MasterCard Incorporated

Company Profile
Publication Date: 17 Jun 2011

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MasterCard Incorporated

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MasterCard Incorporated
TABLE OF CONTENTS

TABLE OF CONTENTS
Company Overview..............................................................................................4 Key Facts...............................................................................................................4 Business Description...........................................................................................5 History...................................................................................................................6 Key Employees.....................................................................................................9 Key Employee Biographies................................................................................10 Major Products and Services............................................................................18 Revenue Analysis...............................................................................................19 SWOT Analysis...................................................................................................20 Top Competitors.................................................................................................24 Company View.....................................................................................................25 Locations and Subsidiaries...............................................................................29

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MasterCard Incorporated
Company Overview

COMPANY OVERVIEW
MasterCard Incorporated (MCI) is a global payment solutions company that provides a variety of services in support of the credit, debit and related payment programs of nearly 23,000 financial institutions. It manages payment of card brands, including MasterCard, MasterCard Electronic, Maestro and Cirrus. The company operates in the Americas; Asia Pacific, Middle East and Africa; and Europe. The company is headquartered in Purchase, New York and employs around 5,600 people. The company recorded revenues of $5,539 million in the financial year (FY) ended December 2010, an increase of 8.6% over FY2009. The company's operating profit was $2,757 million in FY2010, an increase of 24.3% over FY2009. Its net profit was $1,846 million in FY2010, an increase of 26.2% over FY2009.

KEY FACTS
Head Office MasterCard Incorporated 2000 Purchase Street Purchase New York 10577 USA 1 914 249 6524

Phone Fax Web Address

http://www.mastercard.com

Revenue / turnover 5,539.0 (USD Mn) Financial Year End Employees New York Stock Exchange Ticker December 5,600 MA

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MasterCard Incorporated
Business Description

BUSINESS DESCRIPTION
MasterCard Incorporated (MCI) is primarily involved in the credit card market. The company provides marketing, approval, and transaction services for its variety of payment products. MasterCard provides services in more than 210 countries and territories. MasterCard advances commerce worldwide by developing more secure, convenient and rewarding payment solutions, processing billions of payments seamlessly across the globe, and building economic connections that accelerate business. The company primarily operates in single segment: payment solutions The company develops and markets payment solutions, process payment transactions, and provides support services to the customers, merchants and other clients. It manages a family of payment card brands, including MasterCard®, MasterCard Electronic, Maestro and Cirrus. MCI is a global payment solutions company that provides a variety of services in support of the credit, debit and related payment programs of nearly 23,000 financial institutions. Through its three tiered business model as franchisor, processor and advisor, the company develops and markets payment solutions, process payment transactions, and provides consulting services to the customers and merchants. The company is engaged in providing payment services that consists of transaction processing services such as: clearing, settlement and authorizations services. MasterCard manages a number of payment card brands, including MasterCard, Maestro and Cirrus. MCI' general purpose card brands include MasterCard, Visa, American Express, JCB, Diners Club and Discover. The company conducts its business through its principal operating subsidiary, MasterCard International and MasterCard Europe. The company operates in the global payments industry that consists of all forms of payment including paper such as cash, personal checks, money orders, official checks, travelers cheques and other paper−based means of transferring value; cards such as credit cards, charge cards, debit cards including Automated Teller Machine (ATM) cards, stored value cards and other types of cards; and other electronic wire transfers, electronic benefits transfers and Automated Clearing House payments. MCI's subsidiaries include MasterCard International Far East, MasterCard Singapore, MasterCard Netherlands, MasterCard International Services, MasterCard Japan, MasterCard Hong Kong, MasterCard Europe, MasterCard Africa, Maestro International, Eurocard, MasterCard Australia, and MasterCard Canada, among others.

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MasterCard Incorporated
History

HISTORY
MasterCard Incorporated (MCI) was established as the Interbank Card Association in 1966. In 1968, the company began forming global network with banks outside the US. In 1969, the company acquired exclusive rights to the 'Master Charge' name and the trademarked interlocking circles. MCI's Magstripe product became a standard feature to all 'Master Charge' cards in 1974. In 1979, the company changed its name from Interbank Card Association to 'MasterCard to reflect commitment to international growth, following the purchase of 'Master Charge' name and trademark by the California Bank Association. MCI introduced industry's first hologram security device in 1983. In 1985, the company acquired an interest in Europay International's predecessor, EuroCard. In 1988, the company acquired the Cirrus ATM network. Europay and MCI launched Maestro, the world’s first online point-of-sale debit network in 1991. MCI introduced the MasterCard Global Service, the first program to offer customers telephone access to core emergency and special services around the world in 1996. In 1997, the company acquired a 51% controlling stake in Mondex International, opening the gateway for the company's further development and promotion of smartcard technology. In 2001, the company launched Advisors professional services, the global consultancy focused on the payments industry. In 2002, MasterCard merged with Europay International to create MasterCard International. In the same year, the company launched and completed initial trial of its MasterCard PayPass contactless payment program in Orlando, Florida, with Chase, Citibank and MBNA. MasterCard International and iSeatz.com, a major online restaurant reservations provider, entered into a strategic alliance to implement various marketing programs in 2003. In the same year, the company introduced SecureCode program, a major eCommerce security solution for retailers and member financial institutions that use the web for its transactions.

