environments, in fast throughput
businesses, such as fast food restaurants, in transportation and in public sector payments, such as those involving
taxes, fees, fines and tolls, among other categories. Second, we seek to increase the number of payment channels
in which MasterCard programs are accepted, such as by introducing MasterCard acceptance in connection with
bill payment applications. We are working with customers to encourage consumers to make bill payments in a
variety of categories—including rent, utilities and insurance—with their MasterCard-branded cards. Third, we
seek to increase usage of our programs at selected merchants by sponsoring a wide range of promotional
programs on a global basis. We also enter into arrangements with selected merchants under which these
merchants receive performance incentives for the increased use of MasterCard-branded programs or indicate a
preference for MasterCard-branded programs when accepting payments from consumers.
We also support technical initiatives designed to make MasterCard card acceptance more attractive for
specific merchants, such as our Quick Payment Service for fast food restaurants and other merchants where rapid
transactions are required. In addition, MasterCard PayPass appeals to merchants in fast throughput businesses
because it reduces transaction times.
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