Mastercard Sixty Years: How a Group of Banks Built a Global Payment Network

Author: Stablehunter, Yokiiiya

A friend who works at Mastercard recommended a book to me titled "Payments Systems in the U.S.: A Guide for the Payments Professional." He said, Visa and Mastercard, more than business.

What we are most familiar with are the two logos on bank cards: the blue lettering of Visa and the red-yellow circles of Mastercard. They appear in similar consumer scenarios and compete for the same banks and customers, but if we only understand their relationship as a business competition between two companies, we will miss many stories.

The two networks once had common member banks and participated in establishing common technical standards. Banks needed them and negotiated terms with them; they competed with each other while having common interests in security and interoperability. Mastercard and Visa started from different points; Mastercard grew from an association established by a group of banks into a global company with its own brand.

1966---1978: Banks Unite, Networks Begin to Go Overseas

The story of Visa begins with a product from a single bank, while the story of Mastercard begins with multiple banks deciding to unite. In 1958, Bank of America launched BankAmericard in California. By 1966, it began authorizing other banks in the U.S. and overseas, allowing more banks to join this system.

In the same year, another group of banks established the Interbank Card Association, abbreviated as ICA, which is the predecessor of Mastercard. From its inception, it adopted a governance model where member banks jointly managed it, without being dominated by any single bank.

At that time, other banks could choose to join the BankAmericard system, which later developed into Visa, or they could unite to create another network. Mastercard was the result of the latter choice.

For ICA, the first cooperation issue to resolve was how a card could cross the boundaries between banks. For a single bank, issuing a card and ensuring that card could be used everywhere are two completely different challenges.

Banks know their customers, can assess their credit, and decide how much to lend them. But customers travel to other cities and enter stores serviced by other banks. Will merchants accept this card? How do they know the transaction has been approved? After selling goods, how do they receive payment? In case of disputes, who handles them?

If every two banks negotiate separately, the relationships will quickly become too complex to maintain. The value of a common network thus emerged: participants accept a set of rules, transmit transaction information through a common system, and complete clearing and settlement arrangements between institutions. In Mastercard's sixtieth anniversary review, this shared system is also seen as a core task at the company's founding.

Banks give up part of their independence in deciding how products operate in exchange for a broader usage of the card, and there is a direct revenue motivation behind this exchange. Credit cards allow banks to offer loans to consumers outside their original geographical operating range; banks can establish customer relationships through a credit card without waiting for the other party to open a deposit account. An expanded acceptance range means banks have the opportunity to reach more borrowers and expand their consumer credit business.

This also influenced who had more say within the association. In the era when both networks were jointly owned and managed by member banks, issuing cards was more profitable than acquiring them, and issuing institutions often dominated the voices in important committees and boards.

This was the earliest exchange in the payment network: banks were willing to accept common rules because these rules helped them expand their business. Participants in the joint network did not naturally possess the same influence.

Two years after ICA was established, it began seeking cooperation outside the U.S. In 1968, it established connections with Banco Nacional in Mexico, allied with Eurocard in Europe, and Japan's first members also joined that year.

When entering Europe, ICA found cooperation with the existing card organization Eurocard, as European banks already had their own customers and partner merchants. By connecting the networks, both could allow their cards to be used in more places. For ICA, this also meant it could leverage existing banking relationships to expand its business.

By 1970, BankAmericard transitioned into an independent company and subsequently adopted the Visa brand in 1976. At this time, Mastercard's predecessor was still using the name Master Charge.

For Mastercard, the system initially established by several American banks began to connect more banks and merchants in other countries through overseas partners.

1979---1990: Renamed Mastercard, Expanding the Network

In 1979, Master Charge was officially renamed Mastercard, and as the business entered more countries, this unified brand appeared on cards issued by more banks.

In the 1980s, the company continued to expand its product range. The Gold Mastercard launched in 1983 targeted customers with higher spending power, allowing banks to offer different card products to different customers on the same network.

During the same period, Mastercard was also expanding what bank cards could do. In the late 1980s, it acquired the Cirrus ATM network, incorporating interbank cash withdrawal into its business scope.

Buying goods and withdrawing cash are two different needs for cardholders. After connecting to the ATM network, the use of bank cards further extended: when out and about, in addition to paying in stores, users could also withdraw cash through ATMs connected to the network.

During this phase, Mastercard was expanding two types of connections: connecting more banks in different countries and connecting more card usage scenarios. Next, when banks wanted customers to directly use the money in their deposit accounts for payments, debit cards became a new growth opportunity.

1991---2001: Entering Everyday Consumption, Competing and Cooperating with Visa

In 1991, Maestro was launched.

