The newest entrant into the growing money market mutual fund industry is MasterCard. The Securities and Exchange Commission this week approved its application, while concurrently rejecting one from rival Visa.

Acting in conjunction with Fidelity Financial Services Group, a Boston money market fund, MasterCard will offer its 52 million members in this country a cash management account similar to that offered by a number of big brokerage firms. Although it will provide essentially the same services, MasterCard will require a much smaller amount of money to open an account. The service is expected to attract many people who want the convenience of banking and a money fund, plus brokerage capabilities, under one roof.

The program works as follows: At one of the participating 12,500 banks and savings and loans that issue MasterCard, customers can have "excess" funds siphoned off daily from their checking or NOW accounts and placed in a money market fund run by Fidelity that pays a higher interest rate. Each bank or thrift would determine the level above which funds would draw the higher rate, perhaps $2,000 or $2,500. Moreover, through their banks, customers could have their brokerage orders executed by Fidelity. (Some large brokerage houses require a customer to put up $20,000 or more to open such an account.)

From the customer's standpoint, the plan proposed by Visa is similar to MasterCard's. Its application was not approved immediately--although discussions with the SEC are continuing this week--because of how the money is invested.

MasterCard told the authorities that Fidelity would reinvest customers' money in certificates of deposit of participating banks "whenever possible." This allows Fidelity considerable latitude to invest the money where it will earn the best return, as is in the best interest of its customers.

Visa, on the other hand, promised to recycle the money by buying certificates of deposit from the same banks that generate the business.