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

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.

"We accept Credicard, MasterCard, Visa, Diners." That's still a common response from waiters in Brazil when asked what cards are taken. That's because Credicard for a dozen years was the exclusive distributor of the MasterCard brand in Brazil, so much so that Credicard often gets named among the biggest credit-card companies in the world.

During his first years in Brazil, MasterCard Brazil President Desmond Rowan, who is from the United States, found himself irritated when he passed gas stations and, on the sign that listed gas prices, he saw only the Credicard logo. In response, the company developed a marketing strategy directed at sign makers to make them use the correct name--MasterCard.

Thanks to an intense job of marketing and image development, today Rowan sees the logo and name of his company correctly used. Beginning eight years ago, when MasterCard disassociated with Credicard and opened its own office in Brazil, the company has increased its market share along with its brand recognition. In 1996, just 9% of people recognized the brand, according to surveys. By the end of the first quarter of 2004, that number had risen to 54%, much closer to the market leader, Visa, at 64%. "Their figure in 1998 was 78%," says Rowan. "Thanks to the fact that it was the biggest credit-card distributor in Latin America, Credicard did a fantastic job. But the disassociation is a long-term process."

As it has around the world, but even more so in soccer-crazy Brazil, part of that success has been thanks to the "priceless" ad campaign during the 2002 World Cup. Even today, sponsoring the Brazilian national team is part of the company's overall communication strategy. The 1992 match was "our first major investment in marketing" says Rowan.

The same as in Mexico, and despite similarly low incomes, Brazil offers great growth potential for the personal credit industry. In Brazil, transactions per person average six per year--once every two months--compared to 84 a year in the United Kingdom.

Brazil's consumer market is 85 million people, of which 45 million have access to bank services, says Murilo Barbosa, marketing director for MasterCard in Brazil. Private consumption adds up to $70 billion annually, of which just 15% is paid for electronically. Brazil today has 135 million debit cards in circulation and 45 million credit cards. Barbosa says the growth of the industry has been spectacular.

The biggest growth area for the company today in Brazil has been debit cards. Currently, MasterCard has 61 million debit cards, called Maestro and Redeshop, in addition to 21 million credit cards. The debit-card business has grown an average of 55% a year, more than twice as fast as credit cards. This arm of the business got under way in 2002, when MasterCard bought Redeshop, causing its base of cardholders to jump to nearly 60 million cardholders from 25 million.

The banks, which are interested in decreasing the volume of checks they handle since the cost is so high, support the card business, says Rowan. As the volume of checks written has fallen--by 3.4% annually on average across the country--the number of debit and credit transactions has risen by 60% and 20%, respectively.

Thanks to a solid relationship with Caixa Economica Federal, which has 32 million of MasterCard's 60 million cards circulating in the country, the credit-card company then pushed its brand into Brazil's interior, establishing relationships with affiliates, the store owners who would accept the card, along the way. MasterCard chose the city of Sorocaba, in Silo Paulo state, for a pilot project to raise its profile beyond Brazil's capital and largest cities.

Sao Paulo's interior cities combined form the second wealthiest market in the country, trailing only the city of Silo Paulo. The company's equipment distributor Redecard first worked to develop its Sorocaba businesses, then used the town as a base to develop neighboring towns. At the same time, MasterCard turned managers at 100 branches of the five largest banks into an army of card-promoting bankers whose goal was to turn their own commercial clients--stores, bars, bakeries and so forth--into affiliates of the network Simultaneously, the company also made an effort to get more cardholders.

The result, in a little less than three months, has been a 35% increase in card use compared to the average in the state. In the phase, starting this year, the expansion plan grows to include 28 more large cities in Silo Paulo state. Then it moves to other states. "We are always in the big central cities," Rowan says. "We need to get out of the capital and bigger cities and reach the suburbs and small towns."

PLASTIC FANTASTIC

Latin America market share for major credit-card providers.

Visa (2)             50%
MasterCard (1)       32%
American Express     14%
Dinners Club          4%

Note: Table made from pie graph.