Mastercard Membership

The affiliation with global payment networks like Mastercard offers the benefits of financial innovation and connectivity that can increase the value proposition of every financial institution seeking to evolve and expand its services and get ahead of the competition. If this sounds like it could be your strategic goal, read this article to better understand what Mastercard membership is and how you can establish a relationship with Mastercard and become a trusted member of the network that includes issuers, acquirers, and other important actors of the payments ecosystem.

What Is a Mastercard Member

A Mastercard member is an individual or business authorized by Mastercard or its affiliates under the guidelines set by Mastercard to issue or acquire payment cards bearing any Mastercard brand or engage in other authorized activities. Mastercard members play a pivotal role in the digital economy and beyond, holding significant influence and impact in such areas as payment innovation and convenience, cross-border transactions, and economic growth. In this context, Mastercard’s role is to provide the technology and the network that power transactions.

A Mastercard issuer is a financial institution, which could be a bank, credit union, savings and loan association, government entity (such as a postal organization), or retailer that provides a credit line or a debit card to a consumer or business. Mastercard issuers can offer various card levels, including Standard, World, and World Elite.

Mastercard issuers are authorized to conduct a variety of activities:

• Provide credit lines to consumers or businesses through Mastercard-branded credit cards
• Offer debit cards linked to bank accounts for transactional purposes
• Issue prepaid cards with pre-loaded funds for purchases
• Manage cardholder accounts, including billing, statements, and customer support
• Activate newly issued cards and provide assistance to cardholders
• Approve or decline transactions based on available funds or credit limits
• Process transactions and settle payments between merchants and cardholders
• Promote Mastercard-branded cards, offers, and rewards programs to consumers and businesses
• Collaborate with businesses, financial institutions, or co-branding partners to offer specialized cards or rewards programs
• Incorporate new payment technologies and innovations promoted by Mastercard, such as contactless payments or digital wallets

History of Mastercard

Mastercard is a global technology company in the payments industry with several decades of experience. Initially known as Master Charge, it was established in 1966 by a coalition of banks forming the Interbank Card Association (ICA). In 1969, the ICA introduced its credit card program under the name Master Charge. Throughout the 1970s and 1980s, Master Charge expanded its reach internationally, becoming a prominent player in the global payment network. In 1979, the company officially changed its name to Mastercard International, and in the late 1990s, transitioned from a membership association to a publicly traded company.

Mastercard was an early adopter of technological innovations, introducing magnetic stripe cards and pioneering secure payment standards. Over the years, it placed a strong emphasis on enhancing cybersecurity measures and fraud prevention in the digital age. Today, it continues to innovate, investing in technologies like biometrics, blockchain, and AI for secure and efficient transactions. Potential Mastercard members can rest assured that with Mastercard, they will stay at the forefront of technological progress.

Mastercard operates in a plethora of countries globally, serving as a widely accepted payment network in both developed and developing economies. Its reach extends to regions across Africa, Asia, Europe, North America, South America, and Oceania, ensuring broad coverage for consumers, merchants, and financial institutions worldwide. With connections across more than 210 countries and territories, Mastercard significantly contributes to the development of the global digital economy, using secure data, networks, and partnerships that help individuals, governments, financial institutions, and businesses of various industries.

Types of Mastercard Issuer Memberships

Mastercard offers two membership types tailored for financial institutions with different needs and capabilities. If you’re interested in any of the memberships discussed below, our diversely skilled team here at  Regulated United Europe can provide tailored insights into the regulatory requirements, assist in preparing and submitting the membership application, and offer strategic legal advice and consultation throughout the membership acquisition process and beyond.

You can choose from the following Mastercard issuer memberships:

• Principal membership
• Associate membership

Principal membership is granted to banks or financial institutions that issue Mastercard-branded cards directly to consumers or businesses, and it gives full access to Mastercard’s payment network and services, allowing independent card issuance and processing. These members maintain a direct relationship with Mastercard and can access a broader range of services and support. However,  higher financial and operational requirements are set out for principal membership.

Associate membership is granted to financial institutions that intend 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, however, associates tend to have limitations in terms of setting terms, conditions, or pricing, depending on the arrangement with the principal member.

