What Is Mastercard?

Mastercard is one of the four largest processing networks in the US, providing technology to facilitate electronic payments between consumers, businesses, and organizations.

In addition, Mastercard also offers payment products such as credit and debit cards that financial institutions can offer to consumers and businesses. Many people know Mastercard only as a company with a recognizable credit and debit card logo.

However, the payment network plays an important role in the credit and debit cards that are offered, as companies can accept credit cards and complete transactions. Learn more about what the company is, how it works, and what it offers.

Definition and examples of Mastercard

Mastercard is a global payment technology company that provides a platform for consumers, businesses, and organizations to make electronic payments.

Its payment processing network also offers credit, debit, business and prepaid cards. Mastercard works with more than 150 currencies and in more than 210 countries and territories.

Mastercard businesses depend in part on consumer spending and consumers choosing electronic payments over cash and check transactions.

One of its main sources of income comes from the processing fees charged to companies that accept transactions made with Mastercard cards, including Maestro and Cirrus.

Mastercard authorizes, clears, and settles payment transactions made with a variety of credit cards, including Citi Double Cash, Chase Freedom Flex, and Capital One Walmart Rewards Card. You can easily identify Mastercard credit and debit cards by the Mastercard logo on the front or back of a card.

The 16-digit card number on the front of Mastercard credit cards begins with a 5 or a 2.

How does Mastercard work?

Mastercard offers various types of payment products to financial institutions such as banks and credit card issuers. The financial institution does the job of qualifying and approving account holders, collecting deposits or payments, and setting prices.

Once approved, consumers can use these products to shop with companies authorized to accept electronic payments.

Transaction processing

Mastercard's core network routes payment transactions and facilitates the exchange of information necessary to complete a payment transaction. Most transactions involve four main players: the account holder, the card issuer, the merchant, and the acquirer (the merchant's bank).

The consumer makes a purchase in a company

The card issuer authorizes the transaction, pays the acquirer the transaction amount minus an interchange fee, and posts the transaction to the cardholder's account. The acquirer pays the merchant the purchase amount minus the discount fee.

"Exchange" is a fee charged to merchants to cover processing costs. The discount rate is the fee paid to the acquirer to cover its transaction processing costs and the provision of business services.

Merchant Rules

Merchants who accept Mastercard payment cards must accept all Mastercard cards. They may request, but cannot require customers to provide identification, unless it is necessary to complete the transaction, for example to verify a shipping address. Merchants also cannot impose minimum and maximum transaction amounts.

Types of Mastercard products

Mastercard offers several products that banks, in turn, can offer to consumers.

Consumer credit

With Mastercard's consumer credit products, credit card issuers can allow consumers to make purchases and defer payment.

With Mastercard benefit offerings, card issuers can customize credit card products for different consumer segments. The major credit card issuers offering Mastercard credit cards include Capital One, Chase, and Citi.

Consumer debt

Mastercard consumer debit products allow consumers to access funds in their bank accounts. Some programs also allow consumers to make purchases and receive cash from a bank branch, ATM, or point of sale.

Prepaid cards

With prepaid cards, consumers can prepay their purchases without a bank account or credit history. Mastercard's prepaid program allows businesses and organizations to offer cards for a variety of use cases: pay bills, send payments

Commercial credit and debit

Mastercard's business credit and debit products are designed for businesses of all sizes and government agencies to streamline payments, manage information and expenses, and reduce administrative costs.

Loyalty and rewards

Card issuers can use the Mastercard rewards platform to provide benefits and services to cardholders. Benefits may include access to global airline lounges, concierge services, insurance services, emergency card replacement, and emergency cash advances.

Mastercard benefit levels

Within its loyalty and rewards program, Mastercard offers three levels of benefits: Standard, World and World Elite. Each level offers benefits that build on the previous level.

Other benefits may include overdue baggage reimbursement, extended warranty, lost / damaged baggage reimbursement, and protections including car rental cell phones, trip cancellations and delays.

While Mastercard may offer these benefits for card issuers to include in their programs, not all card issuers offer all of the benefits.

If you're buying a credit card, choose your card based on the card issuer and the credit card's rewards, benefits, and prices, not the card's network.

We hope you enjoy watching this video about What Is Mastercard?

Source: Alux.com

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