Mastercard Membership

The affiliation with global payment networks such as Mastercard offers financial innovation and connectivity benefits that can drive higher value propositions of each and every financial institution seeking to evolve and expand their services and differentiating themselves through further competition. If this sounds like it could be your strategic goal, read this article to understand better what Mastercard membership is and how one can establish a relationship with Mastercard to become a trusted member of the network of issuers, acquirers, and other key players in the payments ecosystem.

What Is a Mastercard Member

A Mastercard member is a person or business entity authorized by Mastercard, or its affiliates, according to the terms set forth by Mastercard, for the issuance or acquisition of payment cards of any Mastercard brand, or for such other activity as Mastercard may authorize. Indeed, Mastercard members play an integral role in the digital economy and beyond. Among such areas where the influence and impact of Mastercard are quite huge, one can name innovative payments for convenience, cross-border transactions, and economic growth. In this context, the role of Mastercard is to provide the technology and the network powering the transactions.

An issuer is a financial organization and can include any bank, credit union, savings and loan association, or government agency such as a postal organization, or any retailer that issues a credit line or debit card to a consumer or business. Mastercard issuers can use several card levels including but not limited to Standard, World, and World Elite.

Mastercard issuers are authorized to do a number of the following:

• Issues credit lines to either consumers or businesses through Mastercard-branded credit cards.
• Issues debit cards linked to bank accounts for transactional purposes.
• Issues prepaid cards, where money is preloaded onto the card and used to pay for goods and services.
• Cardholder account management, including but not limited to billing, periodic statements.
• Activation of newly issued cards, inquiries, and support for cardholders.
• Approval or rejection of various transactions based on availability of funds or lines of credit.
• Processing and settlement of transactions between merchants and cardholders.
• Market Mastercard-branded cards, offers, and rewards programs to consumers and businesses.
• Collaborate with businesses, financial institutions, or co-branding partners to issue specific cards or reward programs.
• Incorporate new payment technologies and innovations being driven into the market by Mastercard, such as contactless payments or digital wallets.

History of Mastercard

Mastercard is one of the established technology companies in the global payment industry for a number of decades. Originally named Master Charge, it was formed in 1966 by a consortium of banks that eventually became the Interbank Card Association-ICA. In 1969, ICA launched its credit card program under the brand name Master Charge. In the ’70s and ’80s, Master Charge expanded internationally and turned into one of the leaders of the international payment network. In 1979, the organization was officially renamed Mastercard International. In the late 1990s, it changed from a membership association to a publicly traded company.

Mastercard had adapted very quickly with changes in technology, introducing magnetic stripe cards and obtaining standard security of processing. It gives considerable importance to enhanced cybersecurity and fraud prevention measures in the digital age. Innovation continues today, with recent investments in biometrics, blockchain, and AI for secure and efficient transactions. Prospective members of Mastercard can be assured that with Mastercard, they also will be on the leading edge of technology advancement.

Mastercard operates in scores of countries around the world, acting as one of the popular payment networks in both developed and developing economies. Its services go deep into regions across Africa, Asia, Europe, North America, South America, and Oceania, with greater penetration of consumer, merchant, and financial institution reach. With relationships in more than 210 countries and territories, Mastercard is at the heart of the global digital economy for people, governments, financial institutions, and businesses of all sizes. Using secure data, networks, and partnerships, it aims to drive individuals, governments, financial institutions, and businesses forward.

Types of Mastercard Issuer Memberships

The Mastercard provides for two types of membership targeted at various types of financial institutions with disparate needs and capabilities. If you are interested in any of the memberships spoken to below, our variously skilled team here at Regulated United Europe can provide tailored insights into the regulatory requirements; prepare and submit the application for membership; and offer strategic legal advice and consultation throughout the membership attainment process-and beyond.

Following are the available Mastercard issuer memberships:

• Principal membership
• Associate membership

The principal membership usually includes banks or financial institutions that, themselves, directly issue Mastercard-branded cards to individuals or businesses. Full access to Mastercard’s payment network and services is provided. In turn, principal members are allowed to independently issue or process cards. Principals retain a direct relationship with Mastercard and can thereby avail of more extensive services and support. In addition, the higher levels of financial and operational requirements may be expected in principal membership.

Associate membership is issued to financial institutions willing to issue Mastercard-branded cards through a principal member or another associate member, and this way leverage their membership, including benefiting from some Mastercard services and support. This type of membership is easier to obtain; nevertheless, associates tend to have limitations in terms of setting terms, conditions, or pricing, depending on the arrangement with the principal member.

Mastercard Issuer Membership Benefits

Mastercard issuer membership provides a wide range of benefits and advantages to financial institutions such as yours. These benefits let them offer more products and services, better their customers’ experience, and stay competitive in the rapidly changing, innovation-driven payments industry. Your participation in Mastercard can significantly enhance your financial institution’s strategic positioning and operation on a number of fronts.

