MasterCard wants to wean you off cash, checks
By Eileen Alt Powell
Associated Press
NEW YORK — For MasterCard, catching up with its main rival, Visa, would be priceless.
Although MasterCard is the leader in credit cards in the United States, with 315 million to Visa's 263 million, it's still behind Visa in debit cards and total transactions.
Ruth Ann Marshall, president of MasterCard International's North America division, doesn't see Visa as the main challenge. Since card usage accounts for just a little more than $3 out of every $10 that consumers spend, MasterCard is focusing on getting Americans to give up their checks and cash, she said.
"The biggest opportunity for all of us — and the biggest competitor — is cash and checks," Marshall said. "There's still huge room for growth."
MasterCard International, headquartered in Purchase, N.Y., is a privately held association of banks. It has five geographic divisions, the largest being Marshall's North America unit covering the United States and Canada.
Consumers worldwide used MasterCard-branded cards for 13.6 billion transactions valued at $1.14 trillion last year — nearly double the volume of five years earlier.
Marshall recently spoke with The Associated Press about MasterCard and the payments industry.
Q. How do you get Americans to give up their checks and cash?
A. I think one way we do it is ... through our rewards programs. Then I think it's really focusing on where cash and checks are more prevalent. Cash is most prevalent in the sub-$40 purchase. So then you look and you say, OK, who serves the needs of customers sub-$40? And it's movie theaters, it's fast food. We'll work with those merchants to make credit cards available in those spaces. ... On the flip side, where do most people pay with checks in addition to the supermarket, which is moving greatly to debit? It's the habit, especially in the United States ... of sitting down on a monthly basis and writing your monthly bills. So who offers recurring payments? Utility companies, mortgage companies, gym memberships. So we go out and work with them.
Q. Why do you think the debit card has shown such spectacular growth, and will it continue?
A. Convenience. It's fast, it's secure and it's more readily available for young people who might not qualify for a credit line. It enables you to manage your finances responsibly because when you're using that card, it's taking money directly out of your account so you're only using money that you have. We see the largest takeup with young people in urban environments, on both coasts. Credit is growing in the high single digits, and debit is growing 2 1/2 times that.
Q. What innovations do you see coming in the card business?
A. Smart card, chip card, stored value card. We have 127 million of those now, branded MasterCard around the world. ... We're already seeing growth in the prepaid area, with gift cards, payroll cards for the unbanked, FSAs (flexible spending accounts) where you can put your medical allotment for a year on a card and then tap that throughout the year.
Q. Tell us about PayPass, which you began testing in Orlando, Fla., late last year.
A. We have 61 merchants and 16,000 cards out there circulated by Citigroup, J.P. Morgan Chase and MBNA. ... When you go to a McDonald's or Loews theater or Dunkin' Donuts, you just tap the card on a reader and go. You don't have to wait to check that you have the amount and then sign. We're right in the midst of gathering the data and tabulating the results. ... It looks like the dollar amount, on average, and the number of times the card has been used is significantly above the norm. I'm hopeful that you will see it roll out nationally soon.
Q. What's the most priceless thing you've done with your MasterCard?
A. I moved to New York City a year ago, and I traded in my SUV for a Mini Cooper and I paid off the balance with my MasterCard. To me that was fun. It's yellow and black; it's like a bumblebee.
