MasterCard Adds Corporate Products, Changes Fees

<H1> MasterCard Adds Corporate Products, Changes Fees</H1>By Mary Ann McNulty

<I>Purchase, N.Y.</I> - Zeroing in on corporate products, MasterCard International has developed a new global strategy that calls for expanded product lines, a new interchange structure and financial incentives for merchants to pass data to MasterCard.

In coming months, MasterCard is expected to announce details on components of this strategy, including the new rates of its interchange program for the United States.

For the first time, MasterCard intends to create a new interchange structure for its corporate products that is different from that for consumer cards. Interchange is the fee the association charges bank issuers to process charges on the card.

On the purchasing card side, MasterCard intends to establish a "declining effective rate" on higher-ticket items. Currently, merchants pay fixed costs whether an item costs $10,000 or $100,000, said Al Diamant, vice president of corporate products. The fees take effect March 28, 1997.

"I think it's very good for the large corporate customers and in partcicular for travel managers," said Mitch Gross, vice president of marketing for GE Capital Corporate Expense Management Services, Salt Lake City, of MasterCard's new strategy. MasterCard is focusing on data, which is useful for large customers, Gross added.

New Focus On Corporate Cards

Banks have been reluctant to enter the corporate card market because it is difficult to make as much money as on the consumer card. But as the consumer market matures-with everyone having one if not multiple charge cards-banks are taking a second look at corporate cards. The changes MasterCard is making also are designed to make the corporate card more attractive to banks, merchants and corporations. Details will be released in several weeks.

The interchange rate restructuring is "a major breakthrough that will help overcome previous obstacles to entering this burgeoning business opportunity for suppliers, corporations and issuing and acquiring members," said Steve Abrams, senior vice president for corporate products.

Part of the new structure will allow MasterCard to add some incentives to merchants to pass along additional data details that corporate customers demand, Diamant said. Earlier this year, Visa implemented a similar policy that offers lower rates to merchants who pass along more details.

"We want to incent the marketplace to provide that robust information in a quicker process," Diamant said. "Without the move we're making, it would be years before we got to a critical point where enough vendors were providing the information at the level we need to be an overall big benefit for the end user. This will speed that up."

MasterCard announced the new rates internationally, increasing them to be more in line with competitors. As in the United States, the international board announced a reduction of its interchange to entice vendors to accept its purchasing card.

"This is an exciting time for MasterCard, as well as for the product category overall," said Robert Wesley, senior vice president of global product development and management for MasterCard International. "We are committed to aggressively pursuing this market. Our members and their corporate customers can expect announcements from us about these developments every two months throughout the next year."

Enhancing its product platform, MasterCard plans to offer member banks the ability to customize solutions to meet any company's global payment needs. The goal is to help companies streamline their payment process, manage information and reduce administrative costs.