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MasterCard accelerates mobile P2P payments in quickly growing space

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May 20, 2015

MasterCard Personal Payments.

MasterCard P2P payments.

MasterCard’s newly launched personal payments service aims to be an answer for consumers looking to speed up money transfers while indulging their preference for sending and receiving funds via connected devices.

By connecting to the MasterCard Send platform, businesses, merchants, governments, non-profits, issuers and other senders can send money to consumers whether they are banked or unbanked, and located domestically or abroad. The service points to banks’ growing understanding of the importance of meeting consumers’ accelerated demands for faster service due to their ability to get things instantly on mobile.

“In the U.S., disbursements and P2P payments make up $4 trillion per year,” said Barb King, group head for global products and solutions with MasterCard, Purchase, NY. “Most of these payments are made via checks, ACH transfers and cash. 

“Currently, the methods for these payments are slow, lack ubiquity, and create security concerns,” she said. “Consumers prefer to send and receive money using their connected devices and disbursers are looking for cheaper and more efficient ways to send money to their consumers.”

Secure payments
Digitizing personal payments that are typically handled via cash or check, the service aims to deliver immediate and secure payments transactions to consumers anytime, anywhere and through any channel, based on personal preferences.

It includes the receipt of funds on MasterCard and non-MasterCard cards, into mobile money and bank accounts, and via cash agent outlets.

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MasterCard claims new system’s speed is unbeatable. 

Funds can be sent domestically and internationally via three payment flows: domestic P2P, or payments between two consumers in the same country; cross Border P2P, meaning payments between two consumers in different countries; and disbursements, or payments from governments, businesses, and non-profits to consumers.

MasterCard declined to release details about how the system works. In addition to linking their debit card accounts online or on a phone, users would have to register cards with participating providers, the first of which to be identified are Berkshire Hathaway Travel Protection and FreeShipping.com.

Giving an example of how the service could be used, it said a large insurance company such as Berkshire Hathaway could replace checks for travel insurance claims with payments sent directly and immediately to consumers’ debit card accounts. 

In another case, a large P2P payments provider could replace cash with an electronic payment between two people who have just split the bill for lunch.

And in another example, remittance provider could replace cash-out with an electronic payment sent directly to a person’s mobile money account.

The service also would allow an aid organization to replace a paper voucher with an electronic payment sent directly to a mobile money account.

MasterCard Send is designed to align with the needs outlined in the Federal Reserve’s initiative focused on enhancing the speed, security and efficiency of the U.S. Payments System.

Accelerating transition
MasterCard claims the service is far superior to existing solutions that either limit transfers within a closed-loop network or involve ACH, which can take several days for funds to be received.

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Device-based payments are becoming reality.

“The clunky, overstuffed wallet is quickly becoming a thing of the past,” Ms. King said. “Advancements in payment technology combined with consumer and merchant support are making this transition occur faster than any previous evolution within our industry.

“Device-based payments are no longer some futuristic opportunity,” she said. “They are real and here, and are becoming a part of the core value proposition of new devices.”

Final Take
Michael Barris is staff reporter on Mobile Commerce Daily, New York

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