2021 Mastercard Organistional Informatics Enacted Group Report FIT5086 – ORGANISATIONAL INFORMATICS REPORTED BY: STEPHANIE CHEOK (27150224) QIYANG JIN (30466989) SHIYI HAN (27623009) AI-LING HUANG (30869692) TUTORIAL DAY/TIME: THURSDAY, 1PM TUTOR: MICHAEL NIEMANN Table of Contents Team Member Contribution ...................................................................................................... 1 I. Synopsis / Rationale ............................................................................................................... 2 II. Overarching considerations ................................................................................................... 3 III. Structure ............................................................................................................................... 5 IV. Practices and Process ........................................................................................................... 7 V. Information............................................................................................................................ 9 VI. Conclusion ......................................................................................................................... 11 Reference List .......................................................................................................................... 12 1 Team Member Contribution Section Member I. Synopsis / Rationale STEPHANIE CHEOK (27150224) QIYANG JIN (30466989) SHIYI HAN (27623009) AI-LING HUANG (30869692) II. Overarching considerations AI-LING HUANG (30869692) III. Structure SHIYI HAN (27623009) IV. Practices and Process QIYANG JIN (30466989) V. Information STEPHANIE CHEOK (27150224) VI. Conclusion STEPHANIE CHEOK (27150224) QIYANG JIN (30466989) SHIYI HAN (27623009) AI-LING HUANG (30869692) Reference List STEPHANIE CHEOK (27150224) QIYANG JIN (30466989) SHIYI HAN (27623009) AI-LING HUANG (30869692) 2 I. Synopsis / Rationale For this report, Digital First program was chosen as the activity to focus on because of the coverage regarding the broad range of Mastercard products and services. This program can also be analysed more thoroughly using Linger’s OI framework in respect to COVID-19 accelerating the implementation and adoption of the program’s procedures and standards due to the need for access, security and flexibility of financial services. Firstly, this report addresses the ways of how Mastercard overcame the challenges imposed by COVID-19 at the height of its spread and how these methods helped Mastercard holistically be aligned better with their culture. Secondly, it describes how Mastercard supports and manages the program throughout different parts of the organisations vertically and horizontally in terms of the Linger’s OI framework. Thirdly, changes that Mastercard did in practices and processes for the program were identified, and how sensemaking and learning in the OI framework impacts this process. Lastly, there is a discussion about Mastercard’s technological current and potential abilities that propel it forward in the industry, along with the requirements needed to carry out these advancements for better service. It also highlights the impact on stakeholder’s privacy and autonomy of these requirements in an increasing connected world. In the conclusion, there are several findings from this research that Mastercard can critically review to enhance its conduct of its business activities with the Digital First Program in the presence of COVID-19. 3 II. Overarching considerations COVID-19 not only affected small businesses but also major organisations like Mastercard. In the past year, Mastercard has faced challenges such as a decrease in credit card applications and an increase in credit card cancellation. Before the pandemic, a pre-covid report was conducted and it predicted that the use of payment cards will increase over the next 5 years where there will be a growth of 1.7 billion by 2023 (Girling, 2020). However, due to the pandemic, the consumers are unsure of whether they will be receiving a consistent paycheck as lockdown happens unexpectedly hence the decrease in applying for payment cards. Travel restrictions have been a major downfall to Mastercard as an organisation as well. In relation to credit card cancellation and uncertainty of income, there has also been a sharp drop in card spending especially for travel related purchases. Before the pandemic happened, business travelling was one relevant factor that drove the growth of the payment cards market and it was continuously growing (Girling, 2020). An important precaution to prevent COVID- 19 is to minimise contacts, this in turn sparked a rise in cashless payments. Although this feature had been around for some time, it was still a service that needed more work to be done as there are new digital threats emerging every day. However, with challenges comes change. Mastercard has tried into responding and adapting to the current situation. They have started implementing tap payments which benefited them economically, where the impact of cash payments cost approximately 1.5% of GDP (Girling, 2020). Social isolation is a major factor of the current pandemic, which in turn will make online payments more important than before. Hence, Mastercard has also shifted to the e- commerce sale industry where they have collaborated with buy now pay later companies. Mastercard has several incentives such as fraud prevention. Their Digital First program aims to maximise the safety and security of online banking and contactless payments to ensure consumers are protected (Mastercard, 2021). They have also implemented quicker turnaround times on transactions that are reported or detected to be fraudulent. Mastercard is a company that targets to be customer oriented, thus they have announced a delay in interchange fee which helps merchants to be more at ease during this current economic downfall (‘Chronicle of the 4 New Normal: Managing Disputes’, n.d.; ‘Visa and Mastercard will delay merchant fee hikes another