Payment Companies: New Business Models

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Payment Companies: New Business Models

Popular US card issuers American Express, MasterCard, and Visa are all incorporating new product and service offerings to stay relevant and competitive. American Express and MasterCard both offer business insights to SMEs. MasterCard uses its predictive analytics capabilities to offer other card issuers fast, early fraud detection as well. Visa is making big forays into IoT and mobile payment technology, as well as blockchain-powered digitization of international transactions. Read on for my full rundown of these moves!

AMERICAN EXPRESS: BUSINESS DATA INSIGHTS

American Express, responsible for more than a quarter of all credit card transactions in the US (at a total value of more than $1 trillion), began integrating big data analytics into its internal strategy in 2010. Since then, they've expanded their core offerings and turned that data outward, allowing AmEx business clients to measure their performance against their competitors.

The company also has customer-facing big data services like AmEx Offers, which provides customers with location-based coupons for businesses that accept American Express cards. American Express is recognized as a leader in credit card issuers offering data services, and is "actively undertaking cognitive technology initiatives" in AI and machine learning to better its offerings.

MASTERCARD: INSIGHTS FOR SMALL BUSINESS & BEYOND

Like American Express, MasterCard offers its business clients data analytics services. These include customer transaction insights, demographic information, social posts and sentiments, and even more. MasterCard also offers business performance insights and competitor performance comparisons -- their Local Market Intelligence platform provides "very rich insights into average ticket size compared with their competitors, the frequency of their customers, and a variety of things around their performance — around their customer loyalty and around how they can acquire new customers."

Elsewhere in data analytics, MasterCard recently patented a tool to use credit card and other data to predict possible world political events. MasterCard stock is very strong thanks to these technologies and thanks to several newly-announced payment technologies from the company (including blockchain).

MASTERCARD: EARLY FRAUD DETECTION

MasterCard has also expanded into early fraud detection through predictive analytics. This new service, called the Early Detection System, is aimed at card issuers and banks and uses MasterCard network data "and a combination of internal and external data sources" to identify cards and accounts that face heightened risks of identity theft, notifying the issuer or bank much faster than conventional fraud detection systems. Unfortunately I couldn't find any information on the success of this tool, as it's fairly new on the market.

VISA: IOT-BASED POS EVERYWHERE

Visa is expanding into payment technologies through partnerships with technology companies like IBM, Apple, Intel, and more in the future. The main thrust of this initiative comes through a partnership blending IBM's Watson technology with Visa's Token Service Provider network to make any internet-connected device a possible point of sale.

Possible applications of this technology include smart cars that can identify when maintenance is needed and let the driver pay for and schedule the maintenance from the dashboard, or smart running shoes that "track a user's running distance and — after a certain number of miles — remind them to buy a new pair, which they could do on-the-spot through a fitness tracker or app." This technology is mostly in planning and development stages, so there's little data on its effectiveness. However, the upside for Visa is apparent -- it lets them grow their transaction volume and stay competitive with other issuers who are also branching out into IoT.

VISA: B2B BLOCKCHAIN ACROSS BORDERS

Visa is also offering a new B2B, blockchain-based payments processing service called Visa Connect aimed at facilitating international transactions. Through the Connect platform, Visa can help businesses digitize their international B2B payments (which are traditionally done on paper and therefore time-intensive). The program is currently in testing with three large banks in Asia and one in the US with a planned commercial launch later in 2018.

CONCLUSION

I found five examples of credit card issuers introducing new products or services, across three major credit card companies. These new products include business data analytics from AmEx and MasterCard, predictive analytics-based fraud detection from Mastercard, and IoT and blockchain payments from Visa.
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