Businessweek

MasterCard Incorporated operates as a technology company in the global payments industry that connects consumers, financial institutions, merchants, governments and businesses worldwide, enabling them to use electronic forms of payment instead of cash and checks. Payment Services and Solutions The company provides transaction processing and other payment-related services, as well as a range of payment solutions to enable its customers to design, package and implement products and programs targeted to the specific needs of their customers. The company works with customers to provide customized solutions, as well as general solutions. The company’s payment solutions are built upon its expertise in payment programs, product development, payment processing technology, loyalty and rewards solutions, payment security, consulting and information services and marketing. The company also manages and promotes its brands for the benefit of all customers through advertising, promotional and interactive programs and sponsorship initiatives. The company offers a range of payment solutions that enable the development and implementation of credit, debit, prepaid, commercial and related payment programs and solutions for consumers and merchants. Transaction Processing on the MasterCard Worldwide Network The company operates the MasterCard Worldwide Network, its 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 various merchants worldwide. The company processes transactions through its network for financial institutions and other entities that are its customers, in approximately 150 currencies in approximately 210 countries and territories. It processes payment transactions over the MasterCard Worldwide Network and provides support services to its customers and others. Typical Transaction: A typical transaction processed over the MasterCard Worldwide Network involves four participants in addition to the company, such as cardholder, merchant, issuer (the cardholder's financial institution) and acquirer (the merchant's financial institution). Processing Capabilities Transaction Switching - Authorization, Clearing and Settlement. The company provides transaction switching (authorization, clearing and settlement) through the MasterCard Worldwide Network. Authorization: Authorization refers to the process by which a transaction is routed to the issuer for approval and then a decision whether or not to approve the transaction is made by the issuer or, in certain circumstances, such as when the issuer's systems are unavailable or cannot be contacted, by MasterCard or others on behalf of the issuer in accordance with either the issuer's instructions or applicable rules (also known as stand-in). Clearing: Clearing refers to the exchange of financial transaction information between issuers and acquirers after a transaction has been successfully conducted at the point of interaction. The company clears transactions among customers through its processing systems. Settlement: Once transactions have been authorized and cleared, the company helps to settle the transactions by facilitating the exchange of funds between parties. Once clearing is completed, a daily reconciliation is provided to each customer involved in settlement, detailing the net amounts by clearing cycle and a final settlement position. Cross-Border and Domestic Processing: The MasterCard Worldwide Network provides its customers with a structure that enables them to support processing across regions and for domestic markets. The network processes transactions throughout the world on its products where the merchant country and issuer country are different (cross-border transactions). The company processes transactions denominated in approximately 150 currencies through its global system, providing cardholders with the ability to utilize, and merchants to accept, MasterCard cards and other payment devices across multiple country borders. The company also provides domestic (or int