Mastercard Issuer Membership Advantages

Mastercard issuer membership offers a wide range of benefits and advantages to financial institutions like yours, empowering them to expand their products and services, improve customer experiences, and stay competitive in the innovation-driven payments industry. Joining Mastercard can considerably improve your financial institution’s strategic position and operations in a variety of ways.

As a Mastercard issuer, you can benefit from the following advantages:

• Access to Mastercard’s global payments network which can facilitate cross-border payments and open doors to international markets for your financial institution and its customers
• Authorization to issue credit, debit, or prepaid cards bearing the Mastercard logo, including the ability to customize and offer various card products to cater to different customer segments and preferences, which can significantly expand your financial institution’s product portfolio
• You can leverage Mastercard’s technological innovations to enhance payment solutions and stay ahead in the digital era in order to meet evolving consumer expectations for secure, convenient, and efficient payment experiences
• You can have ongoing technical assistance, training, and resources to integrate and utilize Mastercard’s payment infrastructure which will lead your financial institution to cost-efficiency, agility, and responsiveness to future market demands
• You can gain access to Mastercard’s advanced security measures, fraud prevention tools, and compliance guidance, which will ensure secure transactions for customers and uncompromised compliance with industry regulations and security standards
• The possibility for collaborations and partnerships within Mastercard’s network can provide you with additional resources, and lead your institution to more opportunities and business growth
• You can gain access to valuable transaction data and analytics, which will enable informed decision-making and understanding of customer behavior and market trends
• Association with a globally recognized and trusted brand like Mastercard can significantly strengthen your financial institution’s credibility and market positioning
• You can have an opportunity to generate income through transaction fees, interchange fees, and other revenue streams associated with card issuance and usage

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

While exploring what Mastercard has to offer, you may have had a thought or two about its most significant rivals. It’s worth noting that Mastercard distinguishes itself from its competitors, including Visa, American Express (Amex), UnionPay, Discover, PayPal, and Japan Credit Bureau (JCB), through several key factors.

Here’s what makes Mastercard stand out compared to others:

• Mastercard’s investments in emerging technologies like biometrics, blockchain, and AI for secure transactions set it apart from its rivals, including Visa and Amex
• Mastercard’s global acceptance and security measures are on par with Visa, offering a vast network for transactions and top-notch security, competing directly in global reach and reliability
• Mastercard’s focus on security and compliance is a differentiating factor when compared to PayPal’s primarily digital payments focus
• 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

Mastercard members are regulated through a combination of Mastercard’s own rules and guidelines, industry standards, and regulatory requirements set out by various governmental financial authorities in their respective jurisdictions. Compliance with these regulations and standards will be essential for your financial institution to maintain its active membership status and operate within the Mastercard network.

Mastercard’s membership rules and guidelines form a robust framework that outlines specific obligations and standards for institutions granted membership within its network. It includes specifications on the types of cards that members are authorized to issue under the Mastercard brand, protocols and procedures for obtaining authorization for card transactions, and a framework for resolving transaction disputes, chargebacks, and customer complaints. As a Mastercard member, you’ll be obligated to continually comply with eligibility criteria and ongoing requirements which we can help you with whenever you have the need to consult lawyers with expertise in the financial industry.

Industry standards include the Payment Card Industry Data Security Standard (PCI DSS), designed by major credit card companies, including Visa, Mastercard, and Amex. It’s a set of security standards, the purpose of which is to ensure the secure handling, processing, storage, and transmission of cardholder data. The Payment Card Industry Security Standards Council (PCI SSC)  is responsible for maintaining the existing standards and adding new ones as the payment industry evolves. The specific standards you’ll have to adhere to may include the installation and maintenance of firewalls to protect cardholder data, encryption of cardholder data, and the implementation of strong access control measures.

Financial institutions that are Mastercard members are also subject to supervision by government financial regulatory bodies in the countries where they operate. We reckon you already know the main principles of such supervision if your financial institution holds an appropriate financial license. Your Mastercard membership will be another activity regulated within the national financial framework. If you operate within the EU, you’ll essentially have to adhere to its unified laws and regulations, including the General Data Protection Regulation (GDPR), Payment Services Directive 2 (PSD2), and Anti-Money Laundering Directives (AMLDs).

