The development history of MasterCard

The promotion of bank cards is an integral part of financial modernization. Like the modernization process in other fields, the Golden Card Project also needs to learn from some advanced international experience and lessons learned in the past.

In banks and large stores, you can often see a pattern mark consisting of two closely interlocked spheres, one red and one yellow. That is the logo of MasterCard International, the world-famous bank card association. Now, tens of millions of people around the world hold Mastercard and use it as an advanced payment tool to withdraw money and spend money. There are more than 3,000 staff members around the world running the huge MasterCard system, working on it day and night. But can you imagine? In the early days of its establishment in 1966, it had only 45 employees.

How did it grow and expand? That’s a long story, let’s start with the birth of credit cards.

The birth of credit cards In the late 1940s, some American banks began to issue shopping coupons, which could be used as currency in local stores. In 1951, New York's Franklin National Bank formalized this application and launched the first modern credit card. Bank of America, which is based in California, extended this practice to the United States and launched the BankAmericard card (today's VISA card) in 1960. At the same time it established a bank as its branch in every major city. These branches sign contracts with merchants to accept card payments and develop cardholders within their reach. Since then, bank card payment services have grown rapidly. In 1995, the number of cards issued reached 79.6 billion (including MasterCard, VISA, Discover, American Express, JCB, Diners Club, etc.). Total credit card transactions in 1995 were $1.5 trillion. At the same time, debit cards are also developing very rapidly, such as ATM cash cards.

History of MasterCard?

A few years after the introduction of the BankAmericard card, a group of American bankers who were not commissioned to operate the card started their own network to accept another local credit card . On August 16, 1996, this group of banks formed the "Interbank Card Association (ICA)" to realize the exchange functions of inter-bank authorization, clearing and settlement. ICA later became MasterCard International.

Unlike BankAmericard, ICA is not governed by a single bank. A membership committee is formed by ICA members to manage and operate the ICA association. In addition to establishing authorization, clearing and settlement rules, ICA is also responsible for legal matters such as marketing, security and brand protection.

Creating a global network

From its inception, ICA has been committed to creating a joint global network. In 1968, it established an alliance with the National Bank of Mexico, and in the same year formed the "European Card International Alliance" (now called "Europay International") in Europe. The first Japanese member joined the ICA Association in 1968. In the following years, a group of members from different continents and countries joined the ICA. They are:

1969 - Bank of Montreal, Canada;

1974 - British Access Limited;

1975 - Standard Bank of South Africa;

1979——Bank of Australia.

In 1979, a coalition was formed to reflect the global scope of ICA, and ICA was renamed MasterCard International.

In the 1980s, MasterCard expanded to Asia-Pacific and Latin America. In 1986, the first MasterCard office in the Asia-Pacific region opened in Hong Kong, and in the same year, the Latin American regional headquarters opened in Miami. In 1987, China began to issue MasterCard cards. By 1993, China became one of the countries with the largest sales of MasterCard cards.

In 1989, MasterCard launched local currency settlement for the first time in Venezuela. In the 1990s, as a symbol of globalization, Mastercard established a number of regional boards of directors: the United States, Latin America/Caribbean, Asia Pacific, Canada, and the Middle East/Africa. From 1990 to 1996, Mastercard opened 53 offices around the world, reflecting the unprecedented growth of its international business. By 1997, MasterCard had more than 23,000 members. Business-wise, it has grown from a credit card company to a comprehensive payments company.

Achieving rapid development through technology

Technology has played an important role in Mastercard's global growth. Initially, the authorization between the issuing bank and the accepting bank was carried out by telephone. In 1973, the inter-bank authorization system INAS came into operation, which basically eliminated the telephone authorization method. In the second year, all credit cards adopted the standard magnetic stripe format, which was a major advancement in technology. The opening of the inter-bank electronic funds transfer network in 1975 automated the processing of clearing and settlement. From then on, the accepting bank no longer needed to mail bills to the issuing bank.

In 1983, MasterCard first introduced the use of laser holograms on cards to prevent counterfeiting, thus minimizing fraud losses of member banks. In the same year, it launched Emergency Credit Card Replacement (ECR). program.

