Will more companies follow Mastercard’s lead?

Gies professor says more will embrace digital payment

What’s in a name?

For Mastercard, its name might not be worth as much as some might think.

Mastercard announced this week it is dropping the name from its logo “in select contexts.” The company, known for its credit cards, will bank on customers recognizing the brand solely by its interlocking red and yellow circles. The “Mastercard symbol” has been the company’s hallmark since 1968.

Mastercard“With more than 80 percent of people spontaneously recognizing the Mastercard Symbol without the word ‘mastercard,’ we felt ready to take this next step in our brand evolution,” said Raja Rajamannar, chief marketing and communication officer at Mastercard, in a press release.

This move might be a smart one, says Gies Business Professor Yuqian Xu. She recently conducted research highlighting the popularity of digital payment methods, like China’s Alipay, which suggests increasing digital payment could lead to fewer credit card transactions.

“By taking the word ‘card’ off their logo, we’re seeing Mastercard embrace this trend of consumers moving toward more digital payment methods. I think this is a smart move letting the public know they’re adjusting with technology,” said Xu, an assistant professor of business administration. “Eventually we’re going to see credit cards having a progressively smaller market share as digital payment methods grow.”

Xu co-authored a paper titled “The Impact of Mobile Payment Channel on Consumer Consumption: Evidence from Alipay.” Her research shows consumers spent more money when adopting a digital payment method, but less of that money was spent with physical credit cards. In fact, Xu the amount of money charged to physical credit cards decreases by around 3.9% after the Alipay adoption.

“Credit card companies need to view the move toward digital payments as an opportunity for them, instead of as competition,” Xu said. “Traditional credit card companies have a large market share already, so if they increase their digital payment capabilities, they’ll be able to keep their original customers and acquire new ones as well.”

Mastercard acknowledges the changing financial landscape as they become the first major credit card company to remove the name from their logo. In their news release announcing the change, the company refers to itself as a “digital payment company.” Now with this major logo change, they’re banking on the fact that consumers view them the same way.