MasterCard Tools Up Data Handling - ' Playing for Percentages '

Playing for Percentages

The idea is to gain favor with the portfolio managers at member banks, who decide whether to push Visa card transactions or ones involving MasterCard instead. If the online tools help those managers analyze the profitability of the cards in their portfolio better or gain more customers and transaction volume faster, then either MasterCard or Visa could get a leg up on the other.

"If he can do things faster," says MasterCard vice president of Internet technology services Joseph Caro, "little percentages start moving in our direction."

The "little percentages" that Caro talks about are pieces of the volume of credit card and debit card action.

MasterCard has long played Avis to Visa's Hertz in this field of consumer finance, which has only a handful of players. Historically, Visa has walloped MasterCard, with its cards being used for more than 50% of charges for goods sold worldwide. MasterCard has accounted for only about 25%.

But in the last five years, MasterCard has come out of what its CEO, Robert Selander, calls "its doldrums." With aggressive courting of banks and independent thinking on pricing of services, it has seen its share of credit card charge volume rise from 27.8% in 1997 to 31.6% last year.

All of a sudden, it can begin to think it has a legitimate chance to overtake Visa, whose market share fell to 44.5% last year, according to cardweb.com. Indeed, Selander's outfit has been pushing hard to get big banks to choose sides, quite literally. In 1999, for instance, it got Citigroup, the largest credit card issuer, to commit to a long-term goal of skewing its portfolio in favor of MasterCard, 85% to 15%. J.P. Morgan Chase, the No. 4 issuer, has committed to an 80% skew.

So now MasterCard has deployed a cadre of 35 full-time developers, to come up with new tools to put in the hands of these banks, to analyze their portfolios—and switch more transactions to MasterCard's favor.

Last year, the developers created 27 new applications that went onto a password-protected site on the Web called MasterCard Online, or MOL. That site acts something like a double-agent, serving both MasterCard's objectives and the portfolio managers', perhaps giving rise to the pronunciation inside the card licensor's operations center of MOL as "mole."