Mastercard Worldwide has some catching up to do in the debit card market to
meet its own goals, Timothy H. Murphy, MasterCard U.S. region president, told analysts during a recent conference call.

 "We acknowledge the perception that MasterCard is late to the game in debit in the
U.S., and we are not satisfied with our position," Murphy said.

MasterCard's share of the debit market is well behind Visa Inc.'s market share but
ahead of other network brands, such as Discover and American Express, says Gwenn
Bézard, senior analyst for Boston-based Aite Group.

"If they compare themselves with Visa, they are behind. If they compare themselves
with others, they are ahead," he says. Bézard could not provide specific market-share
numbers for MasterCard or Visa.

Debit is the fastest-growing type of payment in the United States, and it represents
the greatest opportunity to convert more payments from cash and check to the
MasterCard network, Murphy noted.

Approximately 90% of U.S. households have a debit card linked to a bank account,
and U.S. consumers perform roughly 17 transactions per month, he says.

But activation of issued debit cards is still relatively low, and by some measures
only about half of all debit cards issued have been activated, Murphy said.

To spur greater use of debit cards, MasterCard is consulting with its issuers
on strategies to increase the distribution and use of its PayPass contactless technology. At the same time the card brand is working to drive the development of cobranded debit cards and rewards for using debit cards. Other growth areas include
prepaid debit cards and converting bill payment to debit cards, Murphy said.

"The $1 million question is how [MasterCard] can grow its market share,"
says Bézard. MasterCard is trying to expand by working closely with issuers,
offering more consulting services, and attracting clients with rebates and incentives,
he says.

Murphy suggested that large municipalities, such as the city of Sacramento,
Calif., which this year began accepting one-time payment of utility bills using
debit and credit cards, will drive the trend. MasterCard believes there is a high volume
of annual spending in utility-bill payments,and the card industry's share is
small, Murphy said.

MasterCard has made other changes to grow its business. The company sent a bulletin to its signature-debit card issuers April 7 that stated issuers not participating
in Maestro, MasterCard's PIN-debit network, must add the network by Oct. 15
(ADN, 5/15).

"Growing for them means growing product, growing transactions or any combination
of the two," says Adil Moussa, an Aite analyst.

MasterCard also introduced a debit-processing platform, enabling the card brand to make the transition from a switch to an issuer-processor (ADN, 4/24). The addition of the platform, known as MasterCard Integrated Processing Solutions, is another way MasterCard is trying to grow the business, says Moussa.

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