Mastercard's adaptation to pandemic-driven payment system challenges

Mastercard’s Evolution at Micro and Macro Levels Mastercard is a worldwide online payment system that has realized an array of business opportunities with the global economic shutdown after the economic lockdown after the threats of the Coronavirus pandemic was recognized. While the global online economy had already led to the establishment of online retail stores, the payment mechanisms still face many challenges that limited the efficacy of online transactions, such as the limitation of the amounts that can be transacted through online mediums, with the need for the shutdown for brick-and-mortar business, the efficiency of the online payment systems needed to be improved to meet the growing demand (Hazy et al., 2013). The corporation has taken measures that address the current challenges and focus on the development infrastructure and policies that make it reliable even after the pandemic. Mastercard still faces an array of challenges, such as vulnerabilities in cybersecurity, regulation, and volatility of currencies, that can be addressed by employing complexity theory principles to identify, develop, and implement enabling infrastructure that includes social, legal, cultural, and technical factors that foster the evolution of the firm in the changing business environment.

Core Principle of The Complexity Theory Complexity theory is a collection of theories arising from natural sciences that examine complex systems. The theories that constitute the complexity theory are complex adaptive systems by SFI and Europe, autopoiesis by Maturana in biology and its application to social systems, dissipative structure by Ilya Prigogine, increasing returns, and path dependence by Brian Arthur, and chaos theory by Gleick (Mitleton-Kelly, 2008). Applying the knowledge generated from natural sciences to human origination and social behavior is limited except for Arthur in economics, Luhman on autopoiesis, and the work on strategy by Lane & Maxfield (1997). Employing the knowledge generated in natural sciences to evaluate organizations, as will be applied in this discussion, could change strategic thinking and the approach to creating a new organizational culture (Almatrooshi et al., 2016). Applying the theory of complexity allows the establishment of autonomous departments that are interrelated at a macro level to solve some of the emerging issues in the online banking system. Discussed herein are the core concepts of the theory of complexity.
The complexity theory holds that simple systems result in complex human behavior while complex systems give rise to simple behavior globally. Rather than perceive the whole system as a sum of its constituent parts, complexity theory posits that the whole system is a new entity that is qualitatively ideal from its parts. The theory emergence, connectivity, interdependence, and feedback are founded on the system theory. Still, they are expounded to address the uncertainty arising beyond the limits of knowledge in social science (Zhang, 2017). The additional tenets in the theory of complexity are dynamics, chaos theory, and evolution. By evaluating the interdependence and the self-organization of a corporation, the management of an organization acquires a richer image of the complex systems in the internal and external organizational environment resulting in better development of strategies. These concepts will be discussed herein as well as how they are interdependent Adapting in at the Macro-Level The theory of complexity is just the beginning of the suitability of natural science concepts in an organizational context, but further analysis examines which principles are most suitable for evaluating a specific component of an organization. The concepts of the complexity theory ad derived from different disciplines in natural science and applied to different elements of a business. Connectivity and interdependence foster the rise of complex behavior. Consequently, this raises multidimensionality in that these behaviors interact since individuals have the liberty to make individual decisions. As a result, technical, economic, social, cultural, and global dimension factors influence each other resulting in new challenges and evolution of systems that give rise to a new entity. The macro-level systems at Mastercard will be discussed using the principles of complexity theory.