Entering the 1990s, the network began to expand into more everyday payment scenarios. Credit cards were just one entry point, ATM networks connected cash withdrawal needs, and debit cards connected bank deposit accounts. The launch of Maestro in 1991 was an important step for Mastercard in expanding debit payments.

However, banks that were already network members did not necessarily adopt its new products smoothly. Visa and Mastercard wanted banks to issue their debit cards, so they approached the credit card managers they had previously worked with. It turned out that the credit cards were managed by this department, while savings accounts, ATMs, and bank branches were managed by another department. Familiar faces could not make the decision.

The department managing savings accounts was already promoting its own PIN-based debit cards and had to consider how much money its business could earn and how much cost it would incur. Now switching to a new product meant renegotiating who would be responsible and how revenue would be calculated. It took banks several years to sort out these relationships and gradually see that, in the U.S. market at that time, Visa and Mastercard's debit card products could bring more attractive returns to banks.

This also indicated that for Mastercard to grow its business, it first needed to get banks to adopt its products and find the departments within banks that could truly make decisions.

In 1997, Priceless began reaching consumers.

Getting banks to issue Mastercard cards was just the first step. Once the cards were in consumers' hands, whether they would be used for payments was another question.

A person might have several cards in their wallet. Some have more rewards, some have better discounts, and some are just used out of habit. For Mastercard, securing card issuance partnerships with banks did not equate to securing every future transaction from cardholders.

In 1997, Mastercard launched the Priceless advertising campaign. The earliest ad featured a father taking his child to a baseball game: buying tickets and food costs money, but the time spent together cannot be measured by price. Mastercard placed its brand into a relatable life scenario for ordinary people.

The first Priceless ad in 1997: having a good conversation with a child, priceless.

The connection this campaign aimed to establish was: when you spend money on the people and things you care about, Mastercard can be there with you. It gave the red-yellow circles on the bank card a memorable story.

From a business perspective, Mastercard had to appeal to both sides. Banks decided what cards to issue, and cardholders decided which card to use. Brand advertising was one way for it to directly influence cardholders.

On a card, the bank's name and Mastercard's logo are placed together, but behind them are their respective business goals. Banks hope customers continue to use their products, while Mastercard hopes consumers can recognize and choose its brand among cards issued by different banks. Both sides need to cooperate while each hopes to establish a deeper connection with consumers.

From 1998 to 2001, competition, cooperation, and legal entanglements with Visa unfolded simultaneously.

Visa and Mastercard are not two distinctly separate camps. During the years they operated as bank associations, there were common member banks and overlapping economic interests and governance relationships. A single bank could benefit from both networks.

The operational rules of the two networks have historically been very similar, partly because many banks simultaneously belonged to both associations and issued cards under both brands. These banks hoped the rules would be as consistent as possible to reduce the complexity of managing two sets of products.

This added another layer to the relationship between the two companies: the customers they sought were once common owners. While the networks needed to compete, banks hoped that the two systems would not impose too many different requirements on them.

In 1998, the U.S. Department of Justice sued Visa and Mastercard, challenging this dual governance arrangement and the exclusive rules that restricted member banks from cooperating with other card networks.

In terms of security and compatibility, both networks have common needs. Cards and terminals from different countries need to be compatible, and security technologies require a common foundation. Europay, Mastercard, and Visa participated in the development of the initial EMV specifications, and EMVCo was established in 1999 to manage related specifications and interoperability work.

From a business perspective, this cooperation makes sense. Banks can choose between card organizations, but merchants find it difficult to bear the burden of each brand requiring a completely different set of acceptance devices.

Common standards reduce the difficulty of access. After that, who banks hand the projects to, which card consumers use, and which company's services customers purchase remain competitive, with each transaction network operating independently.

In 2001, the court ruled that the exclusive rules restricting member banks from issuing cards from other networks were illegal. This ruling targeted exclusive restrictions and did not categorically deem overlapping membership or all cooperation between the two companies illegal.

Over the years, the two companies have advanced technical standards while facing legal challenges brought by exclusive rules. How to achieve technical compatibility and who is allowed to participate commercially are two separate issues that need to be addressed.

2002---2008: From Banking Associations to Public Companies

In 2002, Mastercard merged with Europay International and transitioned from a member association to a private stock company. In 2006, it went public on the New York Stock Exchange under the stock ticker MA.

The merger with Europay brought Mastercard's cooperation with European banks more closely under one company. Previously, Mastercard was an association jointly established and managed by banks, primarily serving member banks. After going public, it had public shareholders. These shareholders are concerned about how much money the company makes, whether profits can be improved, and where the next business opportunities lie.

Original member banks could convert their partial equity into cash through the IPO. The board of directors was no longer primarily managed by representatives of member banks. Banks remained important clients, but when Mastercard made decisions, it also had to consider the interests of the company and other shareholders. This restructuring also involved how potential litigation and antitrust liabilities would be borne, not just for financing purposes.

