Global financial services firm MasterCard announced this week that it is rolling out a pilot test program that would link credit card purchases to a customer’s location using smartphones. In conjunction with mobile technology firm Syniverse the service would use a customer’s smartphone geolocation data to determine if the customer was physically present at the retailer where a purchase was being made.
While such a system may eventually have broader applications, the service as proposed by MasterCard and Syniverse will at first be limited only to customer purchases made while abroad and will be opt-in only. In today’s increasingly privacy-focused market, some customers may bristle at the thought of yet another third party tracking mechanism, but the service does introduce several advantages for customers and payment firms alike.
In addition to potentially mitigating the damage from fraudulent transactions and theft, customers who opt-in to the program won’t have to experience the common frustration of having an ill-timed declined transaction while traveling abroad. Unless a thief also steals a customer’s mobile device (which is a possibility, especially if you use a case like this), credit card companies will know that you did indeed buy that double order of gelato in Naples.
One potential issue is that the verification of a customer’s location will need to be sent back to Syniverse and the credit card company via a mobile data transaction, and frequent international travelers know that navigating the global roaming scheme without racking up costly charges can be tricky. To address this concern, MasterCard claims that it is working to provide customers who opt-in to the service with special pre-paid data packages that can be purchased directly from a user’s mobile device once they arrive at their destination. It’s unclear at this point if these are full-featured data plans that would also allow users to perform other functions like checking email and the Web, or if these will be plans tailored to accommodate the small data transactions needed to verify a customer’s location.
But not everything about this deal is completely positive. Although there are no plans to implement such features now, MasterCard posits in its press release that future versions of this service could “implement targeted offers, which will be made more relevant by knowing the location of a mobile device, for example in close proximity to a retail store.” Targeted offers based on user location is nothing new – Google has been exploring the practice for years – but the thought of being interrupted with advertising every time you walk by a particular store may be enough to cause users to skip MasterCard’s offer, despite its benefits.