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History

In 2003, the company and eFunds Corporation formed a debit processing alliance, which led to the creation of MasterCard Complete Debit Processing (CDP). In the same year, the company launched the MasterCard SecureCode Hosted Service globally. HSBC was the first global bank to use the service. MCI launched Mastercard's OneSMART PayPass, a payment method by which the user just has to scan their card across a PayPass reader to pay for their goods in 2004. In 2005, the company planned to become a public company. MasterCard made its initial public offering on the New York Stock Exchange (NYSE) in 2006. In the same year, the company introduced new corporate name, MasterCard Worldwide, and adopted a new corporate signature and tagline, The Heart of Commerce. In 2007, the company, launched knowledge leadership initiative with the Worldwide Centers of Commerce. MasterCard Worldwide entered into a contract extension and five-year Debit MasterCard and PIN brand exclusivity agreement with BECU, the credit union in Washington and one of the top five financial cooperatives in the country in 2007. In 2008, the company entered into an agreement to integrate their operating structures in France, a priority market for MasterCard in Europe. MCI entered into an agreement with TJX to offer an Alternative Recovery Program to MasterCard issuers affected by the data breach of TJX in the same year. In 2008, MasterCard Worldwide integrated the MasterCard Payment Gateway with iPayables’ electronic invoice delivery capabilities to provide expanded payment solutions to corporations and financial institutions. In the same year, the company, along with Far Eastern International Bank and HAPPY GO, launched the HAPPY GO Access Debit MasterCard Card. MCI acquired Orbiscom, a Dublin, Ireland-based payments solutions software provider for major financial institutions in January 2009. In the following month, the company appointed Melissa Ballenger as Controller and Principal Accounting Officer. In 2009, the company entered into a multi-year contract extension with OptumHealth Bank to issue MasterCard cards for health savings accounts (HSAs), flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs), including the accounts they manage for UnitedHealthcare members.

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History

In the same year, MCI launched MasterCard Money Manager, a new, interactive financial management tool that enables MasterCard cardholders to monitor debit card spending for themselves and members of their household. In November 2009, Univision Communications, a Spanish-language media company, joined with MasterCard to deliver prepaid financial services. In August 2010, the company entered into an agreement to acquire DataCash Group, a European payment service provider. In the same month, MasterCard entered into an agreement with Borderlinx, the international industry leader in global crossborder ecommerce shopping, offer MasterCard customer financial institutions and their cardholders around the world improved access to the global ecommerce marketplace and facilitate the flow of electronic commerce. In September 2010, China UnionPay and MasterCard Inc.'s MasterCard Worldwide signed MOU to explore business cooperation. In the same month, the company acquired a 12.5% stake in India's ElectraCard Services, a software solutions and payment management firm. In December 2010, MasterCard has purchased the prepaid Card Program Management (CPM) operations of Travelex for $458 million in cash, with an earn-out of up to an additional $55 million if certain performance targets are met. In January 2011, MasterCard and Telefonica announced the launch of a joint venture to lead the development of mobile financial solutions in 12 countries in Latin America where Telefónica is present with the Movistar brand.

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Key Employees

KEY EMPLOYEES
Name
Ajay Banga Richard Haythornthwaite David R Carlucci Steven Freiberg Marc Olivie Mark Schwartz Edward Suning Tian Nancy J Karch Jackson Tai Silvio Barzi

Job Title
President and Chief Executive Officer Chairman Director Director Director Director Director Director Director Director

Board
Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board

Compensation
11855814 USD 310157 USD 210032 USD 190032 USD 215032 USD 225032 USD 200032 USD 215032 USD 215032 USD 205032 USD 200032 USD

Jose Octavio Reyes Lagunes Director Rima Qureshi Gary Flood Noah J Hanft Director

President, MasterCard Technologies Senior Management General Counsel, Chief Payment System Integrity; Compliance Officer; and Corporate Secretary Chief Financial Officer President, International Markets President, U.S. Markets President, Global Technology and Operations Chief Human Resources Officer Senior Management

2659578 USD

Martina Hund Mejean Walter M Macnee Chris A McWilton Robert Reeg Stephanie Voquer

Senior Management Senior Management Senior Management Senior Management Senior Management

2522911 USD 2592328 USD 2659578 USD

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Key Employee Biographies

KEY EMPLOYEE BIOGRAPHIES
Ajay Banga
Board: Executive Board Job Title: President and Chief Executive Officer Since: 2010 Age: 51 Mr. Banga has been the President and Chief Executive Officer at MCI since 2010. Before joining MasterCard, he served as Chief Executive Officer at Citigroup’s Asia Pacific Region. Mr. Banga joined Citigroup in 1996 and served in a variety of positions of increasing responsibility. These included Chairman and Chief Executive Officer at International Global Consumer Group; President at Retail Banking North America; business Head at CitiFinancial and the U.S. Consumer Assets Division; and, division executive for the consumer bank in Central/Eastern Europe, Middle East, Africa, and India. He currently serves on the Board of Directors at Kraft Foods and on the board of trustees of the Asia Society. Mr. Banga was also a Director at Council for Economic Education. He received a B.A. in Economics from Delhi University where he graduated with honors. He is also an alumnus of the Indian Institute of Management, Ahmedabad.

Richard Haythornthwaite
Board: Non Executive Board Job Title: Chairman Since: 2006 Age: 55 Mr. Haythornthwaite has been the Chairman at MCI since 2006. From 2001 to 2005, He served as the Chief Executive Officer and a Director at Invensys and from 1997 to 2001, Mr. Haythornthwaite served as the Chief Executive of Europe and Asia and then as Group Chief Executive for Blue Circle Industries. His prior positions include serving as a Director of Premier Oil, President of BP Venezuela, and General Manager of Magnus Oilfield, BP Exploration. Mr. Haythornthwaite is a also Chairman at Southbank Centre Board. He served as a Non Executive Director at Imperial Chemical Industries and a Director at Land Securities Group.

