Card Transaction Data

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Card transaction data is financial data generally collected through the transfer of funds between a card holder's account and a business's account. [1] It consists of the use of either a debit card or a credit card to generate data on the transfer for the purchase of goods or services. Transaction data describes an action composed of events in which master data participates. Transaction focuses on the price, discount and method of payment interaction between the customer and the organization. [2] They are based on volatility as each transaction data changes every time a purchase is made, one time it could be $10, the next $55. Since debit and credit cards are commonly used to pay for goods and services, they represent a strong percentage of the consumption expenditure in the country. [3]

Contents

Overview

When a transaction is made, the card holder is offered a paper or electronic transaction record containing information about the purchase. This includes: transaction amount, transaction number, transaction date and time, transaction type (deposits, withdrawal, purchase or refund), type of account being debited or credited, card number, identity of the card acceptor (organization/store address) as well as the identity of the terminal (company name from which the machine operates). [4] The use of debit cards in 2014 increased by 18% from the 2011 total volume of Canadian Payment Methods. [5] As for credit cards, it increased by 26% from the 2011 total volume of Canadian Payment Methods. [5] These two types of payment methods combined make up for more transactions than cash. Card transaction data has increased through the expansion of payment channels available to customers. Additionally, incentive and reward programs have increased the use of electronic cards for their benefits. [5] The use of contactless and e-commerce payment has also allowed for a growth in card transaction data to increase due to the simplicity of the transaction. The use of Interac Debit transactions have increased rapidly in the last six years according to Interac Debit statistics. [6] [7] However, Canada has a lower rate debit use transactions by inhabitant in comparison to the United States, Sweden, Netherlands, Australia, and Great Britain.

Credit cards

Terminal processes of credit card transactions:

Type of credit cards:

Debit cards

Terminal processes of debit card transactions:

Point of sale terminals will give access to information

Uses

Transaction data, especially for credit card use is being turned into a revenue stream and being sold for digital advertising and other marketing efforts by many credit card companies. [10] This is not always clear or shared between the companies and their consumers. When asked, Google refuses to disclose who and how these data are being analyzed. Information is shown that their undisclosed partner companies had access to 70 percent of transactions for credit and debit cards in the United States. [11] The data collected is often kept anonymous and aggregate yet it can still define users within a specific ZIP code region for certain types purchases. [10] This information allows for an analysis of the type of consumers found within a specific region and if there are any similarities. This information is then beneficial to companies or stores as it provides data on the kind of consumer they are targeting and how to be successful to increase their revenue in sales. Allowing for statistics to be gathered and marketing targeted in a more broad manner rather than based on consumer's personal transactions. Due to privacy concerns, companies such as MasterCard have refrained from sharing more detailed data on a more individual basis. [10] Some companies such as MasterCard are planning on combining their card transaction data with purchase history and loyalty cards. [10] Allowing for a more defined collection of statistical data of consumer buying and spending habits, this data is collected from real purchases which makes it reliable.

Card transaction data levels

Some companies such as PayPal offer an incentive rates program for merchants who offer more detailed information on their sales transactions. [12] They are only eligible for merchants who comply with Level 2 or Level 3 transactions, transactions that fall under Level 1 qualify as a normal card transaction. [12] To ensure that data being shared is accurate, card companies perform strict verification of data being collected at either Level 2 or 3, therefore only accurate information is eligible for incentive rates being offered by card issuers. [12] This is another form of collecting card transaction data that can be more individualized as it is completed by the merchant after the transaction has been made. The levels refer to the amount of transaction data submitted for the card, the higher the level the more data is needed to be reported. [12]

Level requirements usually differ between companies but are similar to the following offered by PayPal:

Level 1

  • Any merchant who accepts credit cards complies with this level. It functions as a normal credit card and is authorized and associated with normal transaction data. [12]

Level 2

  • Additional data regarding the actual sales such as tax, customer code, purchase number, invoice number etc. is captured at the point of sale. Most of the time it is combined with the merchants information such as Tax ID number, state and postal code data. [12]

Level 3

  • Significant additional information on the actual product or service is shared such as line items, product codes, item description, unit price and quantities as well as shipping postal code data are needed in addition to the Level 2 requirements.

Advantages for Business

The marketing industry claims that sharing card transaction data can be beneficial to consumers as it allows for card companies and merchants to provide better products and services tailored to them directly. [13] This may result in favourable products or services for the consumer, however it tends to increase spending habits. It is also claimed that less mass marketing is done and instead only specific groups that are susceptible to the advertisements will be targeted. [13] Businesses benefit enormously, often at the expense of consumer privacy, as this type of information is useful for identifying promising areas of growth, enhance direct marketing response rates, and improve retention of existing customers. [13] Exposing payment and spending trends can offer more opportunity for revenue growth as well as for consumer experiences in stores and online.

