MasterCard

2006-05-20T04:58:00.000-07:00

MasterCard Incorporated is a membership organization owned by the 25,000 financial institutions that issue its card. MasterCard is also the company's brand of credit cards.

It was originally created by United California Bank, Wells Fargo, Crocker Bank, and the Bank of California as a competitor to the BankAmericard issued by Bank of America. BankAmericard is now the VISA credit card, issued by Visa International.

The name Master Charge was licensed by these California banks from the First National Bank of Louisville, Kentucky in 1967. With the help of New York's Marine Midland Bank (now HSBC Bank USA), these banks joined with the Interbank Card Association (ICA) to create "Master Charge: The Interbank Card".

In 1979, "Master Charge: The Interbank Card" was renamed "MasterCard".

Based on an SEC filing in early 2005, MasterCard's largest current shareholders are:

JPMorgan Chase - 11.8%
Citigroup - 6.2%
Bank of America - 6%
Euro Kartensysteme - 5.2%
Europay France - 5.0%

The company plans to convert from a cooperative organization to a for-profit company with an initial public offering in the second quarter of 2006.

Litigation

Both MasterCard and Visa have paid approximately $3 billion in damages resulting from a class-action lawsuit filed by Hagens Berman in January, 1996. The litigation cites several retail giants as plaintiffs, including Wal-Mart, Sears Roebuck & Company, and Safeway.

MasterCard board of directors

As of December 2004, the following banks are represented on MasterCard's board of directors:

Europay España, S.A.
HSBC
Clarima Banca
Capital One
Banamex (Citigroup's Mexican division)
Citigroup
The Royal Bank Of Scotland
MBNA America
Westpac Banking Corporation
Southern Bank Berhad
Bank of Montreal
Banque Fédérative du Crédit Mutuel
Deutscher Sparkassen-und Giroverband
Orient Corporation

In January, 2005, Washington Mutual Bank, the third largest issuer of debit cards in the United States, announced that it was changing its debit-card branding from VISA to MasterCard. The change will make Washington Mutual MasterCard's largest bank customer.

PayPass

MasterCard PayPass is a new "contactless" payment feature based on the ISO 14443 standard that provides cardholders with a simpler way to pay by tapping a payment card or other payment device, such as a phone or key fob, on a point-of-sale terminal reader rather than swiping or inserting a card.

In 2003, MasterCard concluded a nine-month PayPass market trial in Orlando, Florida, with JPMorgan Chase, Citibank, and MBNA. More than 16,000 cardholders and more than 60 retailer locations participated in the market trial. In addition, MasterCard worked with Nokia, AT&T Wireless, and JPMorgan Chase to incorporate MasterCard PayPass into mobile phones in Dallas, Texas.

In 2005, MasterCard began to roll out PayPass in certain markets. As of April 2006, the following financial institutions have issued the MasterCard PayPass:

MBNA
JPMorgan Chase (available through its "blink" contactless feature)
Citibank (both MasterCard credit and debit cards)
HSBC Bank USA (debit card only)
Key Bank (debit card only)
Citizens Bank (debit card only)
Commonwealth Bank (Australia)