David R Carlucci
Board: Non Executive Board Job Title: Director Since: 2006 Age: 57

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Key Employee Biographies

Mr. Carlucci has been a Director at MCI since 2006. He is the Chairman, President and Chief Executive Officer at IMS Health. Mr. Carlucci was appointed the Chief Executive Officer and President at IMS Health, in 2005 and had been President and Chief Operating Officer at IMS Health, since 2002. He was appointed to serve as the Chairman of IMS Health's Board of Directors effective 2006. From 2000 until 2002, before joining IMS, Mr. Carlucci was the General Manager of IBM Americas, which comprises all of IBM's sales and distribution operations in the US, Canada and Latin America. Prior to that, he held roles of increasing responsibility at IBM, including General Manager of IBM's S/390 Division from 1998 to 2000 and Chief Information Officer from 1997 to 1998. Mr. Carlucci also served as the General Manager of IBM Printing Systems Company from 1995 to 1997 and Vice President of Systems of Industries and Services, Asia Pacific from 1993 to 1995. He was also the Vice President of Marketing and Channel Management at IBM Personal Computer Company, North America from 1990 to 1992.

Steven Freiberg
Board: Non Executive Board Job Title: Director Since: 2006 Age: 54 Mr. Freiberg has been a Director at MCI since 2006. He is the Chairman and Chief Executive Officer at Citigroup's Global Consumer Group and Co-Chair of the Global Consumer Group since 2005. Mr. Freiberg has been a Member of the U.S. region board of MasterCard since 2001 and serves as the Chairman of MasterCard's U.S. region board since 2004. Prior to that, he served as the Chairman and Chief Executive Officer of Citi Cards from 2001 to 2005. Prior to that, Mr. Freiberg held positions of increasing seniority with Citigroup's predecessor companies and affiliates since joining Citigroup's Card Products Division in 1980. He is a Member of Citigroup's Operating and Management Committees. Additionally, Mr. Freiberg serves or has served on the Board of Directors of several of Citigroup's affiliates including, Citibank, Citicorp Credit Services, Citicorp Investment Services, Citicorp Insurance Group, Citibank Trust, Citibank FSB and the Citigroup Foundation. He also serves on the Board(s) of Directors of Direct Marketing Association, Upromise and the Financial Services Roundtable.

Marc Olivie
Board: Non Executive Board Job Title: Director Since: 2006 Age: 57 Mr. Olivie has been a Director at MCI since 2006. He is the President and Chief Executive Officer at Agfa-Gevaert Group. Mr. Olivie has also served as the Executive Director of the Board of Directors and Chairman of the Executive Committee of Agfa-Gevaert since 2005. From 2004 to 2005, he was the Executive Vice President of the Agfa-Gevaert Group. From 2001 to 2004, Mr. Olivie was the Senior Vice President and President of Global Bath and Kitchen Products for American Standard

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Key Employee Biographies

Companies. Prior thereto, he was the President and Chief Executive Officer of Armstrong Floor Products for Armstrong Holdings, from 2000 to 2001 and of Armstrong Building Products for Armstrong Holdings, from 1996 to 2000.

Mark Schwartz
Board: Non Executive Board Job Title: Director Since: 2006 Age: 57 Mr. Schwartz has been a Director at MCI since 2006. He served as a Senior Advisor to George Soros and then as President and Chief Executive Officer at Soros Fund Management from 2003 until 2005. From 1979 to 2001, Mr. Schwartz served in various positions at The Goldman Sachs Group, including as Chairman of Goldman Sachs Asia, from 1999 to 2001, Member of Management Committee, from 1998 to 2001, and President at Goldman Sachs Japan, from 1997 of 2001. He was a Partner of The Goldman Sachs Group, from 1988 until 2001.

Edward Suning Tian
Board: Non Executive Board Job Title: Director Since: 2006 Age: 46 Mr. Tian has been a Director at MCI since 2006. He is the Chief Executive Officer and Chairman at China Netcom Group, positions he has held since 2004. Since 2002, Mr. Tian has also served as the Vice President of China Network Communications, parent company of China Netcom Group. Prior thereto, he served as the Chief Executive Officer of China Netcom from 1999 to 2002 and as Co-Founder and Chief Executive Officer of AsiaInfo Holdings, from 1993 to 1999. Mr. Tian is a Member of the International Business Council of World Economic Forum, the Asia Pacific Board of New York Stock.

Nancy J Karch
Board: Non Executive Board Job Title: Director Since: 2007 Age: 63 Ms. Karch currently has been a Director at MCI since 2007. She is retired from McKinsey, where she served as a Senior Partner from 1988 until 2000, and in other capacities with the consulting firm beginning in 1974. At McKinsey, Ms. Karch led the Retail and Consumer Industries group, a practice she helped create. She also serves on the board of Liz Claiborne, Genworth Financial, and Corporate

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Key Employee Biographies

Executive Board Company. Ms. Karch is also a Trustee of The Westchester Land Trust, The American Folk Art Museum, and Northern Westchester Hospital, all not-for- profit organizations.

Jackson Tai
Board: Non Executive Board Job Title: Director Since: 2008 Age: 60 Mr. Tai has been a Director at MCI since 2008. He is the former Vice Chairman and Chief Executive Officer at DBS Group and DBS Bank, having served as Chief Executive Officer from 2002 until 2007. Mr. Tai joined DBS Group in 1999 as Chief Financial Officer, and subsequently served as President and Chief Operating Officer until his appointment as Chief Executive Officer. From 1974 until 1999, Mr. Tai held several management positions in the Investment Banking Division at J.P. Morgan & Co., in New York, Tokyo and San Francisco. He currently serves as a Director on the Board of Directors at Brookstone, the ING Group NV Supervisory Board and the Board of Directors of CapitaLand.

