MasterCard 2010 Annual Report Download - page 14

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Class A common stock and corporate governance structure. Please see a complete discussion of these risk factors
in Part I, Item 1A—Risk Factors. We caution you that the important factors referenced above may not contain all
of the factors that are important to you. Our forward-looking statements speak only as of the date of this report or
as of the date they are made, and we undertake no obligation to update our forward-looking statements.
In this Report, references to the “Company,” “MasterCard,” “we,” “us” or “our” refer to the MasterCard
brand generally, and to the business conducted by MasterCard Incorporated and its consolidated subsidiaries,
including our principal operating subsidiary, MasterCard International Incorporated (d/b/a MasterCard
Worldwide). All third-party trademarks appearing in this Report are the property of their respective holders.
Item 1. Business
Overview
MasterCard is a leading global payments company that provides a critical economic link among financial
institutions, businesses, merchants, cardholders and governments worldwide, enabling them to use electronic
forms of payment instead of cash and checks. We provide a variety of services in support of the credit, debit,
prepaid and related payment programs of approximately 22,000 financial institutions and other entities that are
our customers. We primarily:
• offer a wide range of payment solutions, which enable our customers to develop and implement credit,
debit, prepaid and related payment programs for their customers (which include cardholders, businesses
and government entities),
• manage a family of well-known, widely accepted payment card brands, including MasterCard®,
Maestro®and Cirrus®, which we license to our customers for use in their payment programs,
• process payment transactions over the MasterCard Worldwide Network,
• provide support services to our customers and, depending upon the service, merchants and other clients,
and
• as part of managing our brands and our franchise, establish and enforce a common set of standards for
adherence by our customers for the efficient and secure use of our payment card network.
MasterCard generates revenue by charging fees to our customers for providing transaction processing and other
payment-related services and by assessing our customers based primarily on the dollar volume of activity, or
gross dollar volume (“GDV”), on the cards that carry our brands.
A typical transaction processed over our network involves four parties in addition to us: the cardholder, the
merchant, the issuer (the cardholder’s financial institution) and the acquirer (the merchant’s financial institution).
Consequently, the payment network we operate supports what is often referred to as a “four-party” payment
system. Our customers are financial institutions and other entities that act as issuers and acquirers. Using our
transaction processing services, issuers and acquirers facilitate payment transactions between cardholders and
merchants throughout the world, providing merchants with an efficient and secure means of receiving payment,
and consumers and businesses with a convenient, quick and secure payment method that is accepted worldwide.
We guarantee the settlement of many of these transactions among our customers to ensure the integrity of our
payment network. In addition, we undertake a variety of marketing activities designed to maintain and enhance
the value of our brands. However, cardholder and merchant transaction relationships are managed principally by
our customers. We do not issue cards, extend credit to cardholders, determine the interest rates (if applicable) or
other fees charged to cardholders by issuers, or establish the “merchant discount” charged by acquirers in
connection with the acceptance of cards that carry our brands.
Our business has a global reach and has continued to experience growth. In 2010, we processed 23.1 billion
transactions, a 2.9% increase over the number of transactions processed in 2009. GDV on cards carrying the
MasterCard brand as reported by our customers was approximately $2.7 trillion in 2010, a 10.7% increase in U.S.
dollar terms and a 9.1% increase in local currency terms over the GDV reported in 2009.
4