year amid ongoing pandemic’, 2021). They have also made it easier for customers of NSW transportation where riders could pay with a contactless Mastercard via their debit card or mobile (Mastercard, n.d; ‘Contactless payments’, n.d). According to a report, Mastercard is aiming to bring 1 billion people into the digital economy by 2025 as this would create pathways toward increased financial security for people, organisations and communities all around the world (Patel, 2020). As Mastercard had been straying from their culture at the beginning of the pandemic, they started to make changes in order to be aligned with its listening and impact values (‘Culture and Values’. n.d.). In terms of their listening, they had empathised with merchants and delayed the interchange fee. As for impact, they implemented cashless payment that helped prevent the spread of covid-19. Mastercard aims to be a customer-oriented organisation while maintaining profitability is how they overcome their challenges. 5 III. Structure The global Digital First program in Asia Pacific is being strengthened and supported more by Mastercard and their innovative partners so that they can provide some more secure digital payment methods to customers, because online banking and online shopping were used more than before due to the COVID-19. The security and convenience of online banking, transactions and e-commerce was maximized by the digital first program through creating end- to-end digital payment methods for their partners including payment processors, fintechs, and issuing banks (Mastercard, 2021). To support digital first program for a better development, Mastercard, Samsung and SoFi cooperate to launch Samsung Money by SoFi which is a mobile-first money management experience (Investor News Details, 2020). Furthermore, the Linger OI model was focused on for this case study. During COVID-19, infrastructure, one of the elements of structure from the OI framework, was improved by the digital first program. Mastercard's increasing digital infrastructure with payment methods to adapt the new context including digital bank account, digital card, and QR code are covered and reinforced by the access goal of the program. The network-based solutions were provided to allow Mastercard’s back-office service processes to complement the program’s goal of convenience. Additionally, at the end of 2020, digital card fraud resulted in about $11 billion losses. The covid-19 was pulling the growth of card fraud activity (Lee, 2021). Also, as the infrastructure was enhanced, the digital first program offered a new method to avoid digital fraud. People’s transactions can be tracked by a digital first program. Once a potential violation was identified by the Mastercard team, they will act immediately, such as removing the suspect items or stop the cooperation with the merchant. Then all the violated merchant’s details will be recorded in the Mastercard Alert to Control High Risk (MATCH) system to minimize further risk (Hyman, 2020). Next there is a relationship between any two elements of the OI framework. In the Mastercard case, the relationship between infrastructure and governance will be focused on. To reinforce the safety, security and convenience of the Digital First program, Mastercard has formulated 6 some policies and procedures for better governance. For instance, the Zero Liability Protection policy, which means that it is not consumers responsibility if a transaction was identified as unauthorized. If a cardholder can satisfy the below two situations, the responsibilities for unauthorized transactions will not be held: Reasonable care was taken by the cardholders to avoid loss of their cards; and the loss was reported on time to the financial institution (Mastercard, n.d.). Furthermore, another procedure is easing the burden of consumers with worry free refund processes for eligible transactions restricted by the pandemic. As most consumers wanted to get their refunds from cancelling trips, hotels, and vacations. These situations took pressure and stress to consumers, enterprises and Mastercard. A program was created to ease transaction disputes by Mastercard and Ethoca, which is named Digital Receipts service. This program can help to share alerts on time between banks and credit unions so that they can solve problems faster (Mastercard, n.d.; Mastercard, 2020). In 2020, Ethoca which is a company of Mastercard, cooperated with Microsoft to create a program which is a Digital Receipts service that can allow consumers access to their digital purchase receipts simply through digital methods such as mobile apps (Mastercard, 2020). In Ethoca’s research, 93% of participants indicated that it is helpful while reporting unauthorized transactions to financial institutions to get more information such as a picture of the printed receipt. Ethoca’s Digital Receipts service allows the organizations to provide this information to their customers through the banks which have already enrolled in Ethoca’s Digital Receipts service, and then customers can use the app on their phone to access these enhanced digital receipts (Mandel, 2020). Therefore, the stress and pressure on both consumers and enterprises can be eased through this procedure, and the transaction disputes also can be eased. These policies and procedures are helpful to manage and support the Digital First program. 