Silvio Barzi
Board: Non Executive Board Job Title: Director Since: 2008 Age: 63 Mr. Barzi currently has been a Director at MCI since 2008. He is the Executive Vice President of UniCredit Group, Head of New Markets, and Founder and Chairman of UniCredit Consumer Finance, a bank specializing in credit cards and consumer credit. Mr. Barzi previously served on the MasterCard Board of Directors from 2003 until 2006 and again from 2007 until 2008 as a non-voting observer to the Board. He has also served as a Member of the MasterCard European Board since 2001 and was appointed Chairman in 2007. Prior to joining UniCredit Group in 2000, Mr. Barzi was a Vice President at Booz Allen & Hamilton. From 1995 until 1998, he worked for the Credit Suisse-Winterthur Group as the Chief Operating Officer. From 1981 to 1995, Mr. Barzi was a Partner in the Italian office and a Leader within the European Financial Institutions and Information Technology practices of McKinsey & Company. In addition to MasterCard’s European Board, he also currently serves as a Director at SinSys and Credit RAS and is on the Board of Trustees of Collegio di Milano.

Jose Octavio Reyes Lagunes
Board: Non Executive Board Job Title: Director Since: 2008 Age: 59

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Key Employee Biographies

Mr. Lagunes currently has been a Director at MCI since 2008. He is the President of Latin America Group at The Coca-Cola Company, a position he has held since 2002. Mr. Reyes began his career at The Coca-Cola Company in 1980 at Coca-Cola de Mexico as Manager of Strategic Planning. In 1987, he was appointed Manager of the Sprite and Diet Coke brands at corporate headquarters in Atlanta. In 1990, Mr. Lagunes was appointed Marketing Director for Brazil, and he later became the Vice President of Marketing and Operations for Coca-Cola de Mexico. He became President for Coca-Cola de Mexico in 1996. In 2002, Mr. Lagunes was named President of the North Latin America Division at Coca-Cola, comprising Mexico, Venezuela, Colombia, Central America and the Carribean. Prior to joining Coca-Cola, he spent five years with Grupo IRSA, a Monsanto Company joint venture. Mr. Lagunes is a Member of the Advisory Board of the NFL (Mexico) and is a Director of the Papalote Museo de Nino and a Member of the Advisory Board of Casa de la Amistad, both not-for-profit organizations.

Rima Qureshi
Board: Non Executive Board Job Title: Director Since: 2011 Age: 46 Ms. Qureshi has been an Independent Director at MasterCard Inc since 2011. She is senior vice president and business unit head, CDMA Mobile Systems at Ericsson, the provider of technology and services to telecom operators. Prior to her appointment to this position in January 2010 as head of one of Ericsson's four business units, she served as vice president, AT&T Improvement Program Manager for Ericsson North America from 2008 until 2009, and vice president, Service Sales for Ericsson Canada in 2008. She served as vice president and head of Product Area Customer Support for Ericsson AB in Stockholm from 2004 until 2008. Ms. Qureshi also has served as head of Ericsson Response since 2006. Ms. Qureshi has held positions of increasing seniority within Ericsson in Canada and Sweden since joining the company in 1993. Before joining Ericsson, Ms. Qureshi served as an IT consultant at DMR Group Inc.

Gary Flood
Board: Senior Management Job Title: President, MasterCard Technologies Since: 2007 Age: 52 Mr. Flood has been the President of Global Products and Solutions at MCI since 2007. Prior to his current position, he was the Executive Vice President of Global Account Management for MasterCard Worldwide. Previously, Mr. Flood was Senior Vice President of Consumer Card Product Management and Development, where he spent four years directing all MasterCard consumer credit programs in the US. During this time, Mr. Flood developed the MasterCard premium card platform; initiated programs in secured, college, and Hispanic segments; and developed and managed enhancement

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Key Employee Biographies

support and services for credit products. He holds a bachelor’s degree in marketing from St. John’s University.

Noah J Hanft
Board: Senior Management Job Title: General Counsel, Chief Payment System Integrity; Compliance Officer; and Corporate Secretary Since: 2009 Age: 59 Mr. Hanft has been the General Counsel, Chief Payment System Integrity; Corporate Secretary; and Compliance Officer at MCI since 2009. He serves as a Member of the company's Executive Committee. Since first joining MasterCard in 1984, Mr. Hanft has held positions of increasing responsibility within the Law Department, including that of Senior Vice President, U.S. Counsel and Assistant General Counsel. He briefly left MasterCard from 1990 to 1993 to become Senior Vice President and Assistant General Counsel of AT&T Universal Card Services. Mr. Hanft was previously associated with the intellectual property law firm of Ladas & Parry in New York. He began his career as a Arial Attorney in the Criminal Defense Division of the Legal Aid Society. Mr. Hanft has a Master of Laws Degree from New York University School of Law in trade regulations, a Doctor of Jurisprudence Degree from Brooklyn Law School, and a Bachelor's Degree from American University, School of Government and Public Administration. He serves on the Board of Directors of the Legal Aid Society.

Martina Hund Mejean
Board: Senior Management Job Title: Chief Financial Officer Since: 2007 Age: 50 Ms. Hund-Mejean has been the Chief Financial Officer at MCI since 2007. Prior to joining the company, she served as Senior Vice President and Treasurer at Tyco International. Ms. Hund-Mejean joined Tyco in 2002 as part of its new management. Prior to Tyco, she was the Senior Vice President and Treasurer of Lucent Technologies. From 1988 to 2000, Ms. Hund-Mejean held a series of finance positions of increasing responsibility at General Motors Corporation, both in US and UK, including the Assistant Treasurer post. She began her corporate career as a credit analyst at Dow Chemical in Frankfurt, Germany. Ms. Hund-Mejean received a Master's degree in Economics from the University of Freiburg, Germany, and an MBA from the Darden Graduate School of Business at the University of Virginia.

