Editorial Policy

Visa, MasterCard Want to Link Purchases to Ads

Marcia Frellick

October 27, 2011

What you charge on your credit card eventually may determine what ads you see online, according to a new report.

Th_cash-bonus-offersThe Wall Street Journal obtained documents indicating that Visa and MasterCard are working on strategies to link Web users with credit card purchases.

Online browsing habits have long been used to help target ads to consumers, and both Visa and MasterCard already anonymously analyze the billions of transactions they process each year.

However, linking personal purchases to ads tailored to individuals takes the technology to the next level. That would allow credit card companies to instantly relate what consumers bought, in aggregate, to advertisers, who could use that information to send specific types of ads to the cardholders within a short period of time.

MasterCard told the Journal it is looking for ways to group a person’s purchase history with others’ history to create marketing “segments.” That data would then be sold to marketing firms.

The report says Visa is planning a similar service, which would also group its customers’ purchase history into segments, such as location, to help advertisers appeal to people in a certain area.

Privacy rights advocates call foul
MasterCard and Visa don’t register people’s names or addresses when processing credit card transactions. Both companies also allow users to opt out of data collection, if they so choose.

People can remove their information from MasterCard’s analysis by providing their card number on MasterCard’s “Data Analytics Opt-Out” page.

Still, the idea concerns privacy rights advocates.

“If it’s beneficial to the consumer, why not let them opt into it?” says Amber Yoo of Privacy Rights Clearinghouse. “After all, [consumers] are using the credit card and making you money … The reason they make it ‘opt out’ is that not many people will take that extra step to opt out.”

She says the idea raises privacy red flags on two fronts.

One red flag involves the claim of “anonymity.” She quoted Paul Ohm, a professor at the University of Colorado Law School, who says in a paper “The Broken Promises of Privacy,” that “data can either be useful or perfectly anonymous but never both.”

“If they’re saying they’re anonymizing the data, yet they are going to track whether you’ve clicked on an online ad and then purchased something with your credit card, there are always ways to connect different data sets — to reidentify an individual,” says Yoo. “I would want them to say exactly what their data set includes. Then, let us decide how comfortable we are with you creating this profile.”

The second red flag involves what happens to the information after it is sold to a marketer, she says. “People may say, ‘it’s just online ads, it’s really in the best interest of the consumer to receive fewer ads.’ …  But there are other industries who would be very interested in tailored profiles — for example,  an insurance company,” notes Yoo. “We already know that they are buying profiles that have been created for the advertising industry and they’re trying to use it to figure out different rates that individuals should pay.”

Neither Visa nor MasterCard responded to requests for comment for this story.

Payment data would be “huge” for marketers
The Wall Street Journal says Visa’s patent applications also describe the potential to track whether a person who sees an online ad ends up buying the advertised product. One application also discusses using the information to prioritize what people see with a search engine. Determining exactly how information would be used is still evolving, the companies told the Journal.

Elaine Starling, president of Starling Media Services in Sacramento, Calif., said what the credit card giants are proposing would be a coup for marketers. But its success rests entirely with how it’s presented, she says.

“Everything that successful businesses are doing is about creating a really rewarding experience for their customers,” says Starling. “Marketers will have to communicate how leveraging this ability to target, using Visa and MasterCard’s proven buying behaviors, significantly improves the experience for the customer. Otherwise the customer will feel like it’s a violation of privacy. If they see benefit, they will say ‘you know what, you have the information anyway, fine, knock yourselves out to make sure I have a better time.’”

Other possible uses for the technology would be to target ads to a consumer in the right buying cycle. Once you’ve bought a car, for instance, you’re probably not looking for another car. Knowing when consumers are ready to buy as opposed to being in the research phase or completely uninterested could save wasted time on the part of both the buyer and seller.

What Visa and MasterCard are proposing is “huge,” Starling says. “Knowing about actual purchases is much more powerful than knowing what people say they will buy. If we understand what you want, and we understand what you like, we have a better chance of making you happy.”