MasterCard Is Selling Your Data Just in Time for the Holidays
Credit card companies make money by taking a cut every time you swipe your plastic at the checkout counter. Now MasterCard has found a way to make those swipes pay over and over again. — As the Financial Times first reported …
Context & Ripple Effects
The Financial Times broke the story that MasterCard has begun selling customers' swipe data, giving the network a way to earn repeatedly from transactions it already processes for interchange fees. Wired's framing around the holidays matters because Q4 swipe volume is when that data is richest for marketers.
There is a neat symmetry in the source: the FT has spent 2011-2012 building its own data-analytics operation to understand and retain readers, and it is now the outlet exposing how a payments network applies the same logic to purchase records. No other network had been reported doing this at scale as of October 2012.
First-order effects
- MasterCard immediately gains a second revenue stream on existing transaction volume, selling purchase-level data to advertisers and retailers rather than earning only the per-swipe interchange cut.
Second-order effects
- Rival processors — Visa and PayPal both appear in this corpus as MasterCard's peers, having jointly cut off WikiLeaks' payment processing in 2011 — face pressure to launch competing data products or watch ad-targeting budgets consolidate around whoever holds the richest purchase graph.
Third-order effects
- If the pattern holds, card networks reposition from toll-takers on payments into data businesses, which puts financial-transaction privacy squarely on the agenda for regulators and for consumers who never opted in to having swipes resold.
The trend: Payment networks are converting transaction records into sellable advertising data, making the swipe itself a product independent of the fee charged for processing it.