MasterCard 2010 Annual Report Download - page 28

Processed Transactions. The processed transaction table below provides information regarding all
transactions processed by MasterCard, regardless of brand, for the years ended December 31, 2010 and 2009
Year ended
December 31, 2010
Year-over- year
growth
Year ended
December 31, 2009
(in millions, except percentages)
Processed transactions1........................... 23,052 2.9% 22,401
1Data represents all transactions processed by MasterCard, including PIN-based online debit transactions,
regardless of brand. The numbers were updated in 2009 to exclude a small number of certain processed
transactions initiated with cards that do not bear our brands. All prior period data has been revised to be
consistent with this revised methodology. Revenue was not impacted by these changes.
Membership Standards
We establish and enforce our standards surrounding membership in MasterCard International and the use
and acceptance of cards carrying our brands.
Rulemaking and Enforcement
Membership in MasterCard International and its affiliates is generally open to financial institutions and
other entities that are our customers. Applicants for membership must generally meet specified membership
eligibility requirements.
In general, MasterCard grants licenses by territory to applicants able to perform all obligations required of
members. Licenses provide members with certain rights, including access to the network and usage of our
brands. Anti-money laundering due diligence reviews and customer risk management reviews are conducted on
all new members prior to admission, as well as on existing members. All applicants and members must meet the
requirements of MasterCard’s anti-money laundering program, and MasterCard can block authorization of
transactions and ultimately terminate membership for non-compliance with the program. As a condition of our
licenses, members agree to comply with our standards, which include our certificate of incorporation, bylaws,
policies, rules and operating regulations and procedures. MasterCard International and certain of its affiliates are
the governing bodies that establish and enforce our standards, which relate to such matters as membership
eligibility and financial soundness criteria; the standards, design and features of cards and card programs; the use
of MasterCard trademarks; merchant acquiring activities (including acceptance standards applicable to
merchants); and guaranteed settlement and member failures. To help ensure that members conform to the
standards, we review card programs proposed by members.
Customer Risk Management
As a guarantor of certain card obligations of principal members, we are exposed to member credit risk
arising from the potential financial failure of any of our approximately 2,500 principal members of MasterCard,
Maestro and Cirrus, and approximately 3,400 affiliate debit licensees. Our estimated gross settlement risk
exposure for MasterCard-branded transactions, which is calculated using the average daily card charges made
during the quarter multiplied by the estimated number of days to settle, was approximately $28.5 billion as of
December 31, 2010. Principal members participate directly in MasterCard programs and are responsible for the
settlement and other activities of their sponsored affiliate members (approximately 19,400).
To minimize the contingent risk to MasterCard of a failure, we monitor the financial health of, economic
and political operating environments of, and compliance with our standards by, our principal members, affiliate
debit licensees and other entities to which we grant licenses. If the financial condition of a member or the state of
the economy in which it operates indicates that it may not be able to satisfy its obligations to us or to other
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