MasterCard Announces Integration of all Authorization Transactions on a Single, Global Platform

Banks wanting to expand across borders and offer customers new services through emerging payment technologies received a boost today with an announcement by MasterCard of major upgrades to its global authorization processing platform.

As early as the second half of 2007, MasterCard’s customer banks around the world will process authorization transactions via a single, common interface. This means that transactions will receive initial approvals through a single connection point via a standardized system, offering banks a simplified, faster process and increased global capabilities.

“We are taking significant steps to make it easier, for example, for banks in say, Britain or Brazil to expand their card operations into Dallas or Dubai,” said W. Roy Dunbar, president of MasterCard Global Technology and Operations. “Banks also will be able to pilot innovative, breakthrough payment technologies like SecureCode, PayPass and Chip/PIN cards without having to go through the trouble of making substantial changes to their own infrastructure to test these technologies.”

When this roll out is complete, MasterCard can integrate these new technologies on behalf of banks until the volume of activity warrants investment by the bank to provide the service itself.

Central to this transition are two main changes. First, MasterCard already has finalized new, standardized rules and capabilities for authorizing a payment card transaction. Second, the transition will enable the enhancement of standard “intelligent edge devices” that exist locally at partner banks. These devices allow transactions to be managed at the edge of the network instead of requiring centralized processing through MasterCard’s own systems.

“We collect our intelligence about a transaction during the initial authorization request via devices at a merchant’s bank, rather than creating a separate, unnecessary step to make the transaction flow through our central systems,” said Dunbar. “By doing this, we are fast and efficient in processing transactions.”

The intelligent edge devices enable MasterCard to process transactions rapidly and reliably. Since the device is located at the bank customers’ sites, MasterCard can process transactions even in the event of an emergency that results in a complete outage of the telecommunications backbone network. This virtually uninterruptible process sharply lessens the risk of losing a transaction.

While this initiative standardizes the authorization interface globally, it also provides a consistent approach for managing local customization of transaction rules.

“Through this standardized global authorization platform, banks that have or are planning to have global extensions will be able to better aggregate and analyze transaction information,” said Dunbar. “Our platform then enables banks to communicate better, as well as to customize transaction rules locally, such as when banks need to adjust processing to comply with local business regulations and practices.”

The global authorization platform is scheduled to be operational by late 2007, with all banks transitioned by late 2009.