Third-party processors and alternative payments systems
MasterCard (MA) competes with third-party transaction processors such as First Data Corporation and Total System Services (TSS). These companies are looking to develop their networks that link issuers directly with point-of-sale devices for payment transaction authorization and processing services.
The payment industry has become more complex, with new technologies, products, and players. MasterCard faces competition from newer payment providers such as PayPal, AliPay, and Amazon. It also faces competition from merchants, mobile operators, and manufacturers. The increasing popularity of digital wallets led MasterCard to launch its own platform, MasterPass, as illustrated in the above graphic.
A digital wallet is an electronic device that streamlines transactions such as online purchases. The wallet links an individual’s details such as bank account, driver’s license, and other identity documents. These smartphone digital wallets can replace physical wallets.
A customer using a digital wallet does not need to complete separate order forms on different websites. The information is updated automatically across various merchant sites.
MasterCard competes with some of these providers, although it may also act as its customer or partner. For example, PayPal’s digital wallet links all cards, including Visa (V) and MasterCard (MA), which act as PayPal’s partners. PayPal also allows its customers to transfer money directly from their bank accounts. In this case, it also acts as a competitor, as funding a PayPal account via a bank transfer eliminates MasterCard’s involvement and affects its revenues.
MasterCard has a competitive edge over emerging players
MasterCard continues to adopt technologically advanced products and platforms like its digital wallet MasterPass. MasterCard is already present in individual markets globally, which gives it an edge over emerging players.
MasterCard’s main competitive advantages are convenience, accessibility, and security. The company’s brand name, product range, and track record of secure transaction processing gives it an edge over new players.