MasterCard Inc. is analyzing transaction data to help marketers direct targeted advertising at consumers, after launching a controversial initiative to make money from its vast database of retail purchases.
This year the credit card network, which processes 34 billion purchases each year, began to help marketers target customers who are more likely to buy their products and services.
MasterCard first explored the possibility of using customer data for targeted advertising last year, but delayed those plans because of legal and regulatory concerns over how financial services companies use the customer data they have collected.
According to an online sales pitch titled "Leveraging MasterCard Data Insights to Reach Holiday Shoppers," MasterCard analyzes billions of transactions – noting, for example, which consumers are more likely to purchase consumer electronics or luxury goods. "The foundation of all of our solutions is transaction data," Susan Grossman, MasterCard's senior vice-president of media solutions, said during the pitch, which has been viewed by the Financial Times.
MasterCard, which confirmed that it launched the initiative in February, told the FT it was "committed to protecting individual privacy." It said the information it sells to marketers is anonymous and is aggregated into groups of potential customers – rather than broken out individually.
The company said the transaction information it collects includes credit card numbers – which it does not share with advertisers – but not cardholders' names or other personal details.
MasterCard said that the product is U.S.-based, and transaction data from cardholders outside of the U.S. is not being used.
As people spend more time in front of computers and mobile phones, companies are amassing vast profiles about their activities both online and away from a screen. Facebook Inc., for example, is working with Datalogix, a data company, to track whether people buy products after viewing an ad on the social networking site.
Other credit card companies have explored using data for marketing. Visa sells retailers the ability to send text messages to consumers based on their previous credit card transactions – but those targeted agree to receive the ads in return for discounts and other incentives. American Express also conducts custom research for marketers based on aggregated, anonymous credit-card transaction data.
The fast-growing industry is raising concern among federal regulators and policy makers. Last week the U.S. Senate Commerce Committee launched an investigation into the practices of nine consumer data brokers. In March the U.S. Federal Trade Commission advocated for legislation to "address the invisibility of, and consumers' lack of control over, data brokers' collection and use of consumer information."
"The digital footprint [consumers] will inevitably leave behind will become more specific and potentially damaging, if used improperly," John Rockefeller, chairman of the Senate Commerce Committee, wrote in a letter to one large data broker.