Making Every Transaction More Valuable

The man behind MasterCard’s IT operations, Rob Reeg, offers a behind-the-scenes overview of the systems that are so critical to the organization’s success.

In May 2008, Rob Reeg took over as President of MasterCard Global Technology and Operations to become the chief of IT at the US$4 billion credit and debit card and electronic payment provider. Responsible for IT operations in 210 countries and territories supporting 24,000 financial institutions, Reeg is key in preventing fraud and credit card scams and enhancing innovative IT systems.

There is no doubt that IT is vital to the success of MasterCard. “We put five key functions together for our ultimate goal, which is to leverage technology to drive business,” explains Reeg. “And we have a little saying, here in the technology department at MasterCard, and that’s to make every transaction more valuable.”

He goes on to explain the five key functions that he looks after: one is the worldwide network, which is used to connect and process transactions around the world; then there is the delivery of customized payment solution for business partners; followed by support for customers; technology-based payment solutions for financial institution customers; and finally the continued development of the data warehouse and business analysis that comes from that. “When we’re looking for opportunities for MasterCard to enhance our processing scale or to drive more business solutions, it always comes back to technology, and then how we link that technology with the power of the MasterCard brand to deliver solutions for our customers.”

Business benefits
The business benefits of having effective IT processes in place are obvious. And Reeg also enjoys the impact these effective processes have had on differentiating the organization to become more agile, quicker to market and provide solutions while enjoying the benefits and cost savings associated with global scale, providing a localized solution for a particular business opportunity.

However, that said, Reeg also faces a number of challenges regarding the maintenance of these processes. “It goes back to the demand we have from our customer base on how we provide on a global scale yet implement localized solutions. So from our customers’ standpoint we need to be global but act local – paying attention to each country’s regulatory situation and dealing in different languages, currencies and cultures -- in order to put customized solution at the edge of the network that best meet our business partners’ needs,” says Reeg.
In order to overcome these challenges, MasterCard has evolved its network architecture to mitigate the strengths and limitations of two network architectures – the centralized network and the peer-to-peer network. The MasterCard Worldwide Network represents a unique and new network architecture in the payments industry.

“The intelligence we built into our network is what makes it unique. The MasterCard network dynamically adapts processing based on the individual characteristics and needs of each transaction, seamlessly blending the speed and reliability of a distributed network with the real-time availability and high-volume threshold of a centralized network,” Reeg said.

Secondly, from an IT management perspective, Reeg ensures that simple, easy to use processes are in place,  to make processes definable and repeatable in order to understand where sticking points are and understand where there are opportunities for improvement. “We drive a lot of business process management into our systems,” explains Reeg. “We actually have a function in our IT group that purely focuses on opportunities for improvement. Whenever you’re operating on a global scale, the more you can make that a common process the better economy of scale you’ll enjoy.”

Technology
So, exactly what technologies does Reeg leverage to help him remain best-in-class? On a global scale, MasterCard operates a network that has technology intelligence at the edge that can be used to route transactions. “We operate under a concept of using best-of-breed architectures to ensure that we get the best possible processing for our customers,” answers Reeg. “So, we have mainframes, client server and Windows-based applications.”

Virtualization has been in place for some time now, and has a huge part to play within the data center. “It’s a big part of our thought processes behind how to reduce server sprawl and how we reduce the number of footprints that we support in the data center – allowing multiple applications to run on one server, which then goes back to a lesser power requirement and improving our green footprint.”

While virtualization has been a significant business function for the payments transaction processor, the data warehouse is a key building block of infrastructure for MasterCard – and with 21 billion transactions in 2008 it is easy to see why. “We’ve got a methodology in place that is patented to actually cleanse the data, so it takes the data that comes in from multiple sources and puts it in a common format, and through these cleansing routines we are able to take this data and make it much more manageable for the analysts that then work on the data,” explains Reeg.

MasterCard continues to get recognized for its ability to deal with the amount of data it produces. However, Reeg has moved on from simply dealing with that volume of data, rather he is looking at how to use it as a business function that can improve customer experience.

One function MasterCard has crafted is called MasterCard Advisors, which is basically a consulting company. “This group can go to our customers’ sites, help them look at a problem, and then leverage data in our data warehouse, to help them come up with innovative solutions for everything from payments to customized services to marketing strategies, risk reduction and operations,” says Reeg. “A big part of this goes back to having the right kind of analysts who can use the data we produce as a business solution.”

Looking ahead
Reeg believes that data warehouse appliances will continue to advance and evolve becoming a real touch point in the future. “Even some of the products that you can employ now are a kind of integrated hardware/software solution in one box – they have really advanced the capabilities to leverage the vast amount of data that sits in the warehouse,” he says.

And, in terms of the future Reeg also believes that there will be a lot of opportunity around the social networking technologies that are emerging. Having used collaboration tools for sometime at MasterCard he believes that social networking tools will take that to the next stage, giving the company the ability to set communities within MasterCard, really leveraging those communities to create knowledge bases that are much more easily shared.

“I’m really excited about wikis and blogs and the opportunities that we are rolling out now,” says Reeg, “From a solution standpoint, our ability to continue to enhance and deploy an integrated global network gives us the opportunity to drive these localized solutions that our customers need, and at the same time make sure we have the very fast, reliable processing that contributes to the economies of scale needed to perform transaction processing.”

MasterCard in numbers
$2.5 trillion in gross dollar volume in 2008
21 billion transactions every year
Supporting 24,000 financial institutions
In 210 countries and territories
160 currencies
Transactions processed in an average 140 milliseconds response time
Cards accepted at 28.5 locations, including 1.5 million ATMs
 
Contactless payment
PayPass is a new contactless payment feature that provides a fast and convenient alternative to cash for everyday small purchases including subway fares and traffic tolls. Consumers simply tap their PayPass-enabled card or device on a specially equipped merchant terminal or swipe their card. The feature has gained strong momentum worldwide and so far there are over 50 million PayPass cards and devices in use at over 141,000 merchant locations worldwide.

“We rewrote our core processing systems a few years ago, and one of the guiding tenets going into that rewrite was the point of interaction, whether a card or fob or some other kind of contactless technology, the system would not care how the transaction came in but has all the capabilities behind it to process any kind of transaction,” explains Reeg. “That architecture has really paid off as we’ve moved into contactless as the next payment vehicle.”