Privacy Concerns

Keeping this type of data anonymous is a challenge for debit and credit card companies who share the information with third parties. Metadata with certain properties, especially a geographical location attached are hard to keep unsourced. [14] Other patterns of behaviour are also unique enough on their own to identify individuals to using metadata, indicating that complete anonymity is impossible. [14] As more information becomes available and is tagged by people's consuming behaviour, this will only get harder to do. [14] The standards for protection and enforcement against the release of this metadata varies among OECD member nations. [14] The United States does not have any enforced national law for reporting consumer data breaches. [14]

Related Research Articles

<span class="mw-page-title-main">Debit card</span> Card used for financial transactions, usually without a credit line

A debit card, also known as a check card or bank card, is a payment card that can be used in place of cash to make purchases. The card usually consists of the bank's name, a card number, the cardholder's name, and an expiration date, on either the front or the back. Many new cards now have a chip on them, which allows people to use their card by touch (contactless), or by inserting the card and keying in a PIN as with swiping the magnetic stripe. Debit cards are similar to a credit card, but the money for the purchase must be in the cardholder's bank account at the time of the purchase and is immediately transferred directly from that account to the merchant's account to pay for the purchase.

<span class="mw-page-title-main">EFTPOS</span> Type of Electronic Funds Transfer system

Electronic Funds Transfer at Point Of Sale, abbreviated as EFTPOS; is the technical term referring to a type of payment transaction where electronic funds transfers (EFT) are processed at a point of sale (POS) system or terminal usually via payment methods such as payment cards. EFTPOS technology was developed during the 1980s.

<span class="mw-page-title-main">Stored-value card</span> Payment card with a monetary value stored on the card itself

A stored-value card (SVC) or cash card is a payment card with a monetary value stored on the card itself, not in an external account maintained by a financial institution. This means no network access is required by the payment collection terminals as funds can be withdrawn and deposited straight from the card. Like cash, payment cards can be used anonymously as the person holding the card can use the funds. They are an electronic development of token coins and are typically used in low-value payment systems or where network access is difficult or expensive to implement, such as parking machines, public transport systems, and closed payment systems in locations such as ships.

<span class="mw-page-title-main">EMV</span> Smart payment card standard

EMV is a payment method based on a technical standard for smart payment cards and for payment terminals and automated teller machines which can accept them. EMV stands for "Europay, Mastercard, and Visa", the three companies that created the standard.

<span class="mw-page-title-main">Interac</span> Canadian interbank network

Interac is a Canadian interbank network that links financial institutions and other enterprises for the purpose of exchanging electronic financial transactions. Interac serves as the Canadian debit card system and the predominant funds transfer network via its e-Transfer service. There are over 59,000 automated teller machines that can be accessed through the Interac network in Canada, and over 450,000 merchant locations accepting Interac debit payments.

An e-commerce payment system facilitates the acceptance of electronic payment for offline transfer, also known as a subcomponent of electronic data interchange (EDI), e-commerce payment systems have become increasingly popular due to the widespread use of the internet-based shopping and banking.

<span class="mw-page-title-main">Visa Debit</span> Debit card

Visa Debit is a major brand of debit card issued by Visa in many countries around the world. Numerous banks and financial institutions issue Visa Debit cards to their customers for access to their bank accounts. In many countries the Visa Debit functionality is often incorporated on the same plastic card that allows access to ATM and any domestic networks like EFTPOS or Interac.

<span class="mw-page-title-main">Dynamic currency conversion</span> Foreign exchange process

Dynamic currency conversion (DCC) or cardholder preferred currency (CPC) is a process whereby the amount of a credit card transaction is converted at the point of sale, ATM or internet to the currency of the card's country of issue. DCC is generally provided by third party operators in association with the merchant, and not by a card issuer. Card issuers permit DCC operators to offer DCC in accordance with the card issuers' processing rules. However, using DCC, the customer is usually charged an amount in excess of the transaction amount converted at the normal exchange rate, though this may not be obviously disclosed to the customer at the time. The merchant, the merchant's bank or ATM operator usually impose a markup on the transaction, in addition to the exchange rate that would normally apply, sometimes by as much as 18%.

A chargeback is a return of money to a payer of a transaction, especially a credit card transaction. Most commonly the payer is a consumer. The chargeback reverses a money transfer from the consumer's bank account, line of credit, or credit card. The chargeback is ordered by the bank that issued the consumer's payment card. In the distribution industry, a chargeback occurs when the supplier sells a product at a higher price to the distributor than the price they have set with the end user. The distributor submits a chargeback to the supplier so they can recover the money lost in the transaction.

A merchant account is a type of bank account that allows businesses to accept payments in multiple ways, typically debit or credit cards. A merchant account is established under an agreement between an acceptor and a merchant acquiring bank for the settlement of payment card transactions. In some cases a payment processor, independent sales organization (ISO), or member service provider (MSP) is also a party to the merchant agreement. Whether a merchant enters into a merchant agreement directly with an acquiring bank or through an aggregator, the agreement contractually binds the merchant to obey the operating regulations established by the card associations. A high-risk merchant account is a business account or merchant account that allows the business to accept online payments though they are considered to be of high-risk nature by the banks and credit card processors. The industries that possess this account are adult industry, travel, Forex trading business, multilevel marketing business. "High-Risk" is the term that is used by the acquiring banks to signify industries or merchants that are involved with the higher financial risk.

