The breadth of MasterCard's portfolio of payment solutions would have been unimaginable when the president of global technology and operations at MasterCard Technologies, Robert Reeg, started his career, but with 85% of global transactions still in cash, he explains the importance of pressing ahead with yet more innovation.

When Robert Reeg started his career in IT 35 years ago, the industry, he says, was avant-garde. It was also highly lucrative for a mathematics graduate. Mr Reeg was offered $100 a month more to train as a software programmer at an oil company than he was to take on a position as an army officer, a career he was also considering. “So for $100 a month more, I got into IT,” he says, laughing.

Mr Reeg may have initially entered the IT industry for economic reasons but with a degree in mathematics it was also a good fit. He entered the payments market after a few stints at non-financial companies, including US network operator Sprint where he was senior director. After about six-and-a-half years at Sprint, a former boss who was working for MasterCard approached him.

Network connections

Seventeen years on and Mr Reeg is president of global technology and operations for MasterCard Technologies, a business unit of MasterCard Worldwide. He is in charge of the card network’s processing platform, quality of operations and a global network of 210 countries.

“There are a lot of similarities between the telecommunications and the payments industry," he says. "They are both dependent on a network to connect to customers, and I could leverage my experience to build MasterCard’s global network."

Mr Reeg started by heading MasterCard's enterprise architecture and data warehouse teams, at a time when the company was setting up its data warehouse. Next, he moved to a global software development position where he was in charge of strengthening IT to improve both internal and customer-facing systems. It was in this position that he had to conduct a core systems rewrite, a redesign that he cites as an unforgettable experience. The goal, he says, was to be able to support growing and evolving technology needs, internally and externally, as well as be able to offer value-added services beyond what he counts at the core competencies – authorisation, clearing and settlement.

“We rewrote all our core technology processing software in one big, four-year-long effort. Being able to see that [change] from inception to the final customer conversion was a gratifying, memorable event,” he says. Today, the technology supports more than 25 billion card transactions a year and more than $1000bn is transferred among financial institutions.

Room for innovation

MasterCard’s approach to innovation has developed hand in hand with market trends. Its portfolio ranges from its contactless payment solution PayPass to a mobile payment and mobile wallet service, person-to-person fund transfer services via ATMs and mobile phones, and e-commerce solutions, as well as traditional cards.

In 2010, MasterCard created a research and development centre dedicated to new payment solutions, the MasterCard Labs, where Mr Reeg says that more than 100 prototypes for new payment methods have been created so far. Two of these are currently in a pilot phase with customers. One is a location-based advertising smartphone app that encourages users to share any coupon deals they use with their social media network. Another is the QkR app, based on near-field communication technology, which is being trialled at certain cinemas in Australia. Participating cinemas have included their food and beverage menu on seat armchairs, where viewers can scan a barcode to order something directly to their seat.

“Our culture has evolved to one that supports two cultures that have to work together, so we can be strong at our core competencies but allow for breakthrough innovation to happen at the same time. What amazes me is that despite all the efforts in mobile payment [and] digital media, 85% of transactions worldwide are still cash. Our aim is a world beyond cash,” says Mr Reeg.

“Technology changes so fast and there is so much differentiation among the solutions that are emerging worldwide. A mobile payment solution in Africa does not mean the same as in Europe. Leveraging the underlying technology to address two different sets of complexity is something we deal with every day.”  

Eye on security

With opportunity comes risk, however, as became clear in 2011 when one of MasterCard's approved merchant acquirers, Global Payments, revealed that there had been a data breach of the cards it processed. Mr Reeg says that information security is on top of his mind each day. “We have dedicated team members focused on this," he says. "The security of data is a key area of focus for us and will continue to be, as new technologies and threats emerge.”

The industry still tends to focus on solving particular issues that are subjective, rather than looking for solutions that everybody in the industry could benefit from, says Mr Reeg. “Just because you got the monkey off your back doesn’t mean the circus has left town," he says, using the quote by the late American comedian George Carlin to describe the prevalent attitude in the industry.

In the year ahead, MasterCard will target a diversification of its portfolio. “We follow a grow, diversify, build model," says Mr Reeg. "We want to grow existing business in credit, debit, prepaid and commercial cards, [but also] diversify our customer base and look to build new business lines.” 

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