MasterCard Launches Transaction Data Service

Advisors Merchants Solutions to Compete With American Express in Offering Consumer Insights to Marketers

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YORK, Pa. ( -- MasterCard upped the ante among global payment companies this week in the growing data analytics and consulting arena.

The company rolled out MasterCard Advisors Merchants Solutions on Tuesday, just a few months after American Express announced American Express Business Insights. Both services use the proprietary data collected from the networks of consumer transactions and use it in a variety of ways to help marketers with prospecting, new-store placement, business strategy and planning and developing campaigns.

Credit and debit payment processors like MasterCard and Visa collect fees on transactions -- every time a card is swiped they get paid -- and they collect data, which they're now packaging for marketers. They are increasingly looking to provide targeted consumer data to marketers and retailers in an effort to attract new business and boost their bottom lines as shoppers cut back on spending and banks tighten credit lines.

MasterCard claims its service stands apart from American Express Business Insights by several measures. Its treasure chest seems much bigger, with information gathered on 340 million credit and debit cards in the U.S., compared to AmEx's 90 million credit-card holders worldwide.

MasterCard said its data is a broader reflection of consumer behavior because it combines MasterCard transaction data with other proprietary information, such as its SpendingPulse reports on national retail sales, and it also includes third-party data such as cash and check purchases. MasterCard also claims experience, as it has been providing similar services to its financial institution partners since 2001.

"It's a perfect fit for how we're already working with merchants," said Chris Alfonso, VP and senior business leader for MasterCard's U.S. commerce development. "This offering creates stronger relationships within the retail community [we already have] and as we're looking to build relationships with new customers."

Forrester Research analyst David Frankland said, "I would see this as absolutely validating what American Express did. They're both coming to the same conclusion -- there's money to be made here."

He said he expects that marketers will do tests of each service and decide which makes the most sense for them. As for more players entering the space, Mr. Frankland joked, "I guess we're all just sitting around waiting for Visa's announcement."

An American Express spokeswoman said the American Express data is unique, and its depth and breadth is different than what MasterCard, or Visa, could offer. Echoing Mr. Frankland, she added that MasterCard's announcement also "validates our position and why we got into this market."

However, the important thing for marketers, the spokeswoman said, is "the transactional data [that] really understands customers in real life in real-time and how they actually behave. That transaction information is critical. ... Marketers need to get more granular. Especially in this economy, where resources can be limited, they need to hone in on real information, and the most useful information."

Privacy will likely be an ongoing concern from consumers, Mr. Frankland said, but he expects both companies to be extremely cautious. As he pointed out, for these major brands, "their reputation is worth more than any revenue they could make off these products."

Strong showing
Mr. Alfonso said MasterCard has gotten positive marketing results and feedback through a pilot program last year. In one case, a big-box retailer he declined to name planned to spend "tens of millions" on an ad campaign to "win back" customers. However, MasterCard's data showed the retailer that, while consumer spending was down, they had actually gained share. The retailer decided not to run the campaign.

Another pilot participant was HH Gregg, a regional appliance and electronics retailer. Jeff Pearson, HH Gregg VP-marketing, said MasterCard approached his company about using its data to target new customers. The retailer specifically wanted to find customers who were inclined to buy electronics or appliances, but had never purchased at the store. MasterCard created a database and developed a direct-mail piece. HH Gregg sent creative and gave approval on the mailer, but never saw the database itself. And the results? About twice as many customers used the 20%-off mailer coupon than others had in previous, similar campaigns without the targeted database.

"The appeal is that this simply isn't data we could access without a partnership with MasterCard," said Mr. Pearson, who's also done similar work with American Express. He added that HH Gregg plans to continue to work with MasterCard this year as it moves into the Mid-Atlantic region, where as a new entrant they have little data of their own.

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