MasterCard
From Free net encyclopedia
MasterCard Incorporated is a membership organization owned by the 25,000 financial institutions that issue its card. MasterCard is also the company's brand of credit cards.
It was originally created by United California Bank, Wells Fargo, Crocker Bank, and the Bank of California as a competitor to the BankAmericard issued by Bank of America. BankAmericard is now the VISA credit card, issued by Visa International.
The name Master Charge was licensed by these California banks from the First National Bank of Louisville, Kentucky in 1967. With the help of New York's Marine Midland Bank (now HSBC Bank USA), these banks joined with the Interbank Card Association (ICA) to create "Master Charge: The Interbank Card".
In 1979, "Master Charge: The Interbank Card" was renamed "MasterCard".
Based on an SEC filing in early 2005, MasterCard's largest current shareholders are:
- JPMorgan Chase - 11.7%
- Citigroup - 6.2%
- Bank of America - 6%
- Euro Kartensysteme - 5.2%
- Europay France - 5.0%
The company plans to convert from a cooperative organization to a for-profit company with an initial public offering in the second quarter of 2006.
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Litigation
Both MasterCard and Visa have paid approximately $3 billion in damages resulting from a class-action lawsuit filed by Hagens Berman in January, 1996. The litigation cites several retail giants as plaintiffs, including Wal-Mart, Sears Roebuck & Company, and Safeway.
In April 2001, MasterCard sent Brad Templeton a cease-and-desist notice demanding he remove a joke from his website on the Usenet newsgroup rec.funny, which parodied MasterCard's strapline priceless advertising campaign with a somewhat tasteless comparison to the two shooters in the Columbine High School massacre. MasterCard's lawyers were of the opinion that the parody of their mark constituted trademark infringement, despite the joke having appeared years earlier. MasterCard backed down from the demand after public exposure. Templeton maintains a copy of MasterCard's demand letter on his website.
Controversy
During 2001 MasterCard threatened litigation over Ralph Nader's use of their priceless trademark in a reference to corporate politics and other activities with which Mr. Nader disagreed. Other web sites which also parodied MasterCard were sent notices to cease and desist during 2001.
MasterCard also backed down in these attempts to silence critics when the letters were made public after those who were served with cease-and-desist letters claimed their uses were parody. In light of the court decision against Eveready batteries in its fight against Adolph Coors, the claims that the articles represent parody have strong legal standing.
In 2005, tickets went on sale for the Football World Cup 2006. Having been the primary sponsor for a number of years, MasterCard secured a deal which gave them the exclusive rights to credit-card sales of tickets. This effectively shut out people without this brand of credit card, with the only option being a £30 bank transfer. This decision was later revised to allow supporters without a MasterCard to pay with a free bank transfer.
Also, Washington Redskins owner Daniel Snyder had planned to allow season-ticket holders to renew their seats for the 2005 season only by using the Washington Redskins Extra Points MasterCard, cash, or check. However, at the request of MasterCard International, the Redskins backed off on this plan, and allowed the use of any kind of MasterCard to be used. No other card brand may be used.
MasterCard is not alone in the use of these exclusive deals; VISA has a similar deal with the International Olympic Committee through 2012.
MasterCard board of directors
As of December 2004, the following banks are represented on MasterCard's board of directors:
- Europay España, S.A.
- HSBC
- Clarima Banca
- Capital One
- Banamex (Citigroup's Mexican division)
- Citigroup
- The Royal Bank Of Scotland
- MBNA America
- Westpac Banking Corporation
- Southern Bank Berhad
- Bank of Montreal
- Banque Fédérative du Crédit Mutuel
- Deutscher Sparkassen-und Giroverband
- Orient Corporation
In January, 2005, Washington Mutual Bank, the third largest issuer of debit cards in the United States, announced that it was changing its debit-card branding from VISA to MasterCard. The change will make Washington Mutual MasterCard's largest bank customer.
PayPass
MasterCard PayPass is a new "contactless" payment feature based on the ISO 14443 standard that provides cardholders with a simpler way to pay by tapping a payment card or other payment device, such as a phone or key fob, on a point-of-sale terminal reader rather than swiping or inserting a card.
In 2003, MasterCard concluded a nine-month PayPass market trial in Orlando, Florida, with JPMorgan Chase, Citibank, and MBNA. More than 16,000 cardholders and more than 60 retailer locations participated in the market trial. In addition, MasterCard worked with Nokia, AT&T Wireless, and JPMorgan Chase to incorporate MasterCard PayPass into mobile phones in Dallas, Texas.
In 2005, MasterCard began to roll out PayPass in certain markets. As of April 2006, the following financial institutions have issued the MasterCard PayPass:
- MBNA
- JPMorgan Chase (available through its "blink" contactless feature)
- Citibank (both MasterCard credit and debit cards)
- HSBC Bank USA (debit card only)
- Key Bank (debit card only)
- Citizens Bank (debit card only)
- Commonwealth Bank (Australia)