Contrary to popular belief, Mastercard is not in the ‘credit card’ business. Rather, Mastercard is a vital network that connects customers and merchants around the world. They provide financial telecom infrastructure that allows financial institutions to communicate and transact with one another.
As the second largest financial telecom network in the world behind Visa, Mastercard has a wide geographical reach. Mastercard allows us to use our credit, debit, and prepaid cards to make payments in more than 150 currencies in over 210 countries and territories. In 2019, Mastercard processed a mind-boggling 87.3 billion transactions, a total of US$6.5 trillion in gross dollar volume.
So how does Mastercard make money? Let me take you through an example below to give you a better understanding of how Mastercard generates its revenues.
In any transaction, there are four participants – the cardholder, the issuer (the cardholder’s bank), the merchant, and