Banga, 50, will take charge in July, replacing retiring CEO Robert Selander, the company said on Monday.
Banga joined MasterCard in August from Citigroup Inc
Selander will remain as MasterCard's executive vice chairman and retain his seat on the board until he retires at the end of the year, the company said. Banga has also joined the board, effective immediately.
Selander, 59, became CEO in March 1997 and oversaw MasterCard's high-profile initial public offering in 2006.
Banga spent 13 years at Citigroup, including a stint as CEO of its international global consumer group, with responsibility for the company's brand and marketing work.
When MasterCard hired him last year, he was CEO of Citi Asia Pacific, responsible for all of the company's business lines in the region. He led a major reorganization of Citigroup's Asian operations in 2008 that gave regional heads increased authority across the bank's sprawling product lines.
The biggest single impact he could have is an emphasis on high-growth international markets -- Brazil, India, China -- where the big opportunities are for the MasterCard brand, said former MasterCard executive Philip J. Philliou.
Those countries are still at the relatively nascent stage for electronic payments, and that's where the growth's going to come, said Philliou, who is now a partner in Philliou Selwanes Partners LLC, a consulting firm to banks and payments companies.
Philliou cited Banga's Indian background and experience managing Citi's operations in the Asia-Pacific region as advantages.
Banga received about $10 million in compensation in 2008 from Citigroup, making him one of the firm's highest paid executives.
Prior to joining the company in 1996, he worked at Nestle
Banga, who graduated from Delhi University and the Indian Institute of Management, Ahmedabad, is one of a growing group of South Asians to lead major U.S.-based companies, including Pepsi and Citigroup.
His background and philosophy seem very well suited for MasterCard and its natural development as a public global payments organization, JPMorgan analyst Tien-tsin Huang wrote in a note to clients. We found Mr. Banga to be quite personable, with the acumen to meet the challenges of communicating with the Street.
The terms of Banga's initial contract with MasterCard included the right to leave the company with his upfront compensation intact, including a $4.2 million sign-on bonus, if he was not offered an opportunity by June 30 of this year to succeed Selander as CEO.
Shares of MasterCard, which reports first-quarter earnings on May 4, were up 0.2 percent at $259.45 in morning trading. At Friday's close, the stock had gained 1.1 percent since the start of the year.
(Reporting by Maria Aspan; Editing by Lisa Von Ahn)