7 IV. Practices and Process To talk about the practices and process, Mastercard did make kinds of changes for the activity that our group is focused on which is called digital first program. First, under the impact of COVID-19, face-to-face contact is not allowed, people cannot go to the bank to do business. Then to keep the organisation running normally, changes had to happen. Mastercard uses sensemaking to analyse the whole environment of the market. In the case of the offline market depression, on the contrary, the demand of the online market is increasing. Moreover, Mastercard predicts the impact of COVID-19 will last a long time, such as 3 years. At the same time, the openness and demand of users around the world for online transactions has reached an all-time high and is likely to continue to grow. To take full advantage of the information technology as well as service domain logic, the digital first program was pushed to a dramatically important position consequently. In practice, Mastercard’s reinforce the digital infrastructure, and launch new services, enabling them to deliver more quickly and efficiently against the ever-evolving needs of consumers, (Mastercard, 2021). With this greater demand for digital experiences, Mastercard is enabling its customers to innovate faster by providing a network of partners that support each step of the consumer digital journey – from acquisition and usage to management (Smith, 2021). Without the support of a strong network, the implementation of the digital first program will definitely be blocked. This is a particular demanded change that digital first program needed through practice and process of Mastercard’s’ exploitation. What is more, according to Bloomberg, Mastercard adjusted their organizational structure as well, due to the explosion of online business, offline workers are no longer needed in large numbers, this poses a huge challenge to Mastercard, Mastercard did their decision making through sensemaking, considering the shift in market, the adjustment of the staff structure cannot be delayed anymore. Mastercard transferred a total of 30 percent of the staff from other departments to Digital First program activity, since digital first program is not a brand-new product and activity, the COVID-19 has given digital first program a whole new meaning in both practices and process. 8 Due to the organizational culture, Mastercard focuses on service domain logic through their process and practices to provide better services for customers. According to the reaserch, the number of cases of fraud has skyrocketed in the COVID-19 environment. But Mastercard enhances close cooperation and responsiveness between departments, for example the examination department and the card issuing department, with the organization learning and updating digital first program often, on the one hand, digital first program can track online transactions, for example, once the Mastercard team finds a potential risk, they will take action immediately. Including contacting customers in a short time and stopping the cooperation with the merchants. All the merchant’s details are recorded in the MATCH system to ensure problems can be dealt with precision. What is more, Mastercard is expanding the Engage platform, offering customers easy access to a growing network of qualified technology and fintech partners that can quickly deploy Mastercard Digital First solutions supporting the conduct of digital first program. These solutions will enable customers to provide entirely digital payment experiences for consumers, from acquisition and card usage to management and engagement, with a physical card option. (Mastercard, 2021). Eventually, current practices are effectively exploiting the existing capability in most areas. The most intuitive example is that Mastercard returned to positive year-on-year revenue growth in Q1 2021, with volume up double-digits both globally and in the U.S. (‘Mastercard (MA) Earnings: Revenue Growth Resumed In Q1, 10%+ Annualized Return Ahead’, 2021). But according to the research, the digital first program is far from saturation, but Mastercard will have to pay more to maintain and operate the network, which means the current practices are not effectively exploiting the existing capability. 9 V. Information The Digital First Program, as outlined in Mastercard (2021), involves encrypted and convenient digital payment methods ranging from digital banking and retail activities of consumers. Furthermore, this program supplies procedures for processors of payments, issuers, fintechs and various stakeholders to establish comprehensive digital payment scalable choices. Mastercard’s current technology within the program enables its global network to become a processing platform present throughout the customer purchasing journey and business operation (Blakey, 2021). The network also conducts digital payments from multiple payment options from physical card to smart wearable technologies, subsequently to sustain these capacities Mastercard has partnerships with a multitude of major banks and financial institutions that utilise this network across the Asia-Pacific region like Standard Chartered, GrabPay, Sumitomo Mitsui Card, Adelaide and Bendigo bank to name a few. This increases information needed such as detailed physical and digital banking activities of stakeholder’s consumers by Mastercard to better analyse data and provide corresponding actions to these stakeholders (Smith, 2021). Whereas the technological advanced capability of the program consists primarily of Mastercard QR on card and Masterpass QR feature which allows the transfer and scanning of funds securely and conveniently. These capabilities that leverage consumers' extensive usage and engagement with smartphones lets Mastercard further be present in cost-effective payment markets and extends the scope of which Mastercard operates into social media platforms like Facebook messenger. Small-scaled merchants in India have already opted for cash free payments with QR codes, enabling Mastercard to simultaneously capture, track and monitor merchants and their respective consumers' portfolio micro information expenditure activity. Additionally, other payment processors, fintechs and providers of digital payment platforms like Euronet Worldwide, HPS, Thales and Infosys are participating with this QR on card feature. Mastercard required information to implement this capability might decrease due to various partnerships in terms of this feature with more agglomeration of payment methods extending to social media and other payment platforms that use QR codes that have respective security and verification procedures. Nonetheless, Mastercard database of information