Visa subsequently went public in 2008, and both companies began to pursue their growth more clearly, adjusting their products, fees, and rules. For merchants accepting both cards, this meant that the requirements for the two sets could become increasingly different, requiring separate adaptations.

In my view, this marks a critical turning point in Mastercard's history, as it began to decide how to develop on its own and needed to reconsider how to keep banks willing to cooperate while also making more money for the company.

To understand this business, one must also look at where the swipe fees ultimately go. After a customer swipes a card, the merchant typically has to pay a fee. This money is shared among several participants, with a portion called "interchange fees," usually paid by the institution that helps the merchant collect payments to the bank that issued the card to the customer. Mastercard processes this money through the settlement process, but it does not count this money as its own revenue. What it earns primarily comes from fees for providing payment networks, transaction processing, and other services.

Although interchange fees do not belong to Mastercard, issuing banks care about this revenue. When banks can choose between different card organizations, they consider which card is more cost-effective to issue. If one card can bring better returns, banks may be more willing to issue and promote it, and Mastercard may also seek to win over large banks for card issuance through fee discounts and service support.

Thus, the rules set by Mastercard not only affect how much it earns but also influence how much banks earn and which cards they are willing to promote. However, these fees also factor into the merchant's cost of accepting payments, and arrangements that banks find attractive may be seen as too expensive by merchants.

A single rule, or even one clause, can change who earns a little more and who pays a little more in a business transaction. Mastercard needs to coordinate these different interests to ensure banks are willing to issue cards and merchants are willing to continue accepting them.

2009---2016: From Card Payments to Mobile Payments

Consumer shopping habits began to change. In physical stores, merchants can see customers and cards; on websites and mobile devices, how to reduce the hassle of filling out information, confirm the payer's identity, and protect card numbers became new issues.

In 2010, Mastercard acquired DataCash to expand its e-commerce payment services. It aimed to help merchants connect to online payments and provide more processing capabilities before and after transactions enter the network.

In 2013, Mastercard launched Masterpass. Consumers can save payment and delivery information and check out on websites or apps that support this service, reducing the steps of repeatedly entering information. Mastercard began to participate more directly in the online checkout experience.

In 2014, Apple Pay was launched, and Mastercard, along with Visa and American Express, became one of the first supported card networks. Mastercard's digital service MDES also participated, allowing bank cards to be securely integrated into mobile payment scenarios.

One key technology is payment tokens. Simply put, a digital identifier can be used in place of the real card number during payment, with restrictions on its usage. Consumers see the card in their mobile devices, but verification and transaction processing still require collaboration between banks, card networks, and mobile wallets.

Users may increasingly carry fewer plastic cards, or even stop noticing the logos on their bank cards, but payments may still go through the original card networks. Mastercard needs to adapt to new payment entry points and has opportunities to provide security and connectivity services for these entry points.

By 2016, Mastercard had already partnered with wallets like Apple Pay, Android Pay, and Samsung Pay, while continuing to develop Masterpass. It was both creating its own products and supporting other companies' wallets.

New participants also prompted networks to adjust their rules. The two networks established rules clarifying how PayPal and similar companies could use bank cards for business. With more payment entry points, networks needed to decide how to bring these companies in and what rules to follow for collaboration.

During this phase, Mastercard needed to keep up with the changes from cards to websites, apps, and mobile devices. It had new platforms for interaction with consumers and increasingly important dealings with partners outside of banks.

2017---2022: From Bank Cards to Account Payments and Financial Data

After going public, Mastercard continued to seek new business opportunities, one direction being to expand its service scope beyond bank cards.

In 2017, it acquired a majority stake in Vocalink, expanding its account payment infrastructure business. Beyond card consumption, the systems required for transfers between bank accounts also became part of its business.

In 2020, it completed the acquisition of Finicity, enhancing its financial data connectivity and open banking capabilities, this time expanding its services to help clients connect and use financial data.

In 2021, Mastercard completed the acquisition of most of Nets' Corporate Services business, increasing capabilities in inter-account payments, real-time payment infrastructure, bill payments, and electronic invoicing.

Looking at these transactions together, Mastercard's business began to cover more payment methods that do not rely on card swiping and extended into financial data services. When banks, businesses, and other payment institutions need to transfer funds, connect accounts, or use data, it hopes to participate in those processes as well.

At this stage, "card network" is no longer sufficient to encompass its entire business scope. However, whether these acquisitions can translate into long-term revenue still depends on whether customers are willing to continue using these products.

2023---2025: Launch of China's Clearing Business and Continued Service Expansion

An international brand card being usable for cross-border consumption is a different business condition from an institution being authorized to conduct domestic bank card clearing in China. Mastercard and the joint venture company established with the National Network, Wan Shi Wang Lian, obtained a bank card clearing business license in 2023, starting domestic operations in May 2024.

