Following the new interchange fee regulations, payment companies have been attempting to identify new revenue streams to make up for the loss of interchange profits. As the Financial Times first reported, MasterCard has identified one potential opportunity, but it involves selling consumer transaction data to advertisers.
In a presentation to potential clients, MasterCard highlighted the different ways the company break down historical data on consumer segments and trends through its processing of 34 billion transactions annually.
MasterCard senior vice president Susan Grossman explains the potential benefits of data mining as reported by Wire.com:
“Business travelers tend to travel Monday through Friday and not so much on Saturdays and Sundays, so we can identify segments that have a high propensity to travel Monday through Friday and feel confident that we have isolated business travelers.”
Each time that a consumer swipes his or her credit card, MasterCard is able to obtain information regarding the date, time, amount and which merchant processed the transaction.
The benefits to advertisers is clear, with the data they can effectively target different consumer segments like last-minute shoppers, holiday travelers, big spenders, and people who don’t eat out except around the holidays. However MasterCard is quick to point out to its potential clients and to ensure consumer confidence, none of the data collected contains identifiable information like consumer names and or addresses.
In a statement MasterCard wrote:
“MasterCard is committed to protecting individual privacy. No personally identifiable information is collected, disclosed or used in the analysis and development of MasterCard Audiences.”
While the program to package and data began this year, and is only available in the U.S., this type of data mining is just the tip of the iceberg. Unless regulation is introduced to prevent these sales (which unlikely in the United States), expect major retailers and other payment operators to start following MasterCard’s example.
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