Blog » MRS API

April 4, 2022

Why should a bank enrich transaction information?

• Digital Banking
• Transaction Enrichment

Post Summary – Relevant Facts

• Today many banks try to use simple MCC (Merchant Category Code) to roll out a simplistic version of personalised banking – But MCC are not consumer-centric, they are often inaccurate and occasionally wrong, from a customer point of view.
• Highly accurate enriched transaction data is key for any company that seeks to compete in terms of customer experience. It is not a ‘nice to have’ but the foundation for launching a range of compelling digital services that increases consumer trust in the brand.
• Snowdrop’ Merchant Reconciliation System returns around 95% match rates. Using MCC but also merchant name, country code and address in the payment processing message.
• Personal Finance Management, Transaction-based Carbon Footprint Emissions, Risk Management, Loyalty Programmes and more use cases can benefit directly from highly accurate data enrichment.

At an event recently one European banker asked if Snowdrop’s ‘Merchant Reconciliation System’ (MRS) solution was “the cherry on the cake” meaning something ‘nice-to-have’, but not essential.

Unsurprisingly, we disagree. Highly accurate enriched transaction data is key for any company that seeks to compete in an increasingly demanding sector in terms of customer experience and trust across an expanding range of digital banking services.

Take Personal Finance Management or PFM for instance. Today, many banks try to use a simple Merchant Category Code (MCC) to roll out a simplistic version of personalised banking. A Merchant Category Code is a four-digit code listed in ISO 18245 for retail financial services, used to classify a business by the types of goods or services it provides.

The idea is to show consumers how much they spend on a number of categories such as Shopping, Transportation or Entertainment, etc. Designed primarily to determine pricing structure rather than customer experience, though, the MCC codes are not consumer-centric. As a result they are often inaccurate, and occasionally wrong, from a customer point of view.

Repsol, for example, is a well known gas company in Spain. Its MCC is 5541 or “Service Station.” A consumer may indeed fill up their car at Repsol. The same consumer may also purchase milk and bread there on a Sunday, stop for a coffee, use the car wash, or withdraw cash from an ATM machine. Showing a purchase of milk as “Service Station” doesn’t help consumers understand and manage their spending habits. On the contrary, consumers find such information annoying, or even worse, they might panic thinking a fraud has occurred.

Merchant Cleaned Name

Repsol

MCC

5541: Service Stations (With or without Ancillary Services)

MRS Category Options

Gas Station
ATM Machine
Supermarket
Cash Wash

At Snowdrop, our MRS API returns around 95% match rates. We use the MCC, but also the merchant name, country code and address in the payment processing message and even location coordinates if applicable. This enables our banks to find the right merchant and show the right category – one that fits the consumer’s actual experience. The Merchant Reconciliation System also provides the right merchant logo as well as additional information about the merchant such as opening hours, the URL, ratings and reviews, StreetView imagery from Google, etc.

Clearly, a better PFM is just one area that benefits directly from highly accurate data enrichment. Many of our banking customers report a clear decrease in calls to the bank’s call centre as well as a decrease in chargebacks once data enrichment through Snowdrop’s MRS solution has been deployed. One mid-sized northern European bank customer reported a cost savings of several hundred thousand pounds in just the first few weeks alone.

While impressive, we believe banks will reap greater benefits when they leverage highly accurate enriched transaction and merchant data to unlock a range of services such as risk management, credit scoring, insights, cashback, loyalty programmes and new services.

Take transaction-based carbon footprint emissions. By knowing which supermarket was involved and where, the bank can create not just a more accurate estimate of CO2 generated, but also look at what other key Environmental Social and Governance (ESG) attributes are associated with that store. This means users can better understand where they spend and what percentage of their spending habits are green. The same applies to rewards program: unless a bank is able to identify exactly where a transaction took place, the bank cannot properly fulfil the rewards or loyalty points to the right merchant store.

In short, highly accurate enriched transaction data is not a ‘nice-to-have’ for a bank, it is the foundation for launching a range of compelling digital services that increases consumer trust in your brand in an increasingly competitive landscape.

Want to know more?

Snowdrop Solutions currently works with leading digital and traditional banks in Europe, the UK and Asia Pacific. Snowdrop is a location and data intelligence company that has been a Google Trusted Partner since 2013 and Visa Europe since 2020. MRS brings together our deep understanding of the Google Maps APIs, a proprietary database and a second to none matching algorithm. We offer superior match rates and accuracy to any of our competitors and a unique customer centric approach that, other than transaction enrichment, provides cost savings and churn reduction to our clients, over and over.

If you want to know more about our product, you can access more information on our dedicated MRS page or by contacting us. A member of the team will respond to your request promptly.