MasterCard Inc. is expected to announce today that it has developed a way to let customers retain their 16-digit account numbers when they switch from one card product to another.
MasterCard Product Graduation, as the service is called, will come into play, for example, when a customer upgrades from a standard credit card to a platinum one.
Visa U.S.A. Inc. has offered a similar capability since 2005.
Keeping the same account number lets cardholders maintain recurring bill payments, online shopping profiles, and other automatic payments that are tied to that account.
Setting up such regular payments can be a time-consuming process, and customers have complained that duplicating numerous recurring arrangements after switching cards can be a headache.
“There was a loud enough cry” from cardholders “to make sure the customer had a good enough experience,” Jeff Portelli, group executive for global consumer credit products at MasterCard Worldwide, said in an interview. Merchants and billers were “complaining just as loudly, so there’s been enough noise in the system that clearly we had to respond to it.”
The problem has persisted because transaction processing systems have long identified cards by their bank identification number, or BIN, a six-digit sequence within the account number, Mr. Portelli said.
When someone initiates a card transaction, the BIN is used to identify the card’s issuer and the specific card product to determine the interchange rate. However, this structure requires issuers to provide a different BIN when people switch cards.
Product Graduation uses all 16 digits of the account number to identify the cardholder, and the system can then determine what type of card product is linked to the customer’s account. The setup lets the merchant acquirer apply the correct interchange for the card, Mr. Portelli said.
The number-retention feature cannot be used with cards that have been lost or stolen, he said; those numbers must be canceled, to make them useless to criminals.
Jim McCarthy, senior vice president of consumer credit products at Visa, said the San Francisco association has been offering a similar capability since October 2005.
Letting customers hold on to their account numbers when they switch card products provided “benefits right out of the gate with attrition, because if you have to send a person a new card, they may decide to pull another card out of the wallet,” Mr. McCarthy said.
“Every time you create those kind of disruptive events, given the competitive marketplace, it’s just one more reason for the customer to stop and think, 'Is that card valuable to me? What are my other options?’ ”
Bruce Cundiff, a senior analyst for Javelin Strategy and Research of Pleasanton, Calif., said that retaining card numbers will benefit issuers, but that moving away from BINs could make it harder for merchants to predict their interchange costs.
“If I have tables that essentially trigger what the interchange will be, and I’ve been accepting this card for 10 years, and all of a sudden, after the fact, you’re telling me there’s higher interchange, that could affect a merchant’s ability to manage costs,” he said.
However, he also noted that the new system could create opportunities for merchant acquirers to help their merchant customers manage their costs by creating “more robust tables, not based on BIN number, but on card numbers.”
