MasterCard International's remote banking program, MasterBanking, has been quietly put to sleep.
Launched in April 1993, MasterBanking made MasterCard an early leader in supplying home banking services to banks. But management shuffles, ill- fated alliances, and lack of funding conspired to slow the momentum to a virtual standstill.
MasterCard officials said MasterBanking has disappeared in name only, and that the card association still plans to support its members in home banking and other remote service offerings.
But market perceptions are that the program is moribund at best. Sources close to MasterCard confirm those impressions, and competitors do not regard MasterBanking as a going concern.
"We're focusing on our Remittance Processing Service," said Cathleen Conforti, a vice president of MasterCard's global deposit access group, referring to a 10-year-old payment processing program that had been a component of MasterBanking.
"We have not used the term MasterBanking for over a year," she said. "We have used 'remote banking services.' We are not just focusing on that part of the business; we are focusing on the complete business package. That is where we saw the industry evolving."
Outsiders view the discontinuation of a brand name as catchy as MasterBanking - even if aimed at a limited audience within the banking industry - as a retreat from the homebanking market.
"We know that (MasterCard) did make a decision to get out of that business," said Christopher Schellhorn, president of Visa Interactive. "I don't think I can comment much more about that."
Closer to its start in 1993, MasterBanking was considered a leading-edge service. At least 18 major banks had signed on, and 12 were represented on the program's advisory committee.
MasterCard was at first considered ahead of Visa, which didn't open Visa Interactive until its acquisition of home banking and bill-paying units from U.S. Order in August 1994. At one point, MasterCard was working with Microsoft Corp. to place a MasterBanking icon on the Money for Windows 95 personal financial management software.
Today, MasterCard is no longer seen as a factor in an interactive services world populated by big banks like Bank of America and Wells Fargo, and by high-technology providers like Microsoft and America Online.
All the banks that signed up for MasterBanking have beaten a retreat. If they are still dealing with MasterCard in home banking, they have reduced their dependence.
"My read is that it's dead," said a former MasterCard official.
"Their strategy was to be a reseller of services, and that strategy just didn't work," the source said. "They didn't invest much money in it - they chose to be more active on the smart card side and didn't really see that they added much value into the home banking arena."
Several former MasterCard executives, all speaking on the condition of anonymity, offered what were essentially post-mortems on MasterBanking. One said that Alex W. Hart, MasterCard's last chief executive officer, had been a cheerleader for the program, while his successor, H. Eugene Lockhart, was less interested in it.
MasterBanking was originally cast as a network intermediary that linked banks with customers. Banks could rely on the MasterCard infrastructure to offer full electronic banking and bill-paying capabilities.
MasterBanking was defined as the "front end" service, complementing the Remittance Processing Service, or RPS, on the back end of clearing and settlement.
But MasterBanking's history has been checkered.
At its start in April 1993, MasterCard formed a partnership with Checkfree Corp., which had already been handling payments for RPS. It also bought a processing system from Manufacturers Hanover Corp., which was acquired by Chemical Banking Corp. (now Chase Manhattan Corp.).
The system MasterCard inherited had about 20 banks on it, with 50,000 subscribers. It was also about 10 years old - by any definition, a first- generation remote banking platform - and operated through the Prodigy on- line service, which had since fallen on hard times.
At one point, MasterCard made plans to replace the aging system, but executives balked at the price tag.
The deal with Microsoft - which MasterCard executives had put much time and effort into, and which would have placed the MasterBanking product and logo in front of hundreds of thousands of Microsoft Money users - fell apart when Microsoft's merger with Intuit Inc. was announced in 1994. (That, too, ultimately fell through.)
In November 1995, MasterCard opted instead to form an alliance with Servantis Systems Inc. of Norcross, Ga., to replace its relationship with Checkfree.
A few months later, Checkfree acquired Servantis, throwing the company's relationship to MasterBanking back into question.
As former MasterCard officials describe it, Checkfree has wholly subsumed MasterBanking, reducing the card association's role to that of a marketer.
"There was a lot of jockeying between Checkfree and MasterCard over who would play what role," recalled one former official.
As a result, "MasterCard has basically disappeared from the map. They have little or no role other than doing some marketing brochures. The value-add provider is Checkfree, and Checkfree is basically out for itself."
Ms. Conforti of MasterCard described the relationship with Checkfree differently: "They're still a large user of our remote banking. We agreed mutually to let our members use Checkfree or any other remote banking providers."
Matthew S. Lewis, a spokesman for Checkfree, said his company's relationship with MasterCard "has evolved pretty substantially" and is now centered on providing support for the Remittance Processing Service.
"We clearly don't have the MasterBanking agreement in place as it was originally conceived, but this segment is evolving on a regular basis," Mr. Lewis said. "This is an example of how two companies that are in it for the long haul are adapting."
In March, MasterCard made a last-ditch attempt to resuscitate the program, announcing that MasterBanking was being merged with its U.S. debit services and RPS.
Ms. Conforti of MasterCard characterized the move as a response to what the market was demanding. She emphasized the strength and growth of RPS, which has processed 43 million transactions since 1987.
"For a long time we have really focused on providing our members with whatever home banking and bill payment they wanted," she said. "In the past year, we have heard a lot from members that they wanted to be able to offer multiple solutions for the consumers."
While MasterBanking may have withered, Visa Interactive has flourished, signing around 100 banks and often being mentioned in the same breath as Checkfree and Intuit Services Corp. (which is soon to be acquired by Checkfree) as a leader in remote banking.
Another bank-backed entity, the Integrion consortium organized by International Business Machines Corp., is due on the scene next year.
"From our perspective, we continue to develop our strategy and deliver to that, which is to expand our product offering and to continue to enable the membership to move forward," said Mr. Schellhorn of Visa Interactive.
While Visa may lead on that front, observers of the turbulent home banking scene say MasterCard's Remittance Processing Service is ahead of Visa's E-Pay.
"MasterCard's idea was that they were going to replicate their combative nature in home banking as in credit cards, but MasterCard never got it fully together, and Visa just sort of did theirs by acquiring U.S. Order," said David E. Weisman, director of money and technology strategies at Forrester Research in Cambridge, Mass.
"Neither one of the companies ever gave it the stature and level of importance it deserved," he said. "MasterBanking faded away slowly, became invisible, just ceased to matter. Visa put some innovation, some effort in, and that's what's keeping them afloat."
One thing MasterBanking did prove was that banks did not want another company's moniker in front of their home banking customers. Though MasterCard's logo was considerably smaller than those of its partner banks, exclusive "bank branding" has become more desirable.
"We found very quickly that (financial institutions) chose to brand it with their own name, and this is a very good choice," said Ms. Conforti of MasterCard.
Even so, the evaporation of MasterBanking - with but a whimper - has left some people in the industry curious.
"I don't know what happened to it - it just kind of fizzled out," said Tom Dittrick, vice president of marketing for Home Financial Network Inc., a home banking software company in Westport, Conn. "All of a sudden you never hear about it, and I don't know why."
