The History of MasterCard Credit Cards
Less than a decade after the creation of Visa, a few banks got together to launch a competing network, which would eventually be known as MasterCard.
The year is 1965 and BankAmericard (the predecessor to Visa) had become a success. They had millions of accounts in California and had begun licensing the program elsewhere.
Meanwhile over in Kentucky, a threat is looming on the horizon. Entrepreneurs Raymond Tanenhaus and Stanley Benovitz had created similar system and sold it to United California Bank in 1966.
That same year, the bank teamed up with several others; Crocker National Bank (of CA), Wells Fargo, and Bank of California. Together they launched the Interbank Card Association (ICA).
ICA offered reciprocal acceptance of credit cards among the participating banks. For example, Bank of California would accept card transactions on behalf of Wells Fargo and vice-versa.
1969 = a big year in history
First of all, the name was changed to “Master Charge: The Interbank Card” when Marine Midland Bank (today known as HSBC Bank USA) came on board.
The second big milestone was the merging of the Everything Card with Master Charge. The Everything Card was a competing product operated by First National City Bank (the predecessor to Citibank).
Last but not least, it was during this year when they adopted the overlapping orange and red circles as a new logo... an image which would eventually become known the world over.
Master Charge becomes MasterCard
It wasn’t until 1979 that the name was changed to MasterCard.
Growth continued throughout the 80’s but it didn’t always come easy. Visa had a headstart on the international markets and was clearly the frontrunner in the credit card world.
However under the guidance of President Russell E. Hogg (who was a former executive of American Express) the company crafted a number strategies which would help MasterCard grow immensely:
By the early 90’s MasterCard had a worldwide debit system in place (Maestro) which competed directly with Visa’s Interlink.
- In 1983 the Emergency Card Replacement program was launched. That same year, a laser-etched hologram was added on the front of cards to help thwart fraud.
- In 1985 the number of MasterCard accounts reached 120 million worldwide. A business card for the international market was also introduced.
- In 1986 the company entered the Pacific Rim market, opening an office in Hong Kong and eventually becoming the first credit card issuer in China.
- In 1988 the acquisition of Cirrus (the largest ATM network in the world) gave MasterCard a new revenue stream and greater acceptance.
As the decade progressed not only did MasterCard chip away at Visa’s marketshare, but they also forayed into areas where plastic was rarely used, such as taxicabs, supermarkets, and convenience stores.
Prior to the company’s IPO in 2006, MasterCard was owned by its member banks – all 25,000+ of them!
However after going public on the NYSE, many of the banks sold their stock. Now they probably wish they didn’t, because today’s price is nearly 10x higher than the $39/share initial public offering.
During this time the name was changed to MasterCard Worldwide to infer a more global image. The corporate logo was also modified to include a third translucent circle, which overlaps the original two. However the logo on MasterCard credit cards and debit cards remains the same.
The company as we know it today
Their headquarters are out of Purchase, New York and contrary to what many people believe, MasterCard has never issued the cards nor loaned the money. The participating banks are responsible for doing both.
MasterCard makes its revenue off of transaction fees as well as the fees that participating financial institutions pay to be a part of the MasterCard program.
With a marketcap of “only” $50 billion, they’re roughly half the size of Visa. But as their international growth continues, it’s anyone’s guess who will be number one a decade or two from now.
A couple of the most popular MasterCards on the market right now are the Citi Platinum Select MasterCard and Citi Thank You Preferred.