MasterCard completes payment processing system

MasterCard International Inc. on Monday will announce the completion of a new US$160 million payment processing system that includes a single, open messaging standard to simplify communications among merchants, 25,000 US financial institutions and back-office clearing systems.

The peak shopping season, which began Nov. 15 and runs through Jan. 6, will top off a record year with more than $1 trillion in MasterCard transactions, according to Jerry McElhatton, senior executive vice president of global technology and operations at Purchase, N.Y.-based MasterCard.

Earlier this month, MasterCard for the first time opened to the international press its $140 million St. Louis Global Technology and Operations Center, which handles global processing of credit card transactions. The building, opened a year ago, consolidated a four-building campus about 25 miles away.

The new processing center was in development for two years and sports a 121,500-square-foot data center/power plant with state-of-the-art computing systems woven together by 161 miles of fiber optics and 95 miles of copper wiring.

The processing center supports MasterCard's new Global Payments Processing Platform and Global Clearing Management System, which runs over an IP-based virtual private network co-developed by AT&T Corp. The messaging service offers a single format for authorization, clearance and settlement information among retailers, banks and MasterCard. On peak days during this shopping season, such as the Saturday before Christmas, the system is expected to handle up to US$38 million in transactions.

The global platform was built on the International Standards Organization's 8583 message set. Currently, about 97 percent of all card-issuing banks are using the new platform, which allows banks to process clearing transactions up to six times a day vs. a single batch method once a day, according to Rob Reeg, senior vice president of systems development at MasterCard.

MasterCard had been using a 27-year-old proprietary messaging platform based on the X.25 protocol called Interbank Electronic Transfer. The new message format has increased the speed of authorization requests to less than 150 milliseconds, vs. about 650 milliseconds on the older platform.

MasterCard also announced this month that it is about halfway through a five-year plan to converge with MasterCard Europe, formerly known as Europay, as part of its overall effort to move to a single technology platform.

"This is the biggest technology change MasterCard has ever done," Reeg said. "It gives us a globally integrated platform."

In building a new data center that will act as a single processing point for global transactions, MasterCard purchased upgraded hardware and software while staying loyal to core vendors, including IBM Corp., EMC Corp., Sun Microsystems Inc. and Storage Technology Corp.

By standardizing on a single global platform, MasterCard's system "programmers can move from one project to another without additional training because they are always using the same standards," Reeg said. "So you definitely see a productivity growth."

MasterCard's payment and clearing network uses 700 IBM Netfinity servers worldwide, or what it calls member interface processors, to direct traffic from merchants to 25,000 card-issuing financial institutions to MasterCard.

For disaster recovery purposes, MasterCard is currently mirroring settlement data over an IP network from St. Louis to a Lake Success, N.Y., facility. But Reeg said the company expects to begin construction on a new disaster recovery center about three hours west of St. Louis to ensure accessibility in the event of a shutdown.

"The events of 9/11 showed us you could shut the airlines down and prevent us from getting [to the disaster recovery facility]," Reeg said.

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