The consensus is that the investor Visa and MasterCard operators are great, but how can these two giant companies actually makes money?
How Visa and MasterCard Make Money
Transaction fees – 32 % of the value of the company’s shares
MasterCard is the second largest global payment solutions company in the world. They offer a variety of services to support the credit, debit card-related payments of more than 24,000 financial institutions worldwide.
MasterCard Worldwide operates its network, which connects between exporters and buyers all over the world for transaction processing services and, through them, allows MasterCard cardholders to use their cards at millions of merchants worldwide.
In a transaction, MasterCard charges issuers and buyers fee for the network and services provided by the deal go through. Transaction fees are one of the major source of income for MasterCard include license fees, settlement and switch, as well as connection fees. In 2010, MasterCard processed 22.6 billion transactions and generated $3.3 billion in revenue.
International charges – 29% of the value of the company’s shares
International fees contribute a large percentage of the proceeds from MasterCard because of the high fees that MasterCard charges on international transactions. Revenues include international transactions, transaction fees and other special fees such as cross-border fees and currency conversion fee. In 2010, accused MasterCard currency conversion fees and cross-border off 1% of the transaction amount.
The currency conversion fee of 0.2% of the transaction amount was cross-border fee of 0.8% of the transaction amount. MasterCard was born about 2.7 billion dollars revenue from international fees in 2010. Check out the MasterCard Company Overview and Revenue.