1984 was a milestone in the development of MasterCard technology. The global transaction processing network Banknet is up and running. The INET system runs on this network, and INAS uses this network for member bank and member bank parity authorization (PTP). In 1984, MasterCard's automated point-of-sale (POS) program reached a fully operational level in the United States, which further supported MasterCard's POS business.

In 1987, the Banknet system began to install international outlets, providing member units with a full range of international services and laying the foundation for the next development of international business.

In the same year, the electronic image system was launched in the United States, which transmitted images of sales documents between member banks through Banknet. In 1990, this business was promoted to international business. In order to support the development of the expedited business market, MasterCard developed the MasterCard Card Processing System (MCCPS) in 1989, which enabled member banks outside the United States to use microcomputers to speed up the issuance and acceptance of credit cards at low cost. This microcomputer can provide a package of "back office" transactions and networking with POS and ATMs.

In the 1990s, Mastercard developed the Member Bank Protection Program (MPP), which enabled member banks to reduce fraud losses by US$50 million per year. ?In order to solve communication obstacles, Mastercard also developed the satellite communication system MSAT, which was installed in Latin America in 1992 and in India in 1996. In 1994, Banknet established packet switching centers in Bahrain and France, and processing centers in Australia and China. In 1996, MasterCard launched Japanese network services in Japan and ran the MasterNet credit card network system in Japan. This system connects the merchant's shipping office with a separate processing center, which reduces the authorization time by 60% and makes cardholders feel smoother than ever when using POS to swipe their cards.

In 1995, MasterCard OnLine made its debut. It is a global messaging vehicle that enables member banks to access and retrieve MasterCard's messaging products and services from their desktop computers. For the first time, two modules, MasterCard Market Advisor and MasterCard MATCH, were developed on this platform. The former is a co-branded card decision support system, while the latter provides the accepting bank with online queries on the database of 50,000 merchants around the world that have been withdrawn by the accepting bank due to risks or other reasons.

After promoting the use of MasterCard Priority Card Connection System, emergency replacement of MasterCard cards can be completed the next day in the United States and within two working days in other parts of the world. At the same time, the replacement procedure cost has also been reduced by 75. ?In order to improve the quality of global customer service, MasterCard launched MasterCard Global Services in 1996.

It provides cardholders with local languages ????of various countries and comprehensive services. Emergency card replacement service is available 24 hours a day and 365 days a year.

In April 1996, MasterCard and National Data Corporation (NDC) formed a partnership to form GPS, the world's largest payment processing company. NDC is a well-known American company that provides value-added application systems and services, specializing in GPS. Including the indirect payment services and data exchange services of the previous MAPP organization and NDC. ?

In 1996, two more things happened that can be called milestones in the history of MasterCard technology development. In November the new Banknet virtual private network (VPN) got its first member Mastercard. It was successfully ported and certified. The network was designed and built based on AT&T's plans. From 1997 to 1998, the VPN will replace the existing data network, making Mastercard credit and debit card transactions faster and more reliable. In December 1996, Mastercard joined forces with IBM and Danny Payment Systems (DPS) to optimize e-commerce with the first end-to-end secure Internet transactions. Secure Electronic Transaction Protocol (SET) is used here to make online payment card transactions more secure. By the end of 1997, MasterCard and member banks in Denmark, France, Japan, South Korea, Malaysia, South Africa, Taiwan and the United States were participating in the project. Nearly 60 SET pilot systems have been established. The continuous advancement of technology has become a strong driving force for the development of MasterCard. By the end of 1996, MasterCard had issued more than 400 million cards, including more than 300 million credit cards and more than 100 million debit cards. The annual card transaction volume reached nearly 6 billion. The transaction value exceeded US$550 billion. On Christmas Eve, December 23, 1996, MasterCard's daily transaction volume reached 20 million, setting its high transaction volume record. ?

Many new products and services?

Although Mastercard was a credit card company from the beginning, in 1979, it had become an international integrated payment service. company. Since then Mastercard has provided a full range of payment products and services. ?