As a Mastercard issuer, you are able to leverage these benefits:

• Access to the global network of Mastercard payments that can be used to facilitate cross-border payments, opening up international markets to and for your financial institution and its customers. Permission to issue credit, debit, or prepaid cards under the brand and logo of Mastercard will provide a wide array of options in card product offerings and variants that can be offered and tailored to meet any number and type of customer segments and preferences of your financial institution-a great way to expand a financial institution’s product portfolio.
• You can utilize technological innovation at Mastercard to further develop payment solutions, staying ahead in the digital era as a way of answering emerging consumer expectations for secure, convenient, and efficient payment experiences.
• You can access various advanced security measures, fraud prevention tools, and compliance guidance from Mastercard, assuring that customers will have secure transactions while maintaining uncompromising compliance with industry regulations and security standards.
• The capability to collaborate or form partnerships within the Mastercard network brings additional resources that set up your institution for more opportunities and business growth.
• Access to transaction data and analytics to make informed decisions, providing an understanding of customer behavior and market trends.
• Being associated with one of the most recognized and trusted global brands, like Mastercard, would give credibility and weight to your financial institution’s standing in the market.
• You stand to create revenue opportunities through commission on transactions, interchange fee, and other card issuance and usage-related streams that bring income.
• As a Mastercard member, you will have a great opportunity to reinforce customer experience and loyalty by offering secure, convenient, seamless payment solutions enabled by innovative features and functionalities.
• If one properly capitalizes on the recognition and acceptance that comes associated with the Mastercard brand, many doors to new markets and customer segments are wide open.

As a Mastercard member, you’ll have a tremendous opportunity to improve customer experience and build customer loyalty by offering secure, convenient, and seamless payment solutions, enabled by innovative features and functionalities. If you can properly leverage the recognition and acceptance associated with the Mastercard brand, many doors to new markets and customer segments will be wide open for you.

What Makes Mastercard Membership Stand Out

As you look into what Mastercard can offer you, a thought or two about who are the biggest competitors may have occurred. First of all, let’s establish that Mastercard sets itself apart from its few rivals like Visa, American Express (Amex), UnionPay, Discover, PayPal and Japan Credit Bureau (JCB) due to several major deciding factors.

Here is what makes Mastercard stand out against the others:

• Mastercard has been differentiating its product offering from its competitors because it holds investments in emerging technologies such as biometrics, blockchain, and AI for secure transactions. This will make it different from its competitors such as Visa and Amex.
• Mastercard competes with UnionPay in expanding its international acceptance beyond regional dominance, challenging UnionPay’s strong presence in Asia.
• Mastercard’s innovative solutions in payment processing and its commitment to financial inclusion set it apart from its competitors, including Amex and Discover.
• Mastercard’s collaborations within its ecosystem, including partnerships with fintech and other startups, promote innovation and competition which distinguishes it from UnionPay and Visa.
• Mastercard’s global focus differentiates it from JCB’s Asia-centric approach which means Mastercard membership will allow you to tap into a vast international network, and expand your cardholder base beyond specific regions.

How Mastercard Members Are Regulated

Accordingly, Members are subject to the laws of Mastercard, relevant industry standards, and requirements of governmental financial regulatory bodies in their respective jurisdictions. Adherence to these various regulations and standards is what will keep your financial institution’s membership active in the Mastercard network.

The membership rules and guidelines of Mastercard form a robust framework with a set range of prerequisites and standards for institutions whose membership is granted within its network. It describes the type of cards that members shall be allowed to issue under the brand of Mastercard, procedures and processes for gaining authorization for card transactions, and a system to handle disputes arising out of card transactions, chargebacks, and customer complaints. As a Mastercard member, you will be bound to meet the ongoing eligibility criteria and requirements continuously, to which we can always assist you whenever you need to consult lawyers with expertise in the financial industry.

Industry standards include the Payment Card Industry Data Security Standard, PCI DSS, which major credit card companies such as Visa, Mastercard, and Amex have designed. It means the set of security norms, whose aim is to guarantee that cardholder data is securely processed, handled, stored, and transmitted. This is the link to The Payment Card Industry Security Standards Council (PCI SSC) that develops and updates existing standards while adding new ones as the payment industry grows and changes. These may include specific requirements that you install and maintain firewalls to protect cardholder data, encrypt cardholder data, and implement strong access control measures.

Financial institutions which are members of Mastercard also fall under supervision from government financial regulatory bodies in the countries where they operate. We assume that you are already familiar with the key principles of such oversight, in case your financial institution already possesses the relevant financial license. Yet another activity framed within the national financial framework will be your membership in Mastercard. Performing activities within the EU, you will actually have to obey its single laws and regulations among which there is the General Data Protection Regulation, Payment Services Directive 2, and Anti-Money Laundering Directives.

