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    Case Study

    Mastercard 2023: Rewired for infinite optionality

    By Howard H. Yu, Mark J. Greeven and Martin Králik
    22 pages
    November 2024
    Order this case study
    Reference: IMD-7-2455

    In the 2010s, card processing – Mastercard’s flagship service – started showing signs of commodification as new, nimble players (typically, fintech startups thriving on digital) entered the payment processing space, and customer preferences evolved beyond plastic cards and traditional contact payments. To re-energize its central position and its ability to capture value, Mastercard – as the incumbent – had to make bold decisions. The case details Mastercard’s approach to conceptualizing and building a global platform ecosystem that upholds the principles and design elements of modularity (i.e. interoperability and scalability) and optionality. Today, Mastercard’s services, based on application programming interfaces (APIs), integrate with a variety of platforms and offer flexibility to businesses that require customized payment solutions. All along, the company has accommodated a high level of internal disruption. The case also explores the nature of Mastercard’s systematic collaboration with fintechs – players that often started out as competitors in specific parts of Mastercard’s value chain. It describes the company’s engagement with fintechs as fostering collaboration and co-creation and facilitating access; in other words, opening doors and sharing tools with partners. The case presents observations and quotes by CEO Michael Miebach, whose career trajectory at Mastercard – spanning Africa & Middle East experience, fintech partnerships, product management and the CEO role – sheds additional light on the philosophy and values that have driven the company’s transformation to a technology powerhouse and self-described original fintech.

    Learning Objective
    • Discuss Mastercard’s traditional business model as a complex two-sided platform that predates today’s digital platforms and the network effects it produced.
    • Using Porter’s Five Forces framework, examine the competitive and commodifying threats Mastercard was facing with the advent of digital technologies and mobile payments.
    • Understand the role that APIs and open APIs have played in Mastercard’s effort to build a modular global platform ecosystem (a “network of networks”), designed for infinite optionality vis-à-vis ecosystem partners around the world.
    • Appreciate the dynamics of collaboration and co-creation with fintechs that Mastercard instituted as part of its quest for modularity.
    • Analyze Mastercard’s experience as an incumbent tackling disruptive innovation, as well as ongoing consolidation vs. fragmentation in the global payments industry.
    Keywords
    Disruption, Digital, Strategy, Digital Transformation, Future-proofing, Future Readiness, Complexity, Modularity, Technology, Application Programming Interface, Payment System
    Settings
    World/global, United States of America
    Mastercard, Finance and Insurance, Financial Services
    2010-2023
    Type
    Field Research
    Copyright
    © 2024
    Available Languages
    English
    Related material
    Teaching note
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    Copyright ©2024
    Copyright owner IMD Copyright
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