Credit Card Transaction Data
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The Ultimate Guide to Credit Card Transaction Data 2020
Learn everything about Credit Card Transaction Data. Understand data sources, popular use cases, and data quality.
Table of Contents
- What is Credit Card Transaction Data?
- Who uses Credit Card Transaction Data and for what use cases?
- What are typical Credit Card Transaction Data attributes?
- How is Credit Card Transaction Data typically collected?
- How to Assess The Quality of Credit Card Transaction Data?
- How is Credit Card Transaction Data Typically Priced?
- Challenges with Transaction Data?
- What to ask Your Data Providers?
What is Credit Card Transaction Data?
Credit card transaction data is the financial information generally collected at the moment of a transfer of funds between a card holder’s account and a business’s account. 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. For instance, when a customer walks into a quick service restaurant and orders a burger, it’s likely that she will pay with a debit or credit card. This information is captured by the bank and recorded as a transaction. Anyone who has ever checked their bank statement online and seen such transactions listed has witnessed consumer purchase data first hand.
Since debit and credit cards are commonly used to pay for goods and services, they represent a strong percentage of the consumption expenditure in a country. These two types of payment methods combined make up for more transactions than cash. 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. The use of contactless and e-commerce payment has also allowed for a growth in card transaction data, due to the simplicity of the transaction. The use of Interactive debit transactions have increased rapidly in the last 6 years.
Who uses Credit Card Transaction Data and for what use cases?
Consumer card transaction data is particularly valuable to retailers, restaurants and financial institutions interested in learning more about consumer behavior as it relates to shopping. With enough de-identified user data over enough time, clear patterns begin to emerge. Financial institutions and retailers can utilize that data and see spending habits, share of wallet, method of payment preference, and more reference data.
From there, predicting a consumer’s next move becomes less about guesswork and more about transaction data analytics. Transaction data, especially for credit card use, is being turned into a revenue stream and sold for digital advertising and other marketing purposes by many credit card companies. Card transaction data is collected by regional code and allows for an analysis of the type of consumers found within a specific region and if there are any similarities.
It can identify areas that are more likely to make certain types of purchases, like shoes, for instance. The data collected is often kept anonymous and aggregate, yet it can still define users within a specific region for certain types of purchases. For example, due to privacy protection, all we know from know from the data is that there are x-thousand shoe-buyers in a given area, online, at any one time. Using this information, online advertisers can then bid on online users from those areas, and target them with ads for shoes.
This information is beneficial to companies or stores as it provides data on the kind of consumer they are targeting and how to increase their revenue in sales, allowing marketing and other teams to more successfully promote targeted offers, deliver personalized financial advice, and drive more meaningful customer interactions.
Due to privacy concerns, companies such as MasterCard do not share detailed data on an individual basis. Some companies such as MasterCard are planning on combining their card transaction data with purchase history and loyalty cards. This will allow for a more defined collection of statistical data of consumer buying and spending habits collected from real purchases, which makes it more reliable.
Some companies such as PayPal offer an incentive rate program for merchants who offer more detailed information on their sales transactions. These are only eligible for merchants who comply with Level 2 or Level 3 (PCI compliance) transactions. Transactions that fall under Level 1 qualify as a normal card transaction.
To ensure that the data being shared is accurate, card companies perform strict verification of data being collected at either Level 2 or 3. Therefore only this information is eligible for incentive rates being offered by card issuers as it is more accurate. This is a form of collecting transaction data that is more individualized, as it is completed by the merchant after the transaction has been made.
The levels refer to the amount of data submitted for the card. The higher the level, the more data needs to be reported. Level requirements usually differ between companies but are similar to the following offered by PayPal:
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.
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.
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.
The marketing industry claims that sharing Credit Card Transaction Data can be beneficial to consumers as it allows card companies and merchants to provide better products and services tailored to them directly. This may result in favorable products or services for the consumer. However, the downside for consumers is that such direct targeting tends to increase spending habits.
It is also claimed that less mass marketing will be done and instead only specific groups that are susceptible to the advertisements will be targeted. But in reality, businesses benefit enormously, as this type of information is useful for identifying promising areas of growth, enhancing direct marketing response rates, and improving retention of existing customers. Exploring payment and spending trends can offer more opportunity for revenue growth as well as for improved consumer experiences in stores and online.
Most businesses would benefit from using some form of Transaction Data analytics to inform business and marketing decisions. Credit Card Transaction Data can drive meaningful digital insights and interactions. It can leverage de-identified data about clients and competitors to set benchmarks and opportunities for growth. Driven by billions of anonymized transactions from millions of de-identified consumers, Transaction Data is an unparalleled source of market intelligence about consumer spending patterns.
More personalized areas where Credit Card Transaction Data can also help are:
- Better understanding your customers’ spending habits
- Allowing you to offer personalized, targeted marketing, as your customer’s transactions likely reveals specific interests and needs in individual customers that you can leverage
- Addressing needs to increase engagement with customers will help to grow your business.
- Analyzing trends and patterns in purchases to attract new customers. Your existing customers’ purchase behavior can reflect larger trends that are on the way in.
What are typical Credit Card Transaction Data attributes?
Typical Credit Card Transaction Data attributes include:
- Private label payment
- Private label payment-void
Type of credit cards:
- Standard (MasterCard, Visa, Discover, AMEX)
- Pre-paid (MasterCard, Visa, Discover, AMEX)
- Corporate (purchasing) cards (as long as it is a process able standard card, i.e. standard Visa means corporate Visa cards are processable)
- Private label cards (depending on the terms of agreement between the company’s financial terminal data generator
How is Credit Card Transaction Data typically collected?
Transaction Data is typically collected by card companies, banks, stores, and businesses where purchases are made. This data is then sold on to Transaction Data providers who sell it to businesses to help in target marketing and improving their business.
How to Assess The Quality of Credit Card Transaction Data?
Good quality Consumer Card Transaction Data is necessary to improve your business target marketing and planning. The data should be up-to-date in real time. The Consumer Card Transaction Data provider should update the data regularly. The data provided should be customizable to your personal business needs. Data should be tested regularly to ensure the level of business improvement over time.
How is Credit Card Transaction Data Typically Priced?
Credit Card Transaction Data is sold by many credit card companies either directly to businesses, or to Transaction Data providers who clean and transform the raw data and sell it to businesses, for digital advertising and other marketing purposes.
Typical pricing models would include:
- Pay per batch - you pay for a one time dataset of historical data
- Subscription fee - you gain access to a real time API via a recurring fee
- Custom quotes - tailored offering or your specific needs
Challenges with Transaction Data?
The common challenges are obtaining up-to-date data that will meet the individual needs of your company.
Keeping this type of data anonymous is also a challenge for debit and credit card companies who share the information with third parties. Data with certain properties, especially a geographical location attached, are hard to keep unsourced. Other patterns of behavior are also unique enough to identify individuals, indicating that complete anonymity is impossible. As more information becomes available and is tagged by people’s consuming behavior, this will only get harder to do. The standards for protection and enforcement against the release of this data varies among OECD member nations and is liable to change.
What to ask Your Data Providers?
Questions buyers might want to ask data providers include:
- How often is the data updated?
- Can the data be customized to meet the needs of my business?
- Will the data work with my existing business technologies?
- Is training on using any analytics platform needed/provided?
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