May 25, 2010
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News: Banga Fights Congress
MasterCard's new President and Chief Operating Officer, Ajay Banga, had already taken aim at lawmakers looking to pass legislation that will significantly decrease the credit card giant's bottom line. Although Banga doesn't officially take over the company until July 1st, new legislation will most likely push him to the forefront. Lawmakers are about overhaul the rules which determine how credit card networks determine interchange fees. The law could give retailers more power in determining interchange fees as well enable them to offer discounts to consumers who use less expensive alternative payment methods such as cash or checks. The legislation would not only affect the major credit card networks like Visa and MasterCard, but will rip millions of dollars in earnings from banks carrying their brands.
Banga will have no choice but to embark on Washington to defend the MasterCard brand since the majority of its revenue is generated from interchange fees. Interchange fees are the fees that the retailer pays each time a customer swipes their debit or credit card to pay for merchandise or services. The new MasterCard president is challenged in finding new ways to market its brand to its customers that issued the more than 357 million MC branded cards. In reality, although MasterCard's consumers are the credit cardholders, the company doesn't directly sell its product to cardholders but rather to the bank that issues the card.
There's no doubt Banga has his work cut out for him as he seeks new ways to market the MasterCard brand credit card to an already saturated United States market. Add to that targeting a market just recovering from one of the most severe economic crisis in decades. For the time being, he has taken his focus to other parts of the world as he has traveled to Asia, Europe and South America promoting the MasterCard brand. Furthermore, he has increased the traveling budget by encouraging his executives to get out and participate in global promotions. Described as an energetic and engaging individual, Banga encourages all MasterCard employees to take risks to "incentivize failure" as well as take greater responsibility in making traveling and promotion decisions.