Walter M Macnee
Board: Senior Management

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Key Employee Biographies

Job Title: President, International Markets Age: 56 Mr. Macnee serves as the President of International Markets at MCI. Previously, he was the President of Global Markets, with responsibility for building all aspects of MasterCard issuance and acceptance business globally. Prior to this, Mr. Macnee was President of the Americas Region. From 2001 to 2004, he was the President of MasterCard Canada, where he oversaw the company’s efforts to provide advanced, secure, and reliable payment solutions and to strengthen its position in the Canadian banking industry. Mr. Macnee has earned several university degrees, including a master’s in business administration from York University.

Chris A McWilton
Board: Senior Management Job Title: President, U.S. Markets Since: 2009 Age: 52 Mr. McWilton has been the President of U.S. Markets at MIC since 2009. Prior to joining the company, he served as the President of Global Accounts, where he managed relationships on a global basis for the Company's largest customers. Mr. McWilton is a member of the Company's Executive Committee. He joined MasterCard in 2003 as Corporate Controller and was appointed Chief Financial Officer. Mr. McWilton earned a Bachelor's degree in business administration in accounting, summa cum laude, from St. Bonaventure University and is a certified public accountant.

Robert Reeg
Board: Senior Management Job Title: President, Global Technology and Operations Age: 54 Mr. Reeg serves as the President of MasterCard Technologies at MCI. He was previously Chief Technology Officer at MasterCard Worldwide. Prior to joining the company, Mr. Reeg held IT and business leadership positions with Sprint Corp., Cleveland Pneumatic, Totco, and Conoco. He serves on the Board of Directors for MMGTS, the University of Missouri-St. Louis Leadership Council, Washington University's Professional Degree Programs Academic Advisory Board, and the United Way of Greater St. Louis' Technology Committee. In addition, Mr. Reeg is the Vice Chairman of Junior Achievement's Board of Directors. He received his Bachelor's degree from Northwestern Oklahoma State University. Mr. Reeg also served in the United States Army Reserves for eight years at the rank of captain.

Stephanie Voquer
Board: Senior Management

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Key Employee Biographies

Job Title: Chief Human Resources Officer Age: 59 Ms. Voquer serves as the Chief Human Resources Officer at MCI. She holds a Bachelor of Arts Honours graduate, summa cum laude, of McMaster University (Hamilton, Ontario). Ms. Voquer completed studies at the University of Caen (France), the University of Valencia (Spain), the International Business Management Institute in an affiliation with American Graduate School of International Management (Thunderbird) and the IBM International Personnel Institute, in collaboration with Georgetown University. She is a member of the Global Human Resources Council of The Conference Board and the Human Resources Roundtable Group.

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MasterCard Incorporated
Major Products and Services

MAJOR PRODUCTS AND SERVICES
MasterCard Incorporated (MCI) is a global payment solutions company that provides a range of services in support of the credit, debit and related payment programs of nearly 23,000 financial institutions. The company's key products and services include the following: Products: Maestro Card Cirrus Card Gold MasterCard Card MasterCard Electronic Platinum MasterCard Card Standard MasterCard Card World Debit MasterCar MasterCard PayPass Card Services: Customer relationship management Deposit access Electronic cash Credit services Transaction processing Credit and charge consumer programs Deposit access consumer programs Consulting and research services

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Revenue Analysis

REVENUE ANALYSIS
MasterCard Incorporated The company recorded revenues of $5,539 million in the financial year (FY) ended December 2010, an increase of 8.6% over FY2009. MasterCard has one reportable segment, ‘Payment Solutions.’

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SWOT Analysis

SWOT ANALYSIS
MasterCard Incorporated (MCI) is a global payment solutions company that provides a variety of services in support of the credit, debit and related payment programs of nearly 23,000 financial institutions. The company is reckoned as the second largest player in the payment industry. Its recent acquisition of DataCash Group plc strengthened its position in e-Commerce payment industry. However, increasing penetration of alternative payment systems, and regulatory challenges could affect the company’s revenue and margins in the future. Strengths World’s second largest retail electronic payments network Relatively diversified revenues lend stability to earnings visibility Acquisition of DataCash Group plc Opportunities Huge opportunity in global small business spending still untapped Long-term penetration potential of MOTAPS Weaknesses Business model susceptible to litigation MCI’s open loop system suffers from low control over cardholder service

Threats Regulatory changes limiting fee inflow Intense rivalry within the existing players Increasing penetration of alternative payment platforms could check growth

Strengths

World’s second largest retail electronic payments network MasterCard Incorporated (MCI) is the world’s second largest retail electronic payments network. MCI’s edge over its competitors excluding Visa is substantial in terms of payment volume, total volume, total transactions, and cards issued. For instance, at the end of calendar year 2009, payment volume, total volume, total transactions, and cards issued by MCI and its competitors is as follows: MasterCard ($1,852 billion, $2,454 billion, 32.1 billion, and 966 million); American Express ($613 billion, $620 billion, 5.1 billion, and 88 million); Discover ($100 billion, $109 billion, 1.7 billion, and 54 million); JCB ($75 billion, $83 billion, 0.8 billion, and 61 million); and Diners Club ($25 billion, $26 billion, 0.2 billion, and 7 million). In 2010, MCI processed 23.1 billion transactions, a 2.9% increase over the number of transactions processed in 2009. Gross dollar volume (GDV) on cards carrying the MasterCard brand as reported by its customers was approximately $2.7 trillion in 2010, a 10.7% increase in US dollar terms and a 9.1% increase in local currency terms over the GDV reported in 2009. Ownership of the world’s second largest retail electronic payments network enables MCI to benefit from both economies of scale and new customer acquisition.