<span class="mw-page-title-main">Payment card</span> Card issued by a financial institution that can be used to make a payment

Payment cards are part of a payment system issued by financial institutions, such as a bank, to a customer that enables its owner to access the funds in the customer's designated bank accounts, or through a credit account and make payments by electronic transfer with a payment terminal and access automated teller machines (ATMs). Such cards are known by a variety of names, including bank cards, ATM cards, client cards, key cards or cash cards.

Moneris is a Canadian financial technology company that specializes in payment processing.

<span class="mw-page-title-main">Interchange fee</span> Fee paid between banks for card-based transactions

Interchange fee is a term used in the payment card industry to describe a fee paid between banks for the acceptance of card-based transactions. Usually for sales/services transactions it is a fee that a merchant's bank pays a customer's bank.

The payment card industry (PCI) denotes the debit, credit, prepaid, e-purse, ATM, and POS cards and associated businesses.

<span class="mw-page-title-main">Credit card fraud</span> Financial crime

Credit card fraud is an inclusive term for fraud committed using a payment card, such as a credit card or debit card. The purpose may be to obtain goods or services or to make payment to another account, which is controlled by a criminal. The Payment Card Industry Data Security Standard is the data security standard created to help financial institutions process card payments securely and reduce card fraud.

<span class="mw-page-title-main">Credit card</span> Card for financial transactions from a line of credit

A credit card is a payment card, usually issued by a bank, allowing its users to purchase goods or services or withdraw cash on credit. Using the card thus accrues debt that has to be repaid later. Credit cards are one of the most widely used forms of payment across the world.

A payment processor is a system that enables financial transactions, commonly employed by a merchant, to handle transactions with customers from various channels such as credit cards and debit cards or bank accounts. They are usually broken down into two types: front-end and back-end.

<span class="mw-page-title-main">Card security code</span> Security feature on payment cards

A card security code is a series of numbers that, in addition to the bank card number, is printed on a credit or debit card. The CSC is used as a security feature for card not present transactions, where a personal identification number (PIN) cannot be manually entered by the cardholder. It was instituted to reduce the incidence of credit card fraud. Unlike the card number, the CSC is deliberately not embossed, so that it is not read when using a mechanical credit card imprinter which will only pick up embossed numbers.

<span class="mw-page-title-main">Surcharge (payment systems)</span>

A surcharge, also known as checkout fee, is an extra fee charged by a merchant when receiving a payment by cheque, credit card, charge card or debit card which at least covers the cost to the merchant of accepting that means of payment, such as the merchant service fee imposed by a credit card company. Retailers generally incur higher costs when consumers choose to pay by credit card due to higher merchant service fees compared to traditional payment methods such as cash.

<span class="mw-page-title-main">Google Pay (payment method)</span> Mobile payments platform developed by Google

Google Pay is a mobile payment service developed by Google to power in-app, online, and in-person contactless purchases on mobile devices, enabling users to make payments with Android phones, tablets, or watches. Users can authenticate via a PIN, passcode, or biometrics such as 3D face scanning or fingerprint recognition.

References

  1. ↑ "Financial Transactions". www.moneris.com. Retrieved 2016-11-06.
  2. ↑ "Master Data VS Transaction Data". www.intricity.com. Archived from the original on 2016-10-27. Retrieved 2016-11-06.
  3. ↑ Minish, Henry (2007). The Development of Electronic Card Transaction Statistics. New Zealand: Business Indicators - Statistics New Zealand. p. 1.
  4. ↑ Canada, Financial Consumer Agency of. "Canadian Code of Practice for Consumer Debit Card Services - Debit Card Transactions". www.fcac-acfc.gc.ca. Retrieved 2016-11-06.
  5. 1 2 3 Tompkins, Michael (December 2015). "Canadian Payment Methods and Trends: 2015" (PDF). Canadian Payments Association Discussion Paper. No. 4. Canadian Payments Association. ISSN   2369-3541.
  6. ↑ "Interac - Interac Debit". www.interac.ca. Retrieved 2016-11-06.[ permanent dead link ]
  7. ↑ "Interac e-Transfer use surpasses one billion transactions in the last twelve months". 31 May 2022.
  8. ↑ "Credit Card Transactions". www.moneris.com. Retrieved 2016-11-06.
  9. ↑ "Debit Card Transactions". www.moneris.com. Retrieved 2016-11-06.
  10. 1 2 3 4 "Mastercard, AmEx Quietly Feed Data to Advertisers" . Retrieved 2016-11-30.
  11. ↑ "Google data mine digs into credit card privacy". South China Morning Post. 2017-05-30. Retrieved 2020-10-10.
  12. 1 2 3 4 5 6 "About Purchase Cards". www.paypalobjects.com. Retrieved 2016-11-30.
  13. 1 2 3 Cameron, Mollie; Nichols, Leigh (2008). "Understand "Customer Tempo" to Improve Marketing Results" (PDF). First Data Corporation.
  14. 1 2 3 4 5 Deng, Boer (2015). "People can be identified through their credit-card transactions". Nature. doi: 10.1038/nature.2015.16817 . S2CID   183196134.
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