MasterCard Looks to Pick up Debit Volume And Share with IPS

Debit is where the transaction growth is, and now MasterCard Inc. is positioning itself at the center of the action with a new debit-processing platform for card issuers that it calls Integrated Processing Solutions. IPS handles everything from ATM and signature- and PIN-based debit card transactions to prepaid cards?and it gives MasterCard a weapon to compete with First Data Corp. and Visa Inc.'s Visa Debit Processing Services, as well as other processors. And IPS might help MasterCard win issuer loyalty in the signature-based debit card market, where it trails Visa by a wide margin. “It extends our role in the payments value chain from the core network switching business that we've been in to now the processing side for debit issuers,” Tim Murphy, president of MasterCard's U.S. region, said Monday at an analysts' meeting to explain the new service. MasterCard says IPS differentiates itself by its ease of use and its technology platform built upon two proven programs, Computer Sciences Corp.'s CAMS system for cardholder processing, and ACI Worldwide Inc.'s Base24-eps system for clearing, settlement, and related payment functions. IPS also includes fraud control and workflow components. The “secret sauce … our true differentiator,” in the words of IPS product manager Jerry Sargent, is Portfolio Viewer, a browser-based reporting system built from about a dozen separate applications. Without having to learn the code of the underlying systems, a user such as a customer-service representative could easily pull transaction data from just one account when solving a problem for a cardholder, while senior managers could call up aggregated data when analyzing portfolio performance or devising new loyalty programs. The system consolidates data that formerly may have come from different sources, and lets issuers set rules on who can view what. As an example of IPS's capabilities, Sargent said a bank looking to increase its interchange revenue from debit card transactions at the point of sale could have a manager recall data from ATM users who don't use their debit cards for purchases, and then, also using IPS, develop ATM screen messages aimed at them, messages that might offer points in the issuer's loyalty program for POS purchases. MasterCard says IPS is built on newer, more streamlined technology than other processing systems. “Our competitors are largely driven by the legacy systems, they're saddled with expensive-to-run, largely customized solutions,” said Murphy. IPS's first customer is Security Service Federal Credit Union, a San Antonio, Texas-based institution with more than $4 billion in loans. In addition to the pure processing business IPS could bring, MasterCard is using IPS as a tool to increase its share of the debit market. Visa currently controls about three-quarters of signature-debit dollar volume. But in converting to IPS, Security Service also is switching its entire debit card portfolio to the MasterCard brand. The size of the portfolio wasn't immediately available. MasterCard is making IPS available to its entire U.S. membership, though Sargent and Murphy indicate larger issuers?both those that still process in-house or use other processors?are the chief targets.” Small debit card issuers, however, might be the most eager customers, says processing consultant Paul R. Martaus of Mountain Home, Ark-based Martaus & Associates. He notes that small banks and credit unions typically can't afford Base24 or CAMS. To get comparable services, they might go to Visa, First Data, or Total System Services Inc. (TSYS), but also to Fiserv Inc. or Fidelity National Information Services Inc. “This is aimed at the heart of those competitive offerings,” he says. “It seems to allow smaller banks to play in the big-bank pools.” Regarding MasterCard's example of targeted ATM messages, Martaus notes that such functionality isn't new. “That has been a standard offering on ACI Base24 for a long time” he says.