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SWOT Analysis

Relatively diversified revenues lend stability to earnings visibility MCI’s revenues are relatively well diversified compared to Visa. Revenue generated in the US contributed approximately 41.6%, 42.4% and 44.1% to MCI’s net revenues in 2010, 2009, and 2008, respectively. No other country generated more than 10% of total revenues in those periods. In 2010, net revenues from MCI’s five largest customers accounted for approximately $1.5 billion, or 28% of its total revenue. No single customer generated greater than 10% of total revenue. Compared to MCI, Visa’s revenues are less diversified. Revenue generated in the US contributed approximately 58.5%, 58.2% and 58.5% to Visa’ net revenues in 2010, 2009, and 2008, respectively. Moreover, Visa’s five largest customers accounted for approximately 30%, 325, and 26% of revenues in 2010, 2009, and 2008, respectively. Relatively diversified revenues lend stability to earnings visibility. Acquisition of DataCash Group plc MCI acquired DataCash Group plc in 2010. DataCash provides e-Commerce merchants with the ability to process secure payments across the world. DataCash develops and provides outsourced electronic payments solutions, fraud prevention, alternative payment options, back-office reconciliation and solutions for merchants selling via multiple channels. DataCash also has a fraud solutions and technology platform. The acquisition of DataCash will create a long-term growth platform in the e-Commerce category while enhancing existing MasterCard payment products and expanding its global presence in the internet gateway business.

Weaknesses

Business model susceptible to litigation Card providers’ business model is highly susceptible to litigation. For instance, In the US, merchants have filed approximately 50 class action or individual suits alleging that MasterCard’s interchange fees and acceptance rules violate federal antitrust laws. In December 2009, it was widely reported in the financial press that Visa Inc and MasterCard Inc. agreed to pay out about $1.1 billion to merchants across the United States as part of an antitrust settlement. Several legal cases which are still pending in the courts could cause substantial financial damages to MasterCard and its related parties. MCI’s open loop system suffers from low control over cardholder service Operators of open-loop networks such as MCI generally do not issue cards, set fees or determine interest rates that cardholders are charged for use of their cards. Issuers have the responsibility for determining these and many other card features. In addition, such networks generally do not solicit merchants directly or establish the fees that merchants are charged for card acceptance, including the merchant discount rate. Both of these functions are generally the responsibility of acquirers. Some of its major competitors, including American Express and Discover, operate closed-loop systems. Closed-loop systems can benefit from direct access to consumer and merchant information,

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SWOT Analysis

and they tend to have greater control over cardholder service than do operators of open-loop payments networks, like Visa, which depend on their financial institution customers to provide products and services directly to the cardholder. Moreover, in recent years, the major closed-loop systems, American Express and Discover, have begun working directly with issuing and acquiring financial institutions, thus emulating certain aspects of the open-loop system, including setting transfer pricing. In effect the success of MCI 's open loop system is more dependent on the abilities of its financial institution customers to provide attractive offers to cardholders.

Opportunities

Huge opportunity in global small business spending still untapped As per industry estimates, for the vast majority of global small-business spending only cash and checks are used instead of credit cards. In fact, the US small businesses use credit/charge cards for only about 15% of their spending and that amount is likely to be even lower internationally. Moreover, the midsize companies worldwide use cards for less than 10% of their major purchases such as travel and entertainment and office supplies. As a matter of fact, out of the total global consumer spending of $28 trillion each year, only 14% is carried out on charge, credit and debit cards. The overall spending pattern, however, has been witnessing a continuous shift from cash to cards, which presents a significant opportunity for the company. Considering the fact that the company has more than a billion credit and other payment cards in circulation worldwide, it is well poised to exploit this opportunity. Long-term penetration potential of MOTAPS It is widely believed that the penetration of near field communication or NFC programs in cash less transactions will significantly increase in the years to come. In 2011, CASSIS International, the pioneer in Trusted Service Management (TSM) Services for NFC mobile devices, who securely provisioned the world’s first commercial payment accounts Over-the-Air onto mobile phones, expanded its TSM Services to support MasterCard’s Mobile Over-the-Air Provisioning Service (MOTAPS), the world’s first enabling platform for Near Field Communication (NFC) programs. Increasing adoption of MOTAPS will strengthen MCI’s leadership position in payments industry.

Threats

Regulatory changes limiting fee inflow Regulatory changes regarding interchange fees, already effected and/or likely to effected shortly, are unfavorable to payment network operators such as MasterCard, and Visa. On December 16,2010, the Federal Reserve proposed a bigger-than-expected cut in maximum interchange fees, the ‘swipe fees’ that merchants pay banks to process consumers' debit-card payments. Although the sharp reduction in debit-interchange fees may not hurt MasterCard, and Visa directly, it could reduce their

