SixBy Tom Steinert-Threlkeld | Posted 2002-06-17 Print
Mastercard thinks it can catch up to Visa. Its latest weapon: analytical tools it develops for credit card issuers.-Month Generations">
Among the signature applications the developers have come up with are the Business Performance Intelligence suite of operational reporting tools, and MarketScope, which helps banks monitor, analyze and develop campaigns to increase use of their cards.
The business performance suite provides about 70 standard reports that let members analyze transactions every day, week or month, and compare their results to different parts of the country, other parts of the world or predefined groups of similar banks.
The developers also work with banks to create repeatable custom reports that can focus on any aspect of authorizing a card or transaction, including chargebacks for disputed amounts and fraud.
Here's where Caro's "little percentages" come into play, in day-to-day operations. One report, called the Issuer Call Referral Performance Report, indicated that one of MasterCard's members was asking its merchants to call in by phone to approve a charge on one in every 50 transactions. That compared to one in every 500 charges for other banks in its region. Pulling up related information showed that the call-ins were coming on mail and telephone orders. With 100,000 transactions a year of that sort, changing its authorization rules to reduce call-ins saved $300,000$3 a call.
Another customer found that 20% of the time it turned down a transaction, it was not because of any analysis of the customer's creditworthiness. Instead, the bank's systems simply timed out.
The MarketScope application, by contrast, helps banks and merchants team up to spur more purchases made by credit card. A card issuer in the New York area, for instance, might use the data to see how many cardholders spent $25 or more in January and February on sporting goods at Wal-Mart stores. Then, notes Clyne, it might propose a mail marketing campaign before the opening of baseball season, tied to heavy spenders with an affinity to the New York Mets or Yankees.
But the kind of credit card issuers that might be swayed by these tools are more likely to be state and regional banks, says Iacobuzio of TowerGroup. Big national and international banks are likely to have developed and used their own analytical tools, he says. "What they might do is use the MasterCard data and analysis to benchmark their own results," instead, as a sort of reality check.
That may well be the case. While banks are loath to describe the business intelligence they do use, big card issuers such as J.P. Morgan Chase note that they only use MasterCard's tools "from time to time."
The tools are not freeand are not offered to merchants. But retailers may not be inclined to send any more money to MasterCard or Visa anyway. Wal-Mart Stores Inc., for instance, is leading a class-action suit against the two card brand licensors for forcing them to honor debit cards, even if they only want to honor credit cards. Many merchants are still miffed by the 1999 increases in the "interchange'' fees charged for using their charge services. And MasterCard, in January, initiated another round of fee hikes.
Merchants now often regard MasterCard and Visa fees as a "profit-attrition factor," says Gwenn Bezard, a senior analyst with Celent Communications, in Boston.
Originally, MasterCard trailed Visa into the field of providing market data to members in some electronic form. MasterCard Online debuted in the mid-'90s after Visa already had been supplying data on disks that could be used on desktop computers, in a program called VisaVue. Now Visa has answered back with its own line of "member-facing" tools on a service called Visa Online, which debuted in 1998 as a portal on the Web. It now has 45,000 users, where MOL claims 20,000.
Visa also is managing about twice as much dataabout 100 trillion characters. But, to date, it has mainly supplied data either online or on disks to its bank customers, who use their own software and machines to analyze it. Now, according to Sara Garrison, senior vice president of Inovant, Visa's technology subsidiary, Visa will begin to run the analyses on its own computers.
In May, Visa also introduced a Web service called Resolve Online, which helps banks deal with disputed payments, known as chargebacks. And online business analytics are on the way, Garrison says.
"I can guarantee you that if MasterCard is ahead of the game in any of this," says Iacobuzio, then Visa "will have it in six months."
But six months can be a long time, in Bray's world. Back in 1995, when MasterCard first set up its online operation, the association, based in Purchase, N.Y., thought the warehouse might eventually hold 8 terabytes of data. It started with one. In 1996, it projected 10 terabytes would be stored by 2000. It hit 28 terabytes, instead.
Now, in 2002, Bray is sitting on a pile of data more than twice as big. And he figures the big data center conversion that "almost killed some of our people" was worth it.
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