MasterCard 2012 Annual Report Download - page 10

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The primary general purpose card brands include MasterCard, Visa®, American Express®,JCB
®,Diners
Club®, UnionPay®and Discover®. These brands, including MasterCard, have come to be associated with a variety
of forms of payment in the United States and other markets around the world, including (depending on the brand)
credit, charge, debit and prepaid cards. Regional and domestic/local debit brands that require a personal
identification number (“PIN”) for verification represent alternative, and sometimes primary, brands within many
countries. In these markets, issuers have historically relied on the Maestro and Cirrus brands (and other brands) to
enable cross-border transactions, which typically constitute a small portion of the overall number of transactions.
In addition to general purpose cards, private label cards comprise a portion of all card-based forms of
payment. Typically, private label cards are credit cards issued by, or on behalf of, a merchant (such as a
department store or gasoline retailer) and can be used only at that merchant’s locations.
Payment Services and Solutions
We provide transaction processing and other payment-related services as well as a wide range of payment
solutions to enable our customers to design, package and implement products and programs targeted to the
specific needs of their customers. We work with customers to provide customized solutions, as well as more
general solutions. Our payment solutions are built upon our expertise in payment programs, product
development, payment processing technology, loyalty and rewards solutions, payment security, consulting and
information services and marketing. We also manage and promote our brands for the benefit of all customers
through advertising, promotional and interactive programs and sponsorship initiatives.
Transaction Processing on the MasterCard Worldwide Network
Introduction. We operate the MasterCard Worldwide Network, our proprietary, global payments network
that links issuers and acquirers around the globe to facilitate the processing of transactions and, through them,
permits MasterCard cardholders to use their cards and other payment devices at millions of merchants
worldwide. We process transactions through our network for financial institutions and other entities that are our
customers, in more than 150 currencies in more than 210 countries and territories.
Typical Transaction. A typical transaction processed over the MasterCard Worldwide Network involves
four participants in addition to us: cardholder, merchant, issuer (the cardholder’s financial institution) and
acquirer (the merchant’s financial institution). The following diagram depicts a typical point-of-interaction card
transaction:
$
(less merchant discount)
Typical Point of Interaction Card Transaction
Authorization and
Transaction Data
Authorization and
Transaction Data
Acquirer
(merchant’s
financial institution)
Transaction
Data Bill
$
Issuer
(cardholder’s
financial institution)
$
Merchant Cardholder
Present Card
Goods and Services
Settlement Bank
$
6