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revenue over time after the new rules are issued by July 2011, 2011. Debit-card usage could fall as banks seek pricing concessions from the card companies to compensate for lower interchange fees. Although MasterCard and Visa do not keep any of the interchange fees for themselves, they do charge banks a processing fee for debit transactions routed through their payment networks. Banks, however, may compensate for the reduced interchange fee revenues by charging consumers higher fees for using debit cards, which could reduce activity, and by seeking to renegotiate contracts with the card companies to lower processing fees. Consequently, companies such as MasterCard, and Visa may either have to concede to banks’ requests or have to settle for lower debit card transaction volumes, either of which is detrimental to them. Intense rivalry within the existing players The market for electronic commerce and payment solutions is intensely competitive with huge number of players. Moreover, the competition has been increasing due to the consolidation in the financial services industry and the increasing efforts by companies to move payment processing services in-house. Consolidation in the industry can create stronger customers with more bargaining power and the ability to handle the processing services in-house.This has resulted in the company competing with divisions of large banks, apart from the core payment processing service providers. The company's competitors include American Express, CyberSource, Discover, Fidelity National Information Services, Fiserv, First Data Corporation, Total System Services and Visa. Further, the trend of moving the processing services in-house has increased in recent years. Increasing capabilities of financial services providers to handle payment processing may affect the growth and profitability of the companies providing these services. Intense competition in the industry may impact the company's market share and operations. Increasing penetration of alternative payment platforms could check growth Penetration of alternative payment platforms has been gaining popularity in the recent years. These alternative payment platforms include aggregators (such as PayPal), wireless payment technologies (including using mobile telephone networks to carry out transactions), prepaid systems and systems linked to payment cards, and bank transfer models. New technologies, together with the portability provided by smartphones and tablets and evolving consumer behavior with social networking, are rapidly changing the way people interact with each other and transact business all around the world. In this connection, traditional and non-traditional competitors such as mobile telecommunications companies are working to deliver digital and mobile payment services for both consumers and merchants. Increasing penetration of alternative payment platforms makes it difficult for the company to sustain/increase market share.

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Top Competitors

TOP COMPETITORS

The following companies are the major competitors of MasterCard Incorporated

American Express Company MBNA Corporation Visa International First Data Corporation Citigroup Inc. Interac Inc.

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Company View

COMPANY VIEW
A statement by Ajay Banga, President and Chief Executive Officer of MasterCard is given below. The statement has been taken from the company's 2010 annual report. Dear Fellow Shareholders: Since taking on the position of president and CEO, I’m often asked what I like best about MasterCard. The answer is simple. I’m excited about the way our products and solutions benefit people and businesses all around the world — and the integral part we play in people’s daily lives. The fact is that whether you’re a young, urban professional working in London, a retired teacher living in Bangkok, or a government seeking greater efficiency, our products and solutions make life easier for you. They offer greater convenience, security and efficiency than cash or checks ever could. What we do as a company allows us to play a central role in facilitating global commerce and all of its positive aspects. A Strong Year When I look back on 2010, I see a year in which we made great progress in strengthening our company and our position in the marketplace. I thank our employees for this. Due to their commitment — and the support of customers, merchants, partners and our cardholders — 2010 was another strong year for our company. We posted solid gains in key financial metrics. At the same time, we expanded our presence in new areas and formed mutually beneficial relationships with financial institutions, merchants, government agencies, transit authorities and telecom companies. This included acquisitions and business partnerships that support our strategy to grow, diversify and build our business. One example is our acquisition of DataCash Group. This strategic move extends our e-commerce merchant gateway capabilities from Asia and Australia to European countries and other markets worldwide. Another example is our agreement to purchase the prepaid program management business of Travelex. This transaction will enable MasterCard to play a greater role in shaping the future of prepaid, especially in high-growth markets and in the attractive cross-border payments space. As we look to the future, our biggest growth opportunity lies in replacing cash and checks. That’s where electronic payments — and MasterCard — offer a huge advantage.The MasterCard Advantage: Putting Insights to Work at an Exciting Time Today, nearly 60 percent of our revenue comes from outside the United States. Given global trends, we think that figure will only increase in the coming years, making this an exciting time to be in the payments industry. For example, over the next decade, there will be 300 million new middle class and affluent consumers, 80% of whom will come from emerging markets. This presents a world of opportunity for us to further penetrate this segment.(1) Another example is the growing influence and purchasing power of the youth market. More than half of the world’s population is under the age of 29. And, one in every five dollars — or $6.4 trillion annually — is spent by youth. Growing urbanization is yet another interesting trend. The World Bank estimates that approximately one million people a week move from rural homes into cities, putting more people within reach of financial services and electronic payments. And, in countries like India and Russia, governments are increasingly prioritizing financial inclusion within their strategies to