This marks an important milestone in its development history. For a global network to enter a market, it still requires local institutional permissions, bank cooperation, and actual access. The logos on bank cards may be the same, but the implementation process must be completed one country and one institution at a time.

The significance of this milestone lies in the fact that an international network operating for decades still needs local cooperation to enter a new type of business. The brand and technology accumulated in other markets do not automatically replace this process.

During the same period, Mastercard was also expanding another type of capability. By the end of 2024, it completed the acquisition of Recorded Future, enhancing its threat intelligence and cybersecurity services.

From account payments and financial data connectivity to threat intelligence, these transactions expanded the services the company could provide. They point to a common business intent: when clients need to connect accounts, use financial data, assess risks, and protect systems, Mastercard hopes to provide those services as well.

It is attempting to broaden the answer to "why customers need me." Transactions processed through card networks are one answer; solving problems surrounding payments for customers is another set of answers.

While expanding these new businesses, Mastercard also needs to continue managing its original bank card business. When banks launch new cards or replace old ones, whether they continue to choose its network is crucial for retaining existing customers and transactions.

In 2025, a round of card replacements in the Netherlands will illustrate how this cooperation continues.

Local banks are replacing Mastercard's Maestro debit cards with the Debit Mastercard, which is also part of this system. By the end of 2025, Mastercard and local banks jointly announced the progress of the card replacement. For cardholders, it means the bank sent a new card; for Mastercard, it signifies that banks continue to use its network when updating products.

This also highlights the role of banks in this business. Most people choose a bank first when applying for a card and then select from the cards offered by that bank. When a bank decides which network a particular card will use, Mastercard has the opportunity to enter the customer's wallet along with that card. A bank can offer both Visa and Mastercard, but which network a specific product uses is usually arranged by the bank.

For example, a bank with many customers may choose to issue a particular debit card using Mastercard's network. When customers open accounts, receive cards, and make daily payments, Mastercard has the opportunity to enter their lives through that bank. It does not need to persuade each individual to choose it first.

This is why the choices made by banks in the past have influenced the later development of Mastercard. Over time, as the partnership grew, banks had already integrated the systems, accumulated experience in card issuance and transaction processing, and customers had already obtained a batch of cards. Changing networks would involve system adjustments, card replacements, and customer notifications, which are costs that banks need to consider. Of course, if another network offers more suitable conditions, banks may also switch partners.

Go global, first go local

Mastercard spent decades connecting banks and merchants from different countries into the same network. However, global network coverage does not mean that entering a country automatically leads to successful business.

In China, it needs to collaborate with the National Internet Finance Association and obtain domestic clearing licenses to launch new businesses. In the Netherlands, its existing bank partnerships continue with the transition from Maestro to Debit Mastercard. One is about entering the market, and the other is about retaining the market, both of which rely on the choices of local institutions.

Consumers see the red and yellow circles on their bank cards, but Mastercard faces different issues in each market: Why are banks willing to issue its cards? Why are merchants willing to accept them? What businesses are regulators allowing it to conduct? These questions are difficult to resolve solely with a globally unified brand and technology.

This also explains why Visa and Mastercard have different standings in different countries. Who established partnerships with local banks earlier, whose products are more suited to local needs, and who can maintain ongoing collaborations all influence today's market landscape. Local card organizations and consumer payment habits also affect the development space for both companies.

Figure: The data represents the estimated share of spending by card organizations in 2023, including online and offline consumer payments to merchants, excluding ATMs; it does not represent card issuance volume or the share of all payment methods. The gray area represents other card organizations, including rounding differences. Examples from some countries, not a complete global ranking.

For Mastercard, the value of a global network is to allow a card to be used in more places; the value of local partnerships is to encourage local banks to issue that card and for merchants to accept it. Each time it enters a market, it needs to reconnect these two aspects.

Mastercard's sixty years began with a group of banks deciding to build a network together. Later, it developed its own brand, became a publicly traded company, and expanded its business into mobile payments, account transfers, and security services. But no matter where it goes, it always needs to answer the same question: Why are local banks, merchants, and partners willing to choose it?

Its relationship with Visa runs throughout this narrative. Both companies compete for the same group of customers, hoping more transactions go through their networks; however, for a card to be used across banks and borders, everyone needs to adhere to common technical and security standards. They compete for business, but jointly maintain the foundation that allows business to occur.

Looking back at what a friend said, "Visa and Mastercard, more than business," adds another layer of meaning. What we are familiar with are the blue letters and the red and yellow circles, but behind them is decades of changing competition, cooperation, and interests. The history of the two companies is also a story of how a bank card connects the world.