MasterCard 2011 Annual Report Download - page 8

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products and solutions; acquisition and other integration issues; and issues relating to our 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 operating subsidiary, MasterCard International Incorporated (d/b/a MasterCard Worldwide).
Item 1. Business
Overview
MasterCard is a global payments and technology company that connects billions of consumers, thousands of
financial institutions, millions of merchants, governments and businesses worldwide, enabling them to use
electronic forms of payment instead of cash and checks. We envision an environment where electronic payment
is the predominant means of payment. We use our technology and expertise to make payments more convenient,
secure and efficient to enable consumers to meet their needs and to provide value to all stakeholders in the
payments system.
We offer a wide range of payment solutions that enable our customers and partners to develop and
implement credit, debit, prepaid and related payment programs and solutions to deliver value to consumers. Our
customers and partners include financial institutions and other entities that act as “issuers” and “acquirers”,
merchants, government entities, telecommunications companies and other businesses. We manage a family of
well-known, widely-accepted payment brands, including MasterCard®, Maestro®and Cirrus®, which we license
to our customers for use in their payment programs and solutions. We process payment transactions over the
MasterCard Worldwide Network and provide support services to our customers and other partners. As part of
managing our brands, we establish and enforce a common set of standards for adherence by our customers for the
efficient and secure use of our payments 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 and other devices 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. Using our transaction processing services, issuers and acquirers who are our customers 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. We partner with merchants on initiatives to
help provide value to them and benefits to consumers. 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 2011, we processed 27.3 billion
transactions, a 18.3% increase over the number of transactions processed in 2010. GDV on cards carrying the
MasterCard brand as reported by our customers was approximately $3.2 trillion in 2011, a 16.1% increase in
local currency terms and a 19.3% increase in U.S. dollar terms over the GDV reported in 2010.
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