Credit due: thanks to big marketing, MasterCard's market share is on the rise in Mexico and Brazil

Latin Trade, Jan, 2005 by Marisol Rueda, Andreas Adriano

Being 11 times bigger than five years ago ... priceless. There are some things money can't buy, for everything else there's MasterCard," says Lizbeth Hasfield, the credit-card company's vice president and general manager in Mexico since 1999. It's no small feat considering that MasterCard's global rival Visa grew 194% in the same time period, despite the enormous potential of being in a country in which just 12% of purchases are made with credit cards and the remainder with cash.

MasterCard's popular ad campaign-from which Hasfield borrows--is part of the reason why. So, too, were the decisions to back the hugely popular Copa America and World Cup soccer matches. Marketing moves like these help the cards get deeper into segments of the population in Brazil and Mexico that previously did not use bankcards. Although Visa continues to lead in the region, MasterCard has managed to cut that lead in the major markets.

During the first half of 2004, Mexicans made 199.4 million purchases worth US$19.74 billion with MasterCard products, a 35% increase over the previous year, and the number of cards increased 25.6% to 17.5 million. Visa has 28 million cards in circulation in Mexico and four times the number of transactions.

After Brazil, Mexico is the second most active country in Latin America for bankcard use. Although just 160,000 businesses are equipped to accept the cards, the Mexican Banking Association projects that that figure could nearly triple. "The market is so big that everyone has room to grow," says Hasfield.

Seventy-five percent of economically active Mexicans carry a debit card, compared to 25% who hold credit cards, according to the banking group. MasterCard's key objective now is to the reach low-income segments of the population, says Xavier Pardo, new accounts director for MasterCard. "We have begun to launch prepaid products. We are looking for ways to make it easy for people to sign up," says Pardo.

In Mexico, as well as Brazil and across the region, MasterCard faces three big challenges: reaching people without bank accounts, encouraging the use of debit cards in shops and businesses, and increasing its client base. Despite the progress, it's no easy task since most Mexicans have never had any kind of formal relationship with a financial institution.

Although MasterCard, like any of its competitors, looks to grow, the company thinks that its advantages lie in working closely with its bank partners and by offering technologically cutting-edge services, as well as better security and marketing programs.

Besides increasing its base, MasterCard Mexico has to make sure customers use their cards in stores. So the company has been looking to attract businesses to the card like fast-food chains and gas stations.

The starting point for this strategy has been U.S. hamburger giant McDonald's, which since November 2003 has installed sales terminals in 150 of its 280 stores. The results are clear: Even without advertising the additional payment option, the chain reports a 5% increase in credit-card sales. "Some of our customers were only thinking of buying a hamburger-french-fries-soda combo meal. Once they realized that we take the cards, they also bought a dessert," says Claudia Negroe, McDonald's treasurer in Mexico. MasterCard Mexico is in the process of installing its equipment in five other fast-food chains.

An aggressive campaign to build a presence at gas stations will be the job for member banks of MasterCard Mexico. Some say it is already making life easier. "When I realize that I have run out of gas and have no money on me, it's a problem to go find a cash machine and then start looking for a gas station," says customer Ernesto Torres. "Now I just take out card and I'm ready to go."

MasterCard can gain a lot of ground in the race to attract customers, says Polux E. Diaz, finance professor at the Instituto Tecnologico Autonomo de Mexico. Yet, he stresses, that success will be dependent on making alliances with the right banks and on getting Mexicans to see a difference in the credit-card products on the market.

Marketing programs to encourage use of the cards are fundamental tools to make cardholders prefer a particular product, says Diaz. "It's precisely in bombarding the customer with information where they create their advantage," he says. "One begins to ask, 'What card should I use?'"

MasterCard's job in Mexico will be tough, since it requires educating the large percentage of Mexicans all but ignored for many years by financial institutions, says Diaz. "Actually, the greatest profit potential lies in the unbanked population. Most Mexicans make very little money, but with discipline can save $10 or $20 a month. For a big bank that's nothing, but add up all those millions and millions that can save small amounts and it becomes possible to create new businesses. MasterCard can do that, but it will take time."

Image matters. In Brazil, where Visa performs 76% more transactions, MasterCard has had to market heavily since 1996 to have its brand even recognized in the country.