Rather than just offer "reward points" based on purchase volume, MasterCard lets merchants award "WOWpoints" of anywhere from 1% to 5% of the purchase price, giving them more control over the process. Off this data it also offers "overwhelming offers," a sort of Groupon with national merchants aimed at building store and brand loyalty.
The company's latest move is MasterPass, a digital wallet that can hold rival credit cards, even Visa numbers. It's a short-cut for online payments and it integrates with Near Field technology so phones can just be pressed against readers to move money around.
This is a simple evolution from PayPass, introduced last year. You may have seen it as an add-on to some merchant terminals, its logo looking like a radio wave.
As with the Marketplace, which went to market with banks, MasterPass also goes to market through third parties, in this case merchants. Lots of different kinds of companies can offer their own digital wallets through the program, and gain some control of the resulting data.
Data is the key point here. Not just payment data but preference data, and data that can increase loyalty to a bank or a merchant. It's a lot cheaper for a store to turn an occasional shopper into a regular with escalating discounts than it is for them to advertise for new customers. Whatever MasterCard is doing right, it's been discovered by the smart money. The stock sports an earnings multiple near 24 -- Google (GOOG) territory -- drawing one dollar in three to the bottom line. It is, quite literally, a license to make money. The question occurs, of course, that in this world of ever-changing money, with Google launching a wallet and start-ups like Square, can MasterCard keep its mojo going? They say follow the money, but here in the 21st century the better idea is to follow the data. At the time of publication the author had positions in KO and GOOG. Follow @DanaBlankenhorn This article was written by an independent contributor, separate from TheStreet's regular news coverage.