Many organizations are working hard to address the opportunities and

storage challenges associated with “big data.” Industry experts estimate that

the total volume of data is doubling every 18 months and the vast majority

of new data being generated is in business domains. MasterCard

International ( is no stranger to wrestling with the

issues associated with massive databases. MasterCard has amassed a data

warehouse that is more than 100-terabytes in size and company insiders

expect that it will growth to more than 1.8 petabytes. The growth of

MasterCard’s data warehouse is fueled by a client/server network that, on

average, handles 140 million credit card transactions per hour on behalf of

more than 25,000 financial institutions [WALL08]. In 2007, MasterCard’s

worldwide network processed 18.7 billion transactions totaling approximately

$2.3 trillion.

MasterCard’s computer facility authorizes, clears, and settles each credit

card transaction in real time as a cardholder’s credit card is swiped.

MasterCard’s bank and business clients expect the system to be fast and

accessible. To meet these expectations, MasterCard expects its network to

have a response time of 140 milliseconds per transaction (or less). It also

has implemented sufficient redundancy and failover systems to be able to




promise its customers 99.999 percent network availability. Needless to say,

MasterCard customers also expect the transaction processing and data

storage systems to be secure.

For continued success, it is important for MasterCard to grow its volume

of credit card transactions. To do this, the company works to expand its base

of bank clients and business partners by offering them an attractive mix of

products and services. Part of their efforts is directed toward helping its

clients increase the number of customers who hold a MasterCard and use

them to make purchases. To remain competitive against other credit card

issuers such as American Express, Discover, and Visa, MasterCard must also

continue to grow its volume of credit card transactions and it has learned

that one of the best ways to do this is by being a good business partner for

its clients.

In addition to credit cards, MasterCard offers debit cards, prepaid cards,

smart cards with embedded chips, and contactless cards. It also has

business card programs for commercial and public sector organizations of all

sizes. MasterCard partners with its customers to create customized loyalty

programs and reward solutions to provide incentives for cardholders to use

MasterCard to make purchases. By helping its customers identify the

benefits that services that are most appealing to their cardholders,

MasterCard is able to help its partners increase customer satisfaction.

MasterCard’s global processing system enables customers to extend their

loyalty programs worldwide. Hence, it is not surprising that MasterCard has

been successful in partnering with airlines and hotel chains on loyalty



MasterCard’s Data Warehouse Strategy MasterCard’s data warehouse has emerged to play an important role in the

company’s competitive strategy. This global data repository has become a




business intelligence (BI) engine that helps the credit card giant and its

clients make more effective business decisions.

Planning for the data warehouse began in the mid-1990s. Interestingly,

MasterCard’s executive team immediately grasped the data warehouse

concept recommended by the IT division as a potential game changer.

MasterCard executives typically required a detailed business case justifying

IT investment recommendations, but in this case, the executives instantly

recognized the proposed data warehouse as a strategic move to give

MasterCard a competitive edge. Specifically, MasterCard wanted to improve

market share. At the time, MasterCard accounted for only about 25% of

charges for goods sold worldwide using credit cards, with Visa accounting for

50%. Since the creation of the data warehouse, MasterCard’s market share

increased to 31%. Although Visa continues to be the industry leader,

MasterCard’s role as a global leader in credit card processing has

strengthened [BASE11].

Financial institutions that use MasterCard rely on the history of credit

card transactions to provide information for targeted marketing and business

planning. For example, a bank that issues credit cards might notice a large

volume of charges for flights on a specific airline. The bank can use this

information to negotiate a deal with the airline to provide special offers and

incentives to cardholders. Similar promotional opportunities could be offered

to a hotel chain that would provide additional incentives (such as “stay two

nights and get a third night free”) for using MasterCard to reserve and pay

for a room.


MasterCard’s BI and Reporting Tools MasterCard runs a combination of homegrown and off-the-shelf analytic

tools to identify buying trends, credit card fraud, and other useful

information. The company can correlate and analyze transactions to




determine a consumer’s interest or detect anomalies that suggest a card has

been stolen. MasterCard offers bank clients access to these tools, as well as

custom reports.

Among the signature applications provided by MasterCard is its Portfolio

Analytics suite of BI and reporting tools. This suite includes a wide range of

standard reports that let members analyze transactions every day, week, or

month and compare the results to different parts of the country, other parts

of the world, or predefined groups of similar banks.

Another popular tool is the MasterCard Marketing Center, which helps its

customers monitor, analyze, and develop campaigns to increase use of their

cards. For example, a card issuer in Los Angeles 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 it might propose to Wal-Mart a mail

marketing campaign before the opening of baseball season, tied to heavy

spenders with an affinity to the Dodgers or Angels. A card issuer in New York

City could use MasterCard’s BI and reporting tools to identify patterns in

restaurant charges for its most affluent cardholders. This information could

be used to develop an “insider’s guide” to NYC “hidden gems for food and

wine” to share with select groups of other MasterCard holders.

