The MasterCard Worldwide Network processes more than 30,000 transactions every
minute of every day—about 25 percent of worldwide credit card and debit card spending.
The network operates under a bandwidth-on-demand
model that’s designed to handle any volume thrown its way.
Even so, Reeg recognizes the urgency of tweaking, adapting
and improving the network—and a variety of other IT
processes—on an ongoing basis.
“The primary objective is to enable payment processing
from anywhere in the world,” he explains. “The goal is to
continue to build out the technology platform that supports
the global consumer and business environment. Today, we
are seeing a [seismic] shift toward electronic payments and
One of MasterCard’s biggest consumer-facing IT initiatives has been the rollout of PayPass, a system that uses
embedded RFID chips in credit and debit cards to provide
contactless payment solutions. This is a particularly attractive
option for convenience stores, movie theaters, gas stations,
sporting events, drug stores and other purchase points where
fast transaction processing is paramount.
This system benefits consumers by reducing the lines
of people waiting to pay for their purchases, and it helps
merchants reduce the number of labor-intensive cash
transactions. During the first quarter of 2008, more than
28 million PayPass cards and devices were in use, according to
MasterCard, and more than 109,000 merchants in 24 countries have adopted the system.
Another key initiative has been the April launch of a new
debit-processing platform, MasterCard Integrated Processing
Solutions (IPS). The platform offers financial institutions a
processing solution that works across multiple banking channels and systems. It allows next-generation ATM networks
to integrate with other market channels, enabling banks to
promote products, better manage transactions, conduct marketing and promotions, and collect data about cardholder
preferences. The system—which is designed to work across
countries and continents—also offers more-flexible reporting
and analytics without the need to hard-code data.
Mobile commerce has emerged as another area of intense
focus. With more than 3 billion handsets in use worldwide,
the foundation for future m-commerce capabilities is
squarely in place, and Reeg recognizes that person-to-person
payments and mobile commerce are inevitable. According
to Portio Research, an independent United Kingdom-based
research company, the m-commerce market will reach
$86.6 billion by 2011.
MasterCard has already adapted PayPass to work with
mobile phones, and it has showcased
secure over-the-air personalization
and payments. It also has developed
a mobile reload system, called ePower,
which allows consumers to add money
to reloadable MasterCard and Maestro
branded prepaid cards and accounts.
In addition, the company has
developed a worldwide money transfer
and domestic peer-to-peer payment
system that it plans to pilot this year.
The service will allow consumers to
exchange money electronically with
friends and family through mobile
phones and PDAs. Finally, MasterCard continues to leverage
its transaction-processing expertise to gain entry into the
emerging m-commerce arena, which includes games, music
and ring tones.
BUILDING A BETTER NETWORK
Make no mistake: The credit card business is continuing to
evolve. From its humble origins and simple plastic card in
1952, magnetic strips, microchips and electronic systems
have continued to redefine the industry. Along the way, the
constants have been the need for innovation and vision.
Following close on their heels is an ongoing investment in
MasterCard certainly understands the importance of IT.
At the beginning of the decade, it spent 160 million for a
complete IT overhaul that ushered in a component-based
architecture. Today, the company is reaping the rewards of
that investment, while also benefiting from a society that
increasingly eschews cash in favor of plastic.
Ponder a few numbers: MasterCard’s network now processes more than 30,000 transactions every minute of every
day. In fact, the company’s transaction volume now exceeds
25 percent of the more than 5 trillion in worldwide credit
card and debit card spending.
Red Gillen, an analyst with New York-based research and
consulting firm Celent, has stated that MasterCard occupies
one “of the sweetest spots in banking imaginable.” Financial
services holding firm Raymond James Financial, with headquarters in St. Petersburg, Fla., predicts that MasterCard
will continue to grow by more than 25 percent over the next
To ensure that the IT operation keeps pace with business
growth, Reeg is intent on building the most robust and agile
IT environment possible. “It’s an environment where you
really don’t know what that next innovation is going to look
like or what the next technology or consumer trend is going
to be,” he says. “You don’t know how payments will evolve and
what specific form they will take. So it’s important to build
a scalable and highly flexible IT environment. Our objective
is to make sure we’ve enabled our processing platform before
the business need occurs.”
So far, Reeg has done a solid job of ensuring that MasterCard
is in the vanguard of IT. He was instrumental in reworking and
rewriting the company’s IT systems five years ago in order to
approach the marketplace in a more agnostic way.