Mastercard collaborates with regulatory authorities to stay informed about changes in laws, regulations, and compliance requirements within the financial industry. It aims to align its rules and guidelines with evolving regulatory frameworks and industry standards. This approach will allow your financial institution to maintain ongoing compliance with the applicable regulatory framework, and mitigate risks associated with security and reputation. Moreover, Mastercard actively participates in industry forums and regulatory discussions to contribute expertise and insights for the development of effective regulations that safeguard the interests of Mastercard members.

How to Become a Mastercard Member

Being a Mastercard member can certainly be very rewarding, but you have to prepare yourself for an application process that can be as complicated as applying for a financial license from a national regulator. The process of becoming a Mastercard member can be initiated once you have a clear understanding of and are capable of meeting certain criteria, including complying with industry regulations and standards.

The application process slightly differs depending on the type of Mastercard membership you’re applying for, however, there are several general steps:

• Begin with an initial inquiry to Mastercard or its principal member to express interest in membership
• Submit a high-quality application form providing detailed information about the organization’s structure, operations, and compliance capabilities
• Mastercard or its principal member will conduct due diligence and review your application to ensure alignment with membership criteria
• Mastercard or its principal member will assess your financial institution for compliance with Mastercard rules, regulations, and security standards
• If your application is successful, you’ll enter into an agreement with Mastercard or its principal member, outlining rights, responsibilities, and compliance obligations

The expenses associated with applying for different membership types differ. Yet, allocating a budget ranging from 50,000 EUR to  100,000 EUR for the initial year of Mastercard membership is recommended to cover essential application fees and other associated costs. Subsequently, as you start using your membership, fees are structured in tiers and adapted based on specific activities of your business.

The duration of the Mastercard membership application process can vary significantly based on several factors, including the type of membership you’re seeking, the completeness of the application, specific regional requirements, and your financial institution’s circumstances. Generally, the process can take around five months from the initial application submission to final approval and agreement execution. That said, you might be able to apply through the Mastercard Fintech Express initiative, allowing regulated fintech businesses to get their Bank Identification Number (BIN) licenses for issuer identification and become Mastercard issuers in two weeks.

To ensure that your application package is comprehensive and doesn’t hinder the process, we invite you to consult with our team of experienced lawyers here at Regulated United Europe. While you continue to focus on the most urgent matters of your business, we can guide you through the complex legal framework, prepare the application form along with all the necessary documentation, conduct comprehensive due diligence to identify any legal risks or issues that might affect your membership approval and act as liaisons 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 submitting the application, you should ensure that your financial institution meets all the eligibility requirements for Mastercard membership, including evidence supported by appropriate documents. Just like the application process, the requirements will slightly differ based on the specific type of membership you’re applying for, however, you can now take note of the general ones.

The general but essential eligibility criteria for Mastercard issuers include:

• An appropriate financial license, such as an e-money institution (EMI) license
• Demonstrated financial stability and soundness to ensure the ability to manage card issuance operations
• Compliance with local and international financial regulations, including AML/CFT, payment provision, and consumer protection laws
• Capability to meet Mastercard’s operational standards, ensuring the infrastructure and processes align with security and processing requirements
• The implementation of robust risk management practices to mitigate financial risks associated with card issuance operations
• Demonstrating innovative technology or services that align with Mastercard’s strategic goals
• Proven track record or expertise relevant to your intended card issuance activities, aligning with Mastercard’s objectives

Most likely, you’ll be required to submit a variety of documents which include:

• Your company documents (e.g., articles of incorporation and registration certificate)
• Audited financial statements (balance sheet, income statement)
• Bank statements
• Financial projections
• AML/CFT compliance policies and procedures
• Your financial license
• Overview of business operations and products or services offered
• A business plan
• Ownership and corporate structure, including a list of directors, officers, and beneficial owners
• System security measures
• Data protection policies
• Customer agreement copies

If you wish to become a Mastercard member and enable your financial institution to benefit from the extensive global network and innovative payment solutions, our team here at Regulated United Europe will be delighted to support you in ensuring that your company fully complies with the relevant eligibility criteria and is well-prepared to enter into an agreement with Mastercard or its principal member. We have over six years of experience in helping numerous businesses navigate the financial industry and experience in obtaining electronic money license in Europe. Contact us now to schedule a personalized consultation during which we’ll discuss your immediate steps toward a successful Mastercard application.