Mastercard partners with regulatory bodies to stay updated on the changing laws, regulations, and compliance needs across the financial ecosystem. This is to ensure harmony between its rules and guidelines with the ever-changing regulatory frameworks and industry standards. In this way, your financial institution will be able to remain in compliance continually with the prevailing regulatory framework, while reducing security and reputational risks. Also, Mastercard actively supports industry forums and regulatory discussions in order to contribute its knowledge and experience for building effective regulations that could protect the interests of Mastercard members.

How to Become a Mastercard Member

While being a Mastercard member can be very rewarding, you do have to brace yourself for an application process that is as complex as it could ever get-only paralleled by applications to be granted a national financial license. Once you understand some of the basic criteria involved, like the acceptance of regulatory and standard industry requirements, you can actually start the membership process.

The application process slightly differs depending on the type of Mastercard membership applied for, but below are a couple of general steps:

• Initial Inquiry: An initial inquiry sent to Mastercard or to its principal member-the first step in declaring interest in membership.
• Submit Application Form of High Quality: Fill out an application form with comprehensive details on the structure of the organization, its operations, and how it can handle compliance matters.
• Due diligence and review of your application by Mastercard or its principal member to ensure alignment with the membership criteria.
• Assessment of your financial institution to ensure it will be in compliance with the rules, regulations, and security standards of Mastercard.
• If your application proves successful, you’ll enter into an agreement with Mastercard or its principal member that outlines rights, responsibilities, and compliance obligations.

The application costs differ according to the type of membership applied for. However, one would be well advised to budget a range of 50,000 EUR to 100,000 EUR for a first-year membership at Mastercard to cover basic application fees and related expenses. When you become operational with your membership, the fees are multi-layered and based on different custom activities of your business.

Some of the factors influencing how long the whole Mastercard membership application process might take are dependent on a lot of variables, each differently covering the type of membership applied for, the completeness of application, regional requirements, and individual conditions of your financial institution. In general, the whole processing, right from the initial application to approval and execution of agreement, may take as long as five months. That said, you might be able to apply via the Mastercard Fintech Express program, which allows regulated fintech companies to get their BIN licenses for the identification of issuers to become Mastercard issuers in two weeks.

With that said, in order not to be a bottleneck in your application package and ensure that it is complete, we would like to offer your consultation with a team of experienced lawyers here at Regulated United Europe. While you remain focused on the most pressing matters of your business, we can take you through this cumbersome legal framework, prepare the application form with all ancillary documentation, conduct full due diligence to identify any legal risks or issues that may impact membership approval, and serve as a liaison between you and Mastercard or its principal member. With the help of our team, you can accelerate your application process and stay aligned with your strategic goals.

Eligibility Criteria for Mastercard Membership

Before you submit your application, ensure that it does comply with all the eligibility requirements for Mastercard membership, with proof supported by appropriate documentation. Similar to the application process, the requirements would vary slightly depending on the type of membership, but you can now note the general ones.

The general but essential eligibility criteria for Mastercard issuers include:

• Must be in possession of an appropriate financial license; for example, an e-money institution license.
• It should depict financial stability and soundness to show the ability to manage the operation of card issuance.
• Must adhere to local and international financial regulations concerning AML/CFT, provision of payment, and consumer protection laws.
• Capable of meeting the Mastercard operational standard: to ensure infrastructure and process align with requirements on security and processing.
• Ability to implement effective risk management practices that will reduce financial risk in card issuance operations.
• Evidence of innovative technology or related services that are in line with the strategic objectives of Mastercard.
• Evidence of past experience or relevant expertise for the type of card issuance activities you wish to engage in and which will assist Mastercard in attaining its goals.

Undeniably, you will most likely be asked to provide a range of documentation which will include but not be limited to:

• Your company incorporation documents to include but not limited to your articles of incorporation and certificate of registration.
• Audited financial statements: balance sheet, income statement.
• Bank statements.
• Financial projections.
• AML/CFT compliance policies and procedures.
• Your financial license.
• Overview of business operations, description of products or services offered.
• A business plan.
• Ownership and corporate structure, listing of directors, officers and beneficial owners.
• Measures with regard to system security.
• Data protection policies.
• Copies of customer agreements.

But if your aim is to become a member of Mastercard and permit your financial organization to make use of the broad worldwide network and innovative payment products, then our experts here at Regulated United Europe will be more than happy to assist you with regard to full compliance of your company with the relevant eligibility criteria and its good preparation for entering into an agreement with Mastercard or its principal member. We have over six years of experience in advising numerous businesses through the financial industry, with experience in obtaining an electronic money license in Europe. Through the correspondence below, please contact us to arrange a personal consultation where we will go over your next immediate steps toward a successful application for Mastercard.