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MasterCard builds omnichannel payments platform with mobile at the core

February 26, 2013

MasterCard is making a significant commitment to omnichannel commerce via its new digital payments platform, with mobile playing a key role in how services will be delivered to customers.

At Mobile World Congress in Barcelona this week, MasterCard introduced MasterPass, which will enable users to make payments via any payment card or enabled device inside a store or online. The digital wallet services will be delivered to consumers via partnerships with banks such as Citi, merchants and other wallet issuers.

“All intelligent, connected devices will become shopping devices; the convergence of the physical and digital is transforming how consumers transact,” said Ed McLaughlin, chief emerging payments officer at MasterCard, Purchase, NY.

“MasterCard is moving beyond plastic with MasterPass,” he said. “MasterPass brings together all of the ways we pay for things, from traditional plastic cards to digital wallets, and gives consumers the ability to make a payment from wherever they are and with one simple experience.

“It’s our digital infrastructure and how MasterCard brings it all together for you.”

Key partnerships
MasterPass represents the broadening of MasterCard’s PayPass Wallet Services, which was introduced last spring and has been in production trail with select merchants and issuers.

Per MasterCard, MasterPass is a digital platform for omnichannel commerce as opposed to a standalone digital wallet such as Visa’s, which is meant for online checkouts.

The difference lies in the range of services MasterPass is offering at launch, including a turnkey white label solution and a robust API that can be embedded into other applications designed for wallet issuers to help them extend and enhance their on consumer relationships.

Consumers will be able to securely store card information in these wallets in a cloud hosted by MasterCard.

Some of the financial institutions working with MasterCard to launch MasterPass include Citi, Bank of Montreal and Handelsbanken.

“The most unique aspect of MasterPass is that it is the only solution from an organization with well established brand name recognition that is being offered indirectly through partners  – rather than direct to consumers,” said Dave Kaminsky, emerging technologies analyst at Mercator Advisory Group, Maynard, MA.

“A number of small solution developers are providing banks with white-labeled mobile wallets, but MasterPass is the only example I can think of where a large, established corporation is choosing to involve partners as the wallet suppliers,” he said.

Value-added services
For merchants, MasterPass is designed to provide a range of checkout services that can be used to enable faster and safer checkouts online, at the register or elsewhere in the store. MasterPass supports a broad array of payment authentication techniques, including NFC, QR codes, tags and mobile devices.

For example, MasterCard is partnering with VeriFone to enable MasterPass services at the point-of-sale, both at the register and in the aisle, enabling shoppers to access their MasterPass wallet accounts from mobile devices to pay for purchases. VeriFone will also continue to support contactless acceptance of the MasterPass wallet.

Through this and other partnerships, MasterPass will be available at more than 5,900 merchants, including American Airlines, Boots, MLB Advanced Media and Park Avenue Coffee.

Users will also be able to make online purchases without the need to enter their card and shipping information every time.

MasterPass will come with value-added services intended to enrich the shopping experience, such as account balances, real-time alerts, loyalty programs and special offers.

Additionally, the wallet is open, meaning users can use other branded credit, debit and prepaid cards.

Trusted entities
Consumers in Australia and Canada will be able to sign up for MasterPass by the end of March. U.S. consumers will have a chance to sign up later in the spring while British consumers will have to wait until the summer.

MasterPass is expected to expand into other market worldwide this year, including Belgium, Brazil, China, France, Italy, Netherlands, Singapore, Spain and Sweden.

While the mobile payments space continues to get more crowded, MasterCard may have an advantage here in that consumers have been slow to adopt offerings from newcomers such as Google and Isis.

“MasterCard will now be facing the same challenges all the other mobile wallet suppliers face, which is convincing both merchants and consumers to make the investments and changes in habit necessary to switch from payment cards to mobile payments,” Mr. Kaminsky said.

“The biggest opportunity that MasterCard can take advantage of is that survey after survey shows that consumers are most likely to trust an open loop mobile wallet supplied by either their financial institution or a payment network,” he said. “Because MasterCard’s strategy involves partnering with FIs, MasterPass wallets would be supplied by both of these trusted entities.”

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York

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