MasterCard 2011 Annual Report Download - page 21

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The Brit Awards and the Walt Disney Company in Europe. In 2011 MasterCard entered into a new cause
marketing partnership with Stand Up to Cancer to encourage MasterCard cardholders to made donations tied to
usage of MasterCard cards. We also sponsored the Copa America 2011 tournament in Argentina and Rugby
World Cup in New Zealand in 2011. Our approach to sponsorship assets aligns with consumer segments
important to MasterCard and our customers.
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 acquirer country and the
issuer 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 acquirer country and issuer 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
• Processed or not processed by MasterCard
In general, cross-border transactions generate higher revenue than domestic transactions since cross-border
fees are higher than domestic fees, and in most cases also include fees for currency conversion. We review our
pricing and implement pricing changes on an ongoing basis. In addition, standard pricing varies among our
regional businesses, and such pricing can be modified 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.
In 2011, net revenues from our five largest customers accounted for approximately $1.7 billion, or 26% of
our total revenue. No single customer generated greater than 10% of total revenue.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Revenues”
in Part II, Item 7 for more detail.
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