MasterCard 2010 Annual Report Download - page 26

relationship by sponsoring premiere events, including the Union of European Football Associations Champions
League in Europe and the Copa America 2011 tournament in Argentina, as well as two leading Argentinean club
teams. MasterCard is also the exclusive payments sponsor to Major League Baseball and a number of its
professional teams. We also sponsor individual teams in the National Football League and National Hockey
League, as well as a leading cricket team in the Indian Premier League. In China, MasterCard sponsors the
Beijing Wukesong Culture and Sports Arena, one of the prominent Olympic stadiums, which was recently
renamed the MasterCard Center. In addition to our sports portfolio, we align ourselves with diverse properties
aimed at multiple target audiences, including a fashion platform in our Asia Pacific region, with the intention of
raising our brand awareness with affluent consumers. We target a broad audience by providing access to music
artists and live performances through well-known entertainment properties such as The GRAMMY Awards®,
Jazz at Lincoln Center in New York, the Brit Awards and partnerships with Cirque du Soleil in Russia.
MasterCard is the official payment services partner of the Walt Disney Company in Europe, including with
respect to Disney stores, motion pictures and Disneyland Paris.
MasterCard Revenue Sources
MasterCard generates revenues by charging fees to our customers for providing transaction processing and
other payment-related services and assessing our customers based on GDV on the cards that carry our brands.
Accordingly, our revenues are impacted both by the number of transactions that we process and by the use of
cards carrying our brands. Our net revenues are classified into the following five categories:
•Domestic assessments: Domestic assessments are fees charged to issuers and acquirers based
primarily on the volume of activity on cards that carry our brands where the merchant country and the
cardholder country are the same.
•Cross-border volume fees: Cross-border volume fees are charged to issuers and acquirers based on the
volume of activity on cards that carry our brands where the merchant country and cardholder country
are different.
•Transaction processing fees: Transaction processing fees are charged for both domestic and cross-
border transactions and are primarily based on the number of transactions.
•Other revenues: Other revenues for other payment-related services include fees associated with fraud
products and services, cardholder service fees, consulting and research fees, compliance and penalty
fees, account and transaction enhancement services, holograms and publications.
•Rebates and incentives (contra-revenue): Rebates and incentives are provided to certain MasterCard
customers and are recorded as contra-revenue in the same period that performance occurs.
Our pricing is complex and is dependent on the nature of the volumes, types of transactions and other
products and services we offer to our customers. A combination of the following factors determines the pricing:
• Domestic or cross-border
• Signature-based or PIN-based
• Tiered pricing, with rates decreasing as customers meet incremental volume/transaction hurdles
• Geographic region or country
• Retail purchase or cash withdrawal
Cross-border transactions generate greater revenue than do domestic transactions. We review our pricing
and implement pricing changes on an ongoing basis and expect pricing to continue to be a component of revenue
growth in the future. In addition, standard pricing varies among our regional businesses, and such pricing can be
customized further for our customers through incentive and rebate agreements. Revenues from processing cross-
border transactions fluctuate with cross-border activities. See “Risk Factors—Business Risks—A decline in
cross-border travel could adversely affect our revenues and profitability, as a significant portion of our revenue is
generated from cross-border transactions” in Part I, Item 1A.
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