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Company View

ensure future sustainable growth. These trends are promising for the global economy and for our future growth prospects. Our insights into these and other areas help us create solutions that make it easier for people everywhere to shop, travel, run a business or manage their finances. Of course, in addition to tracking trends, we actively monitor legal and regulatory matters that may affect our business. In the U.S., for example, we are working with policymakers, the financial services industry and community groups, seeking to address the harm the proposed regulations on debit card interchange fees will have on consumers, small businesses, community banks and credit unions. We’ll continue to work with all stakeholders to help them understand the many benefits electronic payments bring to people around the world. The MasterCard Advantage: Replacing Cash and Checks Cash and check transactions continue to account for an astonishing 85 percent of the world’s $15.7 trillion of total global payment transactions.(2) Hard as it is to believe, even in so-called “mature” payments markets, such as the U.S. and Western Europe, more than half of personal consumption expenditure is in paper form. Consider the cost of cash. Cash is expensive for governments to print, transport, distribute and secure. Its presence reduces the transparency of an economy and can even impact tax revenues. Is it any wonder that cash is most predominant in “informal” economies and “black markets”? Moving to electronic payments is just plain smart. The benefits of electronic payments far outweigh those of cash. Beyond the obvious advantages of speed, convenience and guaranteed payment, electronic payments offer a host of advantages that cash can’t touch, including security and transparency for everyone.The MasterCard Advantage: A Range of Payment Solutions In all markets, we’re aggressively seizing opportunities to curtail the use of cash and checks and meet consumers’ unique needs. One way we’re doing this is through our portfolio of debit products, including Maestro. Our debit solutions are aimed at meeting payment needs based on local market requirements. And, they can be used with some of our most innovative payment methods, including Tap & Go, reloadable prepaid and payroll cards. We’re also well positioned in the commercial space, an area that is fast-growing. By 2015, the commercial segment is expected to equate to $1.7 trillion globally. And, this segment is not very developed outside of the United States and parts of Europe.(3) We’re poised to seize that opportunity. We already have one of the largest commercial payroll programs in place with Walmart, and we currently capture approximately 60 percent of U.S. public-sector volume. Our commercial prepaid cards include everything from payroll to employee benefits to government social benefit programs. These programs are benefiting people in numerous countries, including Italy, Peru, Russia, China and the U.S. I believe the benefits of prepaid will continue to drive demand, as total global volume on open-loop prepaid cards is predicted to reach nearly $840 billion by 2017, according to a study we commissioned last year. We’re also seeing significant opportunities in e-commerce and mobile. That’s why we’re forging strategic partnerships in this space and developing the infrastructure needed to drive the migration to e-commerce and mobile payments. Global e-commerce sales are projected to reach more than $1 trillion in 2011.(4) And, since cash is useless when shopping online, consumers really appreciate the convenience of electronic payments. We’re already leading the way through various merchant and other partnerships, which make it easier for consumers to shop online. Examples include our partnerships with NextJump for MasterCard Marketplace and with Borderlinx for cross-border, online shopping. Also, we’re actively engaged in the mobile arena. Worldwide, there are more than four billion people with a mobile phone, yet only 1.5 billion people with a payment card.(5) In Vietnam alone, the mobile market exceeded the 120

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Company View

million subscriber mark last year — that’s equivalent to a mobile penetration rate of 134 percent. In telling contrast, the banked population in Vietnam is estimated at only 15 percent. Our successes with mobile are gaining attention. We were recently honored — along with airtel Africa and Standard Chartered Bank — for mobile payments innovation at the 16th Annual Global Mobile Awards held during Mobile World Congress 2011. Our jointly developed virtual card product received top honors as the Best Mobile Money Product or Solution. In addition, we also announced plans to launch our Open Application Programming Interface (API) from MasterCard Labs, our global research and development arm. This will allow us to tap into the ingenuity and creativity of software developers across the globe as we create the next generation of payment applications. The MasterCard Advantage: Our People In any organization, employees are key to driving results. In that regard, we’re extremely fortunate. In addition to their knowledge and expertise, our workforce continually demonstrates a passion for developing new solutions, dedication to excellence in all they do and strength of character, all of which help distinguish MasterCard. In 2010, we saw one of MasterCard’s most respected leaders retire, former president and CEO Bob Selander. Bob’s legacy of bold and visionary leadership will remain a compelling chapter in MasterCard history. His contributions were many and varied and include taking the company public in 2006. On behalf of the entire MasterCard family, I wish Bob the very best and thank him for his stewardship. As a company, we’re keenly focused on innovation, and we believe that diversity sits at the root of innovation. Diversity of culture, experience and thought all drive innovative thinking. Our employees are encouraged to express their diverse opinions, engage in healthy debate and candidly share their experiences and ideas. I want our people to feel empowered and to recognize that their contributions make a difference. Their expertise and experience help us develop innovative, market-specific payment solutions that deliver value to people everywhere. And, I know our employees are passionate about this. Of course, innovation also requires a tolerance for failure. That’s why our leaders are focused on supporting a culture that encourages collaboration and the sharing of lessons learned. Strong leadership is critical to our future — not just at the executive level, but throughout MasterCard. I believe that part of a manager’s role is to drive change, give people hope and inspire them to do things they wouldn’t otherwise do. I want all of our employees to have the conviction and courage to take on difficult tasks while maintaining accountability — and a healthy dose of competitive paranoia. That latter point is something that can’t be ignored. In fact, over the last year or so, our internal mantra has been “Competing to Win.” Everyone is behind it. We’re well aware that technology is driving shorter product life cycles and reducing barriers to entry for others. That’s why we’re staying on top of our game and keeping a watchful eye on our competitors, both traditional and emerging. Looking Ahead In summary, I’m thrilled about what we achieved in 2010 and enthused about what tomorrow will bring. Our business is growing, our bottom line is strong and our global resources — both financial and intellectual — are formidable. Each day, we put our advantages to work. We’re in the enviable position of being able to draw upon our assets to make the most of opportunities and trends shaping the industry. More importantly, by bringing together the best people, insights and innovations, we’ll continue to create meaningful solutions that benefit consumers, businesses and governments all

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Company View

around the world. That’s what being at the heart of commerce is all about — and that’s why I’m excited to be part of this great company.

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Locations and Subsidiaries

LOCATIONS AND SUBSIDIARIES
Head Office
MasterCard Incorporated 2000 Purchase Street Purchase New York 10577 USA P:1 914 249 6524 http://www.mastercard.com

Other Locations and Subsidiaries
MasterCard International Far East Ltd. Delware USA MasterCard Netherlands B.V. NLD MasterCard Singapore Ltd. Delware USA MasterCard International Services, Inc. Delware GBR MasterCard Hong Kong Ltd. Delware USA MasterCard Africa, Inc. Delware USA Eurocard Limited GBR

MasterCard Japan K.K. JPN

MasterCard Europe Sprl BEL

Maestro International Incorporated Delware USA

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