MasterCard Nears Finish of Payment System Rollout

ST. LOUIS -- MasterCard International Inc. has largely completed a rollout of a new payment processing system that's designed to simplify data transfers between retailers, banks and the credit card company's back-office transaction-clearing applications.

During a briefing held last month at MasterCard's global technology and operations center here, IT officials said that 97% of the company's 25,000 card issuers worldwide have started using the IP-based payment system. They added that 99% of the member banks in the U.S. have migrated.

The system uses a virtual private network (VPN) to run a secure messaging service that offers a standards-based format for transmitting purchase authorization, clearance and settlement data between retailers, banks and MasterCard, said Rob Reeg, senior vice president of systems development at the Purchase, N.Y.-based company.

MasterCard began the project six years ago and has invested about $296 million to develop the VPN and build the St. Louis data center. "This is the biggest technology change MasterCard has ever done," Reeg said. "It gives us a globally integrated platform."

But the company still has more work to do to fully tie together its worldwide operations. For example, Reeg said MasterCard has yet to choose sites for new regional IT service centers that it plans to open in Asia and South America to support localized processing of credit card transactions. A European service center is operating in Belgium. However, Reeg said that MasterCard is only about halfway through a scheduled five-year effort to converge its systems with those of MasterCard Europe, which was known as Europay before it was bought by MasterCard.

MasterCard announced plans for the payment processing system in April 2001 and began converting banks to it late last year. The move by MasterCard followed Foster City, Calif.-based Visa U.S.A. Inc.'s rollout of an IP-based payment processing network for U.S. banks in late 2000.

In addition to its VPN, which was completed in 1998, MasterCard is using technology from existing vendors such as IBM, EMC Corp., Sun Microsystems Inc., Oracle Corp. and Storage Technology Corp. to support the payment system. "We didn't want to add another layer of complexity into this by changing vendors," said Artie Ahrens, senior vice president of computer and network services at MasterCard.

Outside the data center, MasterCard is using 700 IBM Netfinity servers to function as what it calls "member interface processors." The Netfinity systems, which are located in the facilities of different member banks, direct data traffic from merchants to credit card issuers and then to MasterCard.

The secure messaging service is based on the International Organization for Standardization's 8583 message set. Purchase authorization requests can now be processed in less than 150 milliseconds, compared with about 650 milliseconds using MasterCard's older, proprietary approach, Reeg said.

The messaging platform also lets banks process clearing transactions up to six times a day instead of having to run a single batch job, he added.

Copyright © 2002 IDG Communications, Inc.

7 inconvenient truths about the hybrid work trend
Shop Tech Products at Amazon