In 1981, MasterCard was the first to classify the market. It issues the Gold Mastercard in the United States to target customers with higher spending power, and it also issues Mastercard Travelers Checks. In 1985, the MasterCard commercial card was issued. In 1986, as a strengthening measure for MasterCard Gold Card, the MasterCard Service Help System was developed. In 1988, MasterCard launched MasterDebit, a debit card processed offline, now called MasterMoney. In the same year, Mastercard acquired Cirrus Systems. This company owns the largest automated teller machine (ATM) network in the United States and Canada. The following year, the world's largest ATM network was formed. Mastercard focused on adding value to its products in the 1990s. In 1990, it developed the Mastervalues ??POS discount program, which was quickly promoted in Asia Pacific, Latin America and the Caribbean after its successful implementation in the United States.

In the 1980s, bank cards with marriage relationships began to appear and became increasingly popular. In 1990, Mastercard launched its first co-branded card. The following year, special rules were adopted to approve the application process for co-branded cards, establishing Mastercard's dominance in this field. In 1993, 300 co-branded card applications were processed in the United States alone, and 40 million co-branded cards and bank cards with marriage relationships were issued.

Co-branded cards have become an important force in the bank card market around the world. MasterCard extended its reach into online POS transfer business in 1990. It partnered with European Card International, European Check International and the US regional electronic funds transfer network to launch the world's first global online POS transfer program, named Maestro. In addition, in order to promote and operate the Maestro system in the United States, aestro U.S.A. was established. In 1992, Eurocard and Eurocheck International merged to form Europay International. Later, Mastercard and Europay formed Maestro International to manage Maestro's overseas business. By the end of 1993, Maestro had issued 1.1 billion cards. So far, Maestro card still maintains the momentum of rapid growth. ?

In order to enable member banks to obtain the highest efficiency and highest profits, Mastercard established Mastercard University in 1991. Initially, the university offered courses and instruction only to U.S. member banks and MasterCard employees. By 1993, the university offered a wider range of courses to all regions, and the content of each course was customized to meet the client's special considerations and could be added or deleted according to the client's needs. ?

In 1993, the MasterCard Purchase Card was launched to target the nearly $400 billion corporate purchasing power market in the United States. In the same year, MasterBanking, a Mastercard banking service, was launched in the United States. It is a 24-hour remote banking service and electronic money payment service. ?

In February 1997, Mastercard purchased 51% of Mondex International's shares. Mondex technology is a chip card based platform. This business initiative will accelerate the development of Mondex stored value cards and other smart card products and promote their promotion worldwide. At the same time, it also creates conditions for the formation of a globally unified standard chip-based payment product in the future. ?

How has the Mastercard logo evolved?

As the Mastercard organization continues to grow, the design of its card products continues to reflect these changes. At first, in order to distinguish ICA members from special merchants, the "i" symbol was printed on the card. The issuing bank's logo is clearly visible on the card to highlight each bank. Later, in 1969, the Master Charge symbol was introduced, which was a separate image logo. In 1970, the Master Charge logo took up the entire card frame. After nearly 10 years of unprecedented development, Master Charge evolved into MasterCard in 1979. As the MasterCard trademark became stronger, the association decided that from then on card issuers would only be allowed to occupy 25% of the card surface to identify their banks. ?But in 1984, MasterCard allowed the card issuer to occupy 60% of the card surface to mark its own bank; by 1987, the ratio increased to 80%; in 1990, it increased to 85%. The now familiar red and yellow logos also began to be introduced. Mastercard

The card’s new logo symbolizes a new era for Mastercard. Its smaller size reflects the fact that MasterCard has gained enough popularity to free up more space to identify the card-issuing member banks. ?MasterCard created similar-looking Cirrus and Maestro logos in 1992. Strengthens the association between various Mastercard products in the minds of customers.

In 1996, a new and revised Mastercard logo was introduced. The changes were: increasing the size of the letters with shadows, reducing the interlocking lines between the two spheres, and reducing the background. Change to dark blue. These changes increase the visibility and recognition of the logo and improve the overall strength of the trademark image. Starting in early 1997, the new MasterCard logo appeared on tens of thousands of member banks, tens of millions of merchants and billions of MasterCard cards. Along with the development of the economy and the improvement of people's living standards, it will increasingly penetrate into the hearts of consumers around the world.