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Visa, MasterCard move toward personalized online ads

November 04, 2011

| Money Rates Columnist

Credit card companies MasterCard and Visa are toying with an idea for using transaction information from your credit cards to target you with online ads that match your interests.

This idea might not seem that new. Isn't Google already targeting you with ads that match the text in your G-mail account? And doesn't Amazon already know you're a big fan of author Dean Koontz and organic caramel corn?

To a large extent, your purchases and your online activities have already made you a target. But what Visa and MasterCard are talking about takes personalized ads to a whole new level.

According to the Wall Street Journal, Visa, for one, is talking about pulling in a wide range of personal information--such as data from social networks like Facebook and LinkedIn, information from credit bureaus, data from search engines, insurance claims and even information from DNA data banks--to cook up this chunky new consumer stew.

While customers names might be left out--MasterCard, for instance, doesn't collect people's names or addresses when they process their credit card transactions--the company would use the credit card concoction to create highly detailed profiles. The ads would be targeted to consumers who fit a certain profile.

The Journal said a "holy grail" of this system would be something like this: sending an online weight-loss ad to someone who just swiped their credit card at a fast-food chain and then tracking the consumer to see if they made a purchase based on the ad.

Visa and MasterCard are pursuing separate plans to sell this type of souped-up database analysis about customers to advertising and marketing executives. The lure for advertisers is getting their products in front of people with the best credit cards and a keen interest in buying those products.

For clarity, neither Visa nor MasterCard issues credit cards. They just process credit card payments. Visa handled 45 billion credit card and debit card transactions last year and MasterCard handled 23 billion. Although they don't collect names, the details on purchase date, time, value, merchant and purchase location give them a robust database that allows MasterCard, for instance, to analyze more than 4,000 separate spending behaviors.

The credit card companies' data marketing idea comes at a time when marketers are paying top dollar for details about shoppers. The Journal notes that hundreds of companies currently track online behavior, and consumer profiles are getting more sophisticated every day.

Still, some find the Visa and MasterCard initiatives just a little creepy. Are they really looking at anyone's DNA?

Time magazine's Moneyland blog recently posed the questions of whether credit card issuers could turn down your credit card application if DNA analysis suggested you are at risk for future health problems, or because a relative of yours once defaulted on a credit card debt. While this seems like a stretch, keep in mind that it wasn't that long ago that insurance companies started using your credit score to set your premiums.

Concern about the two companies' proposals prompted Sen. Jay Rockefeller, D-W. Va. and the chairman of the Senate Commerce Committee, to call the reports "unprecedented and alarming." He has asked for more details on the programs.

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