MasterCard is the second largest credit card network in the world. It is accepted at almost 29 million locations around the world.
MasterCard was originally set up by a number of Californian banks including Crocker National Bank that were reacting to the Bank of America Card which was the first successful credit card. Many Californian middle class households had been using revolving credit facilities at stores and with car and appliance manufacturers for years; but in the 1950s the Bank of America managed to launch a similar facility with a central provider of credit. The Bank of America card (which later became the VISA credit card) was the first credit card to be able to do this successfully.
The Bank of America was based in San Francisco and almost all its branches were in California. This meant that other California banks realised that there was an immediate threat. The predecessor of MasterCard set itself up as a co-operative of a number of Californian banks. They realised that on their own they could not form a rival to the Bank of America Card, but that by offering their card together they could become a real force in consumer finance.
These banks separated the account management from the processing of the card, with the banks extending the credit, charging the interest and calculating what the accounts were due. This was the model that Bank of America later followed when its card became the VISA card.
MasterCard for most of its life was a co-operative owned equally by the banks that issued the cards under its name. In 2006 it became a profit making company and floated on the New York Stock Exchange, a path that VISA was to follow two years later.
MasterCard offers both credit and debit cards in the Australian market. MasterCard does not issue its own cards but its cards are issued through the banks and other financial institutions who are the companies that both manage the accounts and advance the money.
Its cards are accepted throughout the world. MasterCard will pay for any transactions in the local currency, but will bill the card holder in Australian dollars. Most but not all cards will charge a foreign transaction fee.
MasterCard operates a zero liability guarantee. This means that MasterCard will not charge the credit card users for any unauthorised transactions that are made on a card that is processed by MasterCard.