Degree of Connectivity Connectivity in the theory of complexity refers to the propagation of influence in an ecosystem dependent on the degree of interdependence and connectivity. The concept of connectivity is borrowed from the biological understanding of ecosystems where a group of species interacts with another subset of other species that creates an extended web structure mirrored in the human population. The degree of connectivity refers to the strength dependencies and how each of the individuals impacts the related entities. As a result, one organism’s fitness depends on the organisms it interacts with as they adapt to change(Mitleton-Kelly, 2008). Each individual belongs to different groups in a social context where their contribution partly depends on the other individual in question. Notably, in a human population, the contribution of a single individual is not a uniform relation but is dependent on the individual’s skills, expertise, and knowledge.
Mastercard is the leading online banking system internationally due to its reliability and connectivity globally with buyer partners, banks and non-banks, and supplier partners. Since it has operations in different continents, it raises issues with different regulations in different countries, trading blocks, and geopolitics. For example, in the U.S., the Office of Foreign Assets Control (OFAC) has imposed sanctions that limit the transacted amount. These sanctions are intended to prevent illegal trade (U.S. Department of the Treasury, 2021). This indiscriminate approach to regulation limits the amount that can be transacted and the regions in which the firm can operate. Connectivity in the theory of complexity can be designed or undesigned, for or informal. Mastercard has been operating under loose regulations that allowed for the corporation to operate in different jurisdictions, making it in a suitable environment. However, the heavy reliance on online backing for global transactions has created vulnerabilities as they have been abused to conduct illegal transactions (Trinh et al., 2020).
Consequently, governments have been forced to regulate online transactions that have limited trade to a certain bandwidth of amounts. Change in the regulatory environment is working in a counterproductive manner as the online global economies. Therefore, Mastercard has been forced to develop suitable operation policies that allow for reliable transactions on its platform.
The transition to a digital work environment in the 21st century has also created substantial issues in cybersecurity that have resulted in efficient online transactions. For example, Mastercard incurs the U.S. $3 Billion losses annually inefficiencies and risk due to online fraudsters who exploit the vulnerabilities in the corporation’s systems and the human errors made by its clients while transacting online (Trinh et al., 2020). The government and the cyberattacks are independent actors that have a high degree of impact on the business of Mastercard. The measures are taken to make strict regulation of transactions are intended to limit counter-terrorist financing, anti-laundering, and anti-corruption and economic sanctions due to the reliance on online banking platforms to conduct these activities before the current regulation (Laidroo & Avarmaa, 2019). The increase in cybersecurity vulnerabilities has been driven by the permeance of the digital economy and globalization. These are forces that have been created by human interactions on the internet as well as global travel. While these interactions were projected to increase the business for the corporation, the activities of the illegal trade and cybersecurity have made the growth of business slower than expected. Mastercard as a single entity has been affected by the cyberattacks and governments’ actions in response to the change in global online transactions. As a result, Mastercard has been forced to improve the security of its systems and adjust its policies to adhere to the regulation in different jurisdictions. These are reactive measures in the changing dynamics in the global online banking environment. Co-evolution Connectivity is not limited to the interaction between individual systems within an ecosystem but also in tandem systems. As one system changes, it necessitates the change in the behaviors in the systems that it is connected to fit into the changing environment. This interdependence in the change in a corporate environment by industry competitors, business environment changes, or relationship between the industry with other industries forces the corporation to evolve as these forces change. An ecosystem is defined as “each kind of organism has, as parts of its environment, other organisms of the same and different kinds, adaptation by one kind of organism alters both the fitness and the fitness landscape of the other organisms” (Sammut-Bonnici, 2015). In a social context, a social ecosystem can be influenced by the technical, geographic, social, cultural, and economic factors that force the co-evolution of ecosystems in each of these factors. Notably, no single factor operates in isolation rather; they work in tandem in an autonomous system that co-evolve simultaneously.
Each entity in online banking has ideal participation that influences and influences the social factors caused by other businesses, suppliers, economic, consumers, cultural, and legal institutions. Co-evolution raises the concern of accountability as an effect from one ecosystem results in developing a social response (Sammut-Bonnici, 2015). As such, organizations, institutions, and organizations must consider the social impact of their response to the responsive action. As such, corporations are keen while taking active or reactive action to make sure that the impact of their actions across the industries is ethical and sensitive to consequent social results.
The evolution doe not only happens at the macro-level but at the microlevel as well in small increments, eventually necessitating evolution at a macro-level. Through the process of co-evolution, there arises a new order and coherence between systems—Mastercard’s business co-evolves in tandem with the technology since its global financial system powers its operations. The percolation of the internet globally has resulted in the reach of a larger market and upward scaling of its operations (Almatrooshi et al., 2016). However, this expansion has created technological, economic, and social impacts on how financial operations are conducted today. The result of global trade being possible has been growing globalization and emphasis on competitive advantage in production.
Countries now specialize in producing services that they are uniquely equipped to produce to maximize exports and source what they have a deficiency in globally. Notably, the permission to operate in a global market creates a social responsibility in the organization to the communities within which it functions to maintain a good working relationship (Trinh et al., 2020). Mastercard has a global corporate social responsibility that focuses on contributing to offering solutions to the challenges in communities where they operate with international organizations, such as UNICEF, which offers educational funds to aid the education of children from low-income families (Mastercard Foundation, 2021). Notably, the partnership with Mastercard is informed by the impact of education in skilling the human population in communities to gener5ate skilled personnel that transforms their communities. Non-Linear Dissipative Structure and History Dissipative structure refers to open systems that exchange energy, information, or matter across their environments, resulting in new structure and order when they shift too far from equilibrium. This approach in the theory of complexity heavily focuses on the principles of thermodynamics, where the application of external constraint systems is maintained at equilibrium. However, the critical temperature of liquids and solids in motion is structured in a small convention that forces the water molecules to organize themselves. The motions and self-organization are formed out of the molecular chaos of the molecules in motion at the critical temperature (Sammut-Bonnici, 2015). While the molecules appear to be in a single motion, the direction of individual molecules could be to the left or right. When the constraints set are strict, the molecules organize themselves accordingly in this environment.
Either self-organization can achieve the organization to attain a state of order through conservative or dissipative processes. Conservative self-organization refers to the transition of reversible states, while dissipative structure refers to the transition phase that irreversible and that results in the establishment of a new order. Dissipative structure arises from the latter system and results from collective non-linear cooperation of micro factors that reach a critical point far from the equilibrium (Waldrop, 2008). The minor non-linear interactions at the critical point give rise to an entirely new system interdependent to the original system and other entities at the macro-level.
Consequently, history is built in the manner of behavior of the system since one among many possibilities takes place that affects its further evolution. Since there are multiple alternatives, the history held is path-dependent to arrive at an array of solutions. Whenever another critical moment arises, the molecules with a right and left orientation separate to their respective paths (Almatrooshi et al., 2016). In a social context, a series of decisions that an individual makes from an alternative of the available choices determines the path of life for that individual.
The non-equilibrium in a system may help avoid thermal disorder and transform part of the energy communicated from the environment to give rise to new behavior, dissipative structure, characterized by multiple choices and symmetry breaking (Hazy et al., 2013). The banking industry had already established an equilibrium that worked efficiently for banking needs in the 20th century. However, the 21st century has been greatly affected by the digitization of initially analog activities that have resulted in the complete establishment of the online banking system.
However, the need for equilibrium in the online industry has given rise to better regulation to limit illegal activities while simultaneously preventing international trade. Thus, there is an oscillation between order and chaos that emphasizes the establishment of stability in the industry (Zhang, 2017). Currently, the online global system is facing challenges, such as the need for a stable currency that can solve currency volatility. The rise of an array of cryptocurrencies aims to solve currency volatility and online banking systems to conduct illegal transactions online using blockchain technologies. Currently, the online banking industry is critical to determine its growth in the future. Adapting in at the Micro-Level