MasterCard Europe to launch merchant fraud database

Source: MasterCard

MasterCard Europe will soon activate within Europe its unique "MATCH" system, a globally operated database for acquirers which registers merchants that have been identified as being involved in business specific irregularities.

Consulting the database will give banks the power to make a more informed decision before signing contracts with new merchants.

The announcement follows the endorsement of the group of data protection authorities (the so called Article 29 Working Party) to new guidelines on the collection and processing of data on merchants whose contracts to accept payments cards have been terminated.

Walter Hansen, Vice President of Global Security and Risk Services, MasterCard International, commented: "The use of anti-payment fraud databases is critical to helping the banking industry manage risk and could generate estimated cost savings of up to 200 million euros per annum in the European Union alone, according to cardholder disputes on identified merchants.

"As a primary player in the payments industry, MasterCard has worked closely with the EC to negotiate new guidelines which address a crucial business need, while complying with data protection rules.

"MasterCard is delighted that Europe's data protection authorities have recognised that the effective operation of databases such as MATCH on a pan European level could save banks, and ultimately cardholders, substantial amounts of money in terms of losses due to merchants' irregularities."

EU member states have localised data protection laws and the differences in legislation between countries have made it impossible to operate cross-border databases such as MATCH until now. MasterCard Europe has cooperated with the EC and the data protection authorities to establish new guidelines that can bridge these differences and maintain the fine balance between protection of personal data and sharing data to prevent financial irregularities.

The new EC guidelines will enable the global payments industry to further minimise the risk posed by the advent of e-commerce, where merchants can operate their businesses anywhere in the world. Once a merchant is identified as engaging in irregular practices, preventative action is taken. In cases where the agreement with the acquirer is terminated, common practice has been for these merchants to go to another acquirer elsewhere in the world and simply start their business again, with a high likelihood of irregularities recurring.

MATCH (Member Alert To Control High Risk) operates as a global system holding the details of any merchant that has been involved in irregular practices for a maximum period of five years, after which they are automatically removed. Merchants registered on the database are informed in line with national data protection legislation. Until now, localised European data protection legislation has precluded the completion of the European element of the database, as banks in member states have been reluctant to report merchants for fear of breaching national data protection laws.

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