Chase Visa deal and SDWOANAF: where potential and confusion meet
Writing clearly requires more effort than just writing; this becomes more evident the more complicated the subject. The Wall Street Journal provided a good example of that recently with its article "What's in Your Digital Wallet? Lucrative Data"
The story was triggered by MasterCard’s recently announced (and inelegantly named) Staged Digital Wallet Operator Annual Network Access Fee (SDWOANAF). In a "staged" transaction, the merchant charges one payment product (say, a Chase Visa card) and the consumer pays with a different product (say a Citi MasterCard) with the wallet operator sitting in the middle.
The information needed to authorize a transaction is the card number, expiration date, security code, and transaction amount; a merchant identifier ties that transaction to a particular merchant. In staged transactions, the merchant identifier is not seen by the network of the product used for payment. Instead that network sees the merchant identifier of the wallet operator who sits in the middle.
Thus the loss—the ability to tie a consumer’s purchase to a merchant, something networks use today for analytics.
Note that, compared to today’s plastic card transactions, there is no new information in the system. The change is that one piece of current information—the merchant ID—is dropped. In other words the networks stand to lose access to something they get today, rather than failing to gain access to something new.
This is not clear from the article, with the sub-heading "Firms Feud Over Access to Details on Transactions as New Apps Replace Plastic" and a quote saying "It's about the purchase data, which will be used to render very targeted and relevant ads and offers, and to prove that they generated a new sale…for a retailer." (Emphasis mine)
Reading those lines, does it sound to you like fighting to avoid losing something, or to gain something new? And when you read "…very targeted and relevant ads and offers... does that make you think of offers you receive today?
Continuing, the article quotes a different industry expert as stating "In these [staged wallet] scenarios, the wallet provider acts as the merchant of record and does not disclose specific merchant-level information to the network or card issuer." The specific merchant-level information is, to be specific, the merchant ID—nothing more than that.
Those who read my last blog on Mobile Payments Today know my feeling already: today’s information is not providing particularly targeted ads, so what MasterCard is trying to preserve is just the same moderately ok level of targeting they provide today.
But I suspect many reading the article would think a treasure trove of valuable new data is up for grabs by virtue of digital wallets. Does this fuzziness come from the writer, the sources quoted, or the editor? I don’t know. But with the proliferation of articles on changes in payment it would by good to see better explanations.
Which brings me to the recent Chase/Visa deal, an agreement that effectively allows Chase to run a private network (Chase Merchant Services) using Visa’s rails, presuming Chase Merchant Services can get merchants to join the party.
This is big news, and has gotten a lot of press. But one point about data—an important one-- hasn’t gotten much emphasis. Chase Merchant Service has the potential to increase the amount of information it can use for offers if it can provide merchants a good reason to share the product-level (SKU) data.
I wrote about this in some detail in my last blog, noting this is where the power of payment data lies. But while there is much being written about the power of data, when that writing gets into the specifics, clarity is hard to come by, even when the topic is one as familiar as card payments.
So caveat lector—let the reader beware—and if it doesn’t make sense to you after a couple of readings, it may not make sense at all.
David True David is a new product, marketing and business development professional with deep experience in payments and a passion finding business benefits of technology. He has a particular focus on mobile and prepaid.