regardless widens and with increasing expectations of users directly and indirectly to offer 10 information readily for access to technologically advanced features (Gupta, 2016; ‘Mastercard On The ‘Digital-First’ Transformation Of Credit Cards Into Daily Money Management Tools’, 2020; ‘Mastercard to launch QR on card programme to simplify digital payments’, 2021). However, Mastercard’s aggressive behaviour for mass gathering, management and storage of data as a singular entity from these advancements have sparked privacy criticism and concerns for autonomy of stakeholders from experts. Mastercard’s ability to share detailed individual spending information to its large base of stakeholders without clear consent from the user benefits marketing and sale strategies to be accurately targeted back to consumers. Mastercard also would be involved with the large “buy now, pay later” companies and banks to provide credit loans for these targeted consumers, making it an endless cycle of precise targeting and monitoring of the market using their own personal information (Iacurci, 2021; Sloane, 2021). More and more consumers and businesses are becoming aware of the information powerhouse major digital payment processors like Mastercard hold in a relatively monopolised industry with a recent study showing 88% of survey respondents indicate privacy concerns being a barrier to adoption and pure reliance on digital payments (Kapur, 2018). Moreover, businesses' degree of autonomy as a key stakeholder are highlighted with Zapper, a loyalty-rewards based application terminating their contract with Masterpass. This was due to Mastercard closing the access to loop to its system by making businesses and consumers use its own mobile application for Masterpass terminals to accept scan through payments (Lotz, 2020). Again, it shows the level of control Mastercard has in terms of the flexibility and access it can provide its stakeholders, and how much it can easily change the direction of that control. 11 VI. Conclusion The research findings have shown how Mastercard has been consistently moving towards their culture and conducting their business activities efficiently by putting safety, access, and convenience at the forefront in the active COVID-19 period via the Digital First Program. This includes simple methods like allowing higher payment limits, delaying merchant swipe fees, incentives for quick turnaround for fraudulent transactions and being more proactive in the public transport sector in NSW. Internally, Mastercard had the MATCH system and network reliant solutions as part of their digital infrastructure to support the various payment methods made available to consumers. In terms of their governance, policies such as the Zero Liability policy and procedures to ease the burdens of disputes were in place. Mastercard did sensemaking to analyse the environment of the market to strengthen and reorient digital payment processing, focusing on preventing and dealing with fraud, network services, expanding the scope and number of partners for convenience and safety. Besides that, Mastercard was a learning organisation through making digital payment methods and processes more seamless and integrated than before. The program feeds off the current technological abilities and incorporates technological advancements from the medium in which users utilise for digital payments like wearable technology and social media. Subsequently, the garnered amount of information from existing and continuously widening scope of Mastercard in the financial services and digital processor sector through technological capabilities and capacities has shown to have the power to promote data sharing effectively for accurate prediction either for fraud or marketing strategies. However, this becomes a double- edged sword with the level of control that this enormous amount of data gives Mastercard to decide the autonomy direction and access of its stakeholders. (2991 words) 12 Reference List Blakey, D. (2021, April 23). Mastercard strengthens Digital First programme in Asia Pacific. 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Credit card fraud will increase due to the Covid pandemic, experts warn. Retrieved from https://www.cnbc.com/2021/01/27/credit-card-fraud-is-on-the-rise-due- to-covid-pandemic.html Lotz, B. (2020, October 8). Masterpass’ behaviour in the local QR code payment sector is concerning. Hypertext. Retrieved from https://www.htxt.co.za/2020/10/masterpass- behaviour-in-the-local-qr-code-payment-sector-is-concerning/ Mandel, S. (2020). Ethoca to Bring Digital Receipts to Consumers through Collaboration with Microsoft [Press release]. Retrieved from https://www.mastercard.com/news/press/press- releases/2020/april/ethoca-to-bring-digital-receipts-to-consumers-through-collaboration- with-microsoft/ Mastercard. (n.d.). Mastercard Innovations | Contactless Payment for Public Transport. Retrieved from https://www.mastercard.com.au/en-au/about- mastercard/innovations/contactless-payment-for-public-transport.html 14 Mastercard. (n.d.). Zero Liability Protection. Retrieved from https://www.mastercard.com/content/mastercardcom/global/en/personal/get- support/zero-liability-terms-conditions.html Mastercard. (2020). Leading during COVID-19 [Press release]. Retrieved from https://www.mastercard.com/news/perspectives/featured-topics/covid-19-response/ ‘Mastercard On The ‘Digital-First’ Transformation Of Credit Cards Into Daily Money Management Tools’. (2020, October 1). Retrieved from https://www.pymnts.com/digital-payments/2020/mastercard-digital-first-credit-cards- money-management/ Mastercard. (2021). Mastercard Accelerates Deployment of Digital First Solutions [Press release]. Retrieved from https://www.mastercard.com/news/press/2021/march/mastercard-accelerates- deployment-of-digital-first-solutions/ Mastercard. (2021, April 22). Mastercard strengthens Digital First program in Asia Pacific to meet rising demand for convenient and secure transactions [Press release]. 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