In 2007, Discover Financial Services began monitoring social networking Web sites. By early 2008, the credit card company had built an in-house listening system to follow blogs and postings about financial services in general and Discover in particular by "crawling" such sites as Facebook, Twitter, LinkedIn and YouTube to spot key words and phrases.

"By observing for a while at first, we were able to figure out what we didn't want to do," said Mike Boush, Discover's vice president of e-business. Discover, of Riverwoods, Ill., became convinced it should not "create a community in a place where it didn't naturally want to form," he said.

By mid-2009, Discover had learned enough to create its own blog, "Inside Discover," where employees post articles about the company. Some recent topics include advice on mobile applications; tips on building the right card product; researching student loans; and congratulations for the winner of a Discover sweepstakes.

Discover is not alone among payments players using social networks to gather market data, promote products and interact with customers. After months or even years of "listening" to interactions on social networks, all of the major card brands and many issuers have been building online communities.

"This social media stuff — it's not a fad," said Elizabeth Rowe, director of the Retail Banking Advisory Service at Mercator Advisory Group Inc. "Social networking is a key piece of a very transformational process for society. Bankers will be swept along."

Social networking, however, comes with caveats. Brash marketing can drive away the Internet's less-than-captive audience. Serving customers in a too-specific way can expose personal information to theft in mostly public online forums. And drawing too many conclusions from the ranting of the loudest voices on the Web can lead strategists astray.

With traditional mass-market television and print ads, the payments industry beseeches the public with one-way communication, Boush said. But with dialogue-based social networking, it has to engage participants, or the public simply ignores it, he said.

That two-way communication provides payments companies with new insights into what customers think about their brands. Already, the industry is using that intelligence to shape new approaches to social networking, said Alex Craddock, head of small-business marketing at Visa Inc. Soon, that information on what consumers want will dictate changes in the payments industry, he said.

But gleaning that intelligence is tricky. The industry can engage consumers through methods that educate, entertain or create a community where users can communicate with their peers, said Cheryl Guerin, senior vice president of U.S. and digital marketing at MasterCard Inc.

Consumers return frequently to sites that provide good reasons to come back, said Jennifer Bazante, Visa's vice president of global brand marketing.

Users also appreciate social networking messages with relevant information, ranging from a card's limited-time offers to ticket availability to rock shows, according to Michelle Bottomley, chief marketing officer of Barclaycard U.S.

For example, the Wilmington, Del., issuer, which offers cobranded cards, introduced a Miles Away Challenge to promote its U.S. Airways Dividend Miles cards.

The contest was promoted on Facebook and Twitter. Users played the game 700,000 times during the one-month promotion, and Barclaycard U.S. gained a "good chunk" of new frequent-flier registrations, Bottomley said. "It's an example of creating content in a destination where these frequent travelers are going to be," she said.

Social networking yields the best results for companies that already have good relationships with customers, Boush said. Otherwise, the "double-edged sword" of two-way communication slices into a vein of negativity, he said.

"The brands that don't have a good story to tell, they're probably not going to be as enthusiastic about it," Boush said.

Though social networking is intertwining the industry with customers' lives in ways never before possible, it seldom contributes directly to the bottom line, said Megan Bramlette, managing associate for Auriemma Consulting Group Inc. "It's a good channel for things like education and advice," she said. "I don't see it as a place where you're going to drive a lot of direct revenue."

One advantage is that social networking tends to cost less than traditional marketing, said Mary Hines, a vice president of marketing, charge card, at American Express Co.

Higher costs could come, however, if the industry's social networking endeavors gain in sophistication. Digital advertising agencies already are helping financial companies build social networking platforms.

With or without the help of agencies, card brands and issuers are taking the first, often tentative, steps into social networking. These are the "early days" of social networking for the payments industry, Boush said.