The process used by MasterCard customers to make access the data

warehouse to populate reports or perform BI queries is illustrated in general

terms in Figure C3.1. Such transactions proceed in the following way:

1. Member bank connects to MasterCard facility, known as MasterCard

Online. This could be by Internet, by means of a mobile access service, or by means of a private wide area network, such as a frame relay network. In the case of Internet access, all traffic must go through a firewall, which assures that unwanted traffic is blocked.

2. User authenticates to MasterCard Online. A dedicated group of

servers is assigned the task of authenticating all incoming transaction requests to assure that the user has permission to use the facility and to specify the user’s level of privilege.




3. MasterCard Online verifies user product licensing. This has to do with which business enterprise software tools the bank client is able to use.

4. User request is forwarded to a transaction server, which invokes the

appropriate application software for this transaction. The application translates the request into the corresponding database requests and updates.

5. The transaction server forwards a transaction request to the data

warehouse, which processes the request and returns a response to the member user.







MasterCard continues to expand the size of the data repository and the

tool set. The goal is to include every transaction handled by members over a

three-year period, capturing the dollar amount, the card number, the

location, and the merchant in each instance. But it is the set of applications

provided to members that is crucial in gaining competitive edge. MasterCard

aims to gain favor with portfolio managers and member banks, who decide

whether to push Visa or MasterCard. 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 MasterCard benefits. To keep

ahead of Visa, the MasterCard IT shop has dozens of full-time developers

tasked to come up with new tools and reports to put in the hands of banks

and other clients. The developers also work with MasterCard clients to create

repeatable custom reports that can focus on any aspect of authorizing a card

or transaction, including charge backs for disputed amounts and fraud.

MasterCard has approximately 1.7 billion cardholders worldwide and

MasterCard can be used for purchases at more than 33 million locations.

While this might seem like sufficient market penetration, MasterCard is

always looking for new ways increase volume of purchase transactions.

Several new payment systems have been implemented including “tag & go”

PayPass cards that speed up purchasing by avoiding the need to swipe a

card [LAWS12]. PayPass digital wallets have also been developed to speed

up the payment process for online purchases.

MasterCard has embraced smartphone payment systems and are rolling

out smartphone and tablet PC apps that enable banks and business clients

use mobile devices to monitor credit usage patterns and use its data

warehouse BI and reporting tools [TELE12]. As mobility become more

pervasive, MasterCard’s data repository will be modified to assimilate mobile

transactions with traditional credit card transactions. This will almost

certainly result in an enriched set of BI and reporting tools.




Discussion Points 1. MasterCard managers are motivated to increase (1) the number of

individuals who have and use a MasterCard credit card, (2) the number of banks and other clents who issue MasterCards to customers and/or employees, and (3) the number of locations that accept MasterCard payments. Discuss how MasterCard could use its data warehouse to help it expand each of these customer bases.

2. MasterCard makes its analytics tools available to all of its member

banks and other issuers. It knows that getting its clients to use these tools can be critical to keeping them as loyal customers. Discuss the steps that MasterCard can take to promote greater use of its BI and reporting tools by its clients. Who do you think larger or smaller clients will benefit most from MasterCard’s analytics tools? Why?

3. Do some Internet research to identify examples of “tap & go”

applications. What are some typical types of “tap & go” payment applications and what growth trends are expected? Do you think that there are limits to the types of applications that “tap & go” payments can be used for? Why or why not?

4. Do some research on the extent to which MasterCard’s PayPass digital

wallet is being embraced as a payment mechanism for online purchases. What are the advantages and disadvantages of digital wallets such as PayPass? What can MasterCard do to encourage online merchants to accept PayPass digital wallet payments?

5. Supporting mobility and smartphone apps is important to MasterCard.

What challenges does MasterCard face in rolling out smartphone payment systems? Which of these do you think will be most difficult to address? Why?


Sources [BASE11] Basenese, L. “Stock Wars: Visa vs. MasterCard.” Wall Street Daily, May 18, 2011. Retrieved online at: [LAWS12] Lawson, S. “MasterCard, Startup PaidPiper Tap into Credit Cards for Mobile Payments.” CIO, May 4, 2012. Retrieved online at: to_credit_cards_mobile_payments/




[WALL08] Wallgum, T. “The Man Behind MasterCard’s 100-Terabyte Data Warehouse.” Computerworld, July 17, 2008. Retrieved online at: 316BA999B7AFE095 [TELE12] The Telegraph, “MasterCard to Let Users Pay by Smartphone App.” May 17, 2012. Retrieved online at: 9253573/Mastercard-to-let-users-pay-via-smartphone-app.html

    • MasterCard’s Data Warehouse Strategy
    • MasterCard’s BI and Reporting Tools
    • Discussion Points
    • Sources
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