MIAMI — MasterCard Inc. has introduced a debit processing system that can handle several types of payments and could boost profits for banks that use it.
The Purchase, N.Y., credit card company also said its Integrated Processing Solutions system, announced Monday, would help it attract more big banks as issuers.
"There are very few institutions out there that can provide signature and PIN, brand and processing, and now we're one of them," said Timothy H. Murphy, the president of MasterCard's U.S. region. "We believe it will help us win business in this market."
MasterCard said IPS offers a single processing system for signature debit, PIN debit, and automated teller machine transactions. The system was unveiled here at the Card Forum and Expo.
Jerry Sargent, the IPS product manager, said it ties together functions that formerly were handled separately; PIN and signature transactions, for example, travel on separate networks.
MasterCard is touting the integration as a competitive advantage. "We're not competing on price, or simplistic processing strategies," Mr. Sargent said. Instead, issuers could use the system as a way to promote more profitable uses of debit cards.
For example, he noted that ATMs are expensive and often underused assets. However, bankers can use IPS to identify customers who use their cards at the ATM, a cost center for the bank, but not at the point of sale, where the bank could earn interchange. Banks could deliver customized messages to these customers through the ATM. For example, "we can assign rewards points for the POS behavior they are trying to achieve."
IPS can also give issuers real-time fraud scoring for both PIN and signature debit, case management, rewards programs, and reports and dashboards from the system's datamart.
Two vendors supply technology for IPS. MasterCard said it uses issuing and processing capabilities from Computer Sciences Corp.'s Cams II software and acquiring capabilities from ACI Worldwide Inc.'s Base24-eps software.
The first financial company to agree to use IPS is Security Service Federal Credit Union in San Antonio, a $4.5 billion-asset institution with 630,000 members.
Keith Sultemeier, an executive vice president at Security Service and its chief financial officer, said the credit union plans to switch to IPS from Discover Financial Services LLC's Pulse debit network by the end of this quarter and to reissue its debit cards by yearend.
Security Service reviewed several debit offerings before deciding, he said. "All of the providers are able to compete on price. You wipe that out of the way," he said, "and you're left with other things, like brand and capabilities. That's where MasterCard had a better hand."
Mr. Sargent said that IPS can handle various types of payment instruments, including magnetic-stripe and contactless cards, as well as chip-based "smart cards." The system also can take advantage of emerging technologies such as mobile payments, he said.
Gwenn Bezard, an analyst at the research and advisory firm Aite Group LLC in Boston, said MasterCard's issuing and processing capabilities should help it compete with its larger rival Visa Inc., which has offered its Visa Debit Processing Service for several years.
MasterCard previously had offered PIN debit processing to issuers through an alliance with eFunds Corp. in Scottsdale, Ariz., Mr. Bezard said, but this agreement was terminated in late 2006.
He speculated that MasterCard could integrate other payments capabilities into the IPS system, including credit card processing. "We're not there yet, and it will take a while before we get there in practice," he said. "But that is the direction."
