Mastercard: Looks like a tech firm, acts like a tech firm, is a tech firm

Financial services giant finds itself in a prominent position as the volume of digital transactions increases

This article can also be found in the Premium Editorial Download: Computer Weekly: How Mastercard is taking digital payments into a new era

Mastercard is using advanced technologies to broaden its business far beyond the payment processing service it is best known for.

The company, which has built a huge global business by processing vast volumes of payment transactions, is using the same business model and its tech expertise to extend deeper into commerce. This business model sees the firm earn its money from charging very small fees on huge volumes of transactions.

Although Mastercard is usually placed in the financial services sector, a more accurate identity for it now is as a tech company that develops tools around the points of interaction between buyers and sellers, Ken Moore, executive vice-president at Mastercard, tells Computer Weekly.

Of course, money is key here, but according to Moore, the company is focused on using technologies such as artificial intelligence (AI), computer vision, distributed ledgers and virtual reality to smooth commerce and expand the global digital economy.

“We are best known for payments, but we are a technology company in commerce and we innovate way beyond the financial transaction to all different points of interaction that a business or a consumer has with a provider of goods or services,” says Moore. The make-up of Mastercard’s workforce reflects that of a technology company, with about 80% of its 18,000 employees in tech roles.

Expanding the digital economy

Moore says of the company’s plans going forward: “It’s about extending the range of products and services and serving new clients beyond banks. We have no intention of stopping what we do in payments, but we want to be much broader and innovate around points of interaction in commerce.”

The prize is big, not just financially but morally, with the aim of bringing more people into the digital economy. This will benefit Mastercard financially through additional volumes of micro fee payments and will benefit businesses and consumers that were previously unable to buy and sell digitally.

Moore describes what Mastercard calls “purposeful innovation” providing “growth and prosperity to more people”. He adds that although that “sounds very lofty”, there are a number of practical benefits for Mastercard.

“Half of people live outside the digital economy and outside the formal financial system and we have set a goal to bring one billion people and 50 million small businesses into the digital economy by 2025,” says Moore. This is a goal Mastercard takes “very seriously”, he adds, with regular reports on its progress to the analyst community.

But what are the services on offer?

Digital tracking of physical products

One example that supports global supply chains is a Mastercard service known as Provenance, which, put simply, gives things a digital identity. Using blockchain, in which Mastercard has a number of patents, the Provenance service identifies products, their origin and their route to consumers.

For example, Mastercard is working with (En)visible, which is focused on food systems, to guarantee the authenticity of salmon by tracing fish journeys from the coast of Alaska to supermarkets across the US.

“With our solution, consumers can scan a QR code in the supermarket with their smartphone and in seconds see the salmon’s entire journey from sea to supermarket aisle,” says Moore.

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But Provenance goes beyond food, providing identities to physical products in any industry where fake and counterfeit products are a problem. As well as food, this includes agriculture, electronics, cosmetics, minerals, fashion and pharmaceuticals.

The service is already live in Latin America, the US and Asia-Pacific. “Consumers need to know if things are what they claim to be and from where they claim to come from, so we created a digital identity of things,” says Moore. According to the Organisation for Economic Co-operation and Development, the value of imported fake goods worldwide, based on 2016 data, is $509bn.

Digital identity for healthcare

On the subject of identity, but people rather than products this time, Moore describes a project run in West Africa that supports the healthcare sector in the developing world.

Mastercard is working with public/private organisation Global Alliance for Vaccines and Immunisation on a service that helps identify which vaccines are needed by people who might not have immunisation records.

Wellness Pass, as the service is known, gives a digital identity to people using biometric information, usually fingerprints or facial recognition, but also voice when remote identification is necessary. It also digitises immunisation records.

In a developing country, a parent might walk into a vaccine clinic with their child, and that child probably has no record, no physical identity documents and no way of identifying themselves. The clinic will have no idea what vaccines the child has had, or when they were administered. “The parent probably doesn’t have a government ID or even a tribal ID,” says Moore. “Even if the clinic did have records, it would probably be unable to correlate them with the person standing right in front of them.”

This type of service could be vital when a Covid-19 vaccine is available and has to be distributed to billions of people around the world. “Imagine the challenge there will be in some of the emerging markets,” says Moore.

Key role during pandemic

On the theme of Covid-19, tech firms will play a key role in supporting citizens and businesses when the world economy starts moving again after the pandemic. In fact, Mastercard has shown its tech credentials by helping the economy continue to move during lockdowns.

Not only did its digital payments enable people to continue to shop, but it quickly developed and released a service to help consumers identify which shops were still open during the most disruptive period of lockdown.

The service, known as Business Locator – now renamed Shop Openings – is used in the US and Canada to alert consumers to which shops are open. Working with data analysis company Sixth Sense, Mastercard analyses live payment information to identify in real time which shops, restaurants, and so on are operating.

Mobile POS

Also in retail, Mastercard is offering small shops in developing countries an alternative to point-of-sale equipment. Known as Duka Connect, taking its name from the small shops found in Kenya, the app turns a mobile phone into a point of sale (POS) tool.

It uses advanced technologies such as AI, computer vision and augmented reality (AR) to identify products through a mobile app and make the appropriate charges, without the need for scanning equipment.

In dukas, people buy products differently than in the developed world, with, for example, a packet of nappies being broken up into smaller sales. The app enables the shopkeeper to scan the goods, with the AI, computer vision and AR identifying the products and completing the transaction.

Tackling money laundering

Then back to what might be reasonably considered Mastercard’s home turf is its Mule Insights Tactical Solution, an anti-money laundering tool trained to spot suspicious transactions.

Money laundering was headline news recently. Documents leaked to Buzzfeed News and shared with the International Consortium of Investigative Journalists revealed that banks including HSBC, Barclays and Standard Chartered had moved huge amounts of money despite noticing suspicious transactions.

Criminals use big banks to hide their dirty money, which is often linked to organised crime, with funds being used to pay for assets to hide the money’s origin. According to the United Nations, about $2tn is moved illegally each year. “If money laundering were a country, it would have the 13th largest GDP in the world,” says Moore.

Working with Pay.UK, Mastercard is using AI technology to spot suspicious transaction patterns and behaviour. “We built AI algorithms that can spot patterns and embedded them across the whole UK payments network,” says Moore. “We can spot the frauds in real time and report to banks and regulators to allow them to stop crime while in progress.”

All of these products are developed by Mastercard’s internal IT team, often in partnership with other organisations and tech firms in specialist sectors.

As businesses in the financial services sector re-invent themselves as tech companies that offer financial services, and tech firms move increasingly into the transactional part of financial services, Mastercard finds itself in a prominent position. Where tech firms might struggle to meet the regulatory requirements in the finance sector, Mastercard is already there, and where finance firms might struggle to adopt new business models that rely on lots of very small fees, Mastercard was built on one.

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