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Nine months after unveiling its digital-wallet strategy, MasterCard Inc. on Monday announced the start of that strategy’s implementation. Known as MasterPass, the new wallet platform enables mobile payments by consumers using either near-field communication (NFC) technology or quick-response (QR) codes to trigger links between handsets and merchant terminals. Wallets based on MasterCard’s technology will also accommodate cards of any brand, the company says, including rivals like Visa Inc. and American Express Co.
Unlike Visa’s V.me wallet, which is also open to rival brands but for now is restricted to e-commerce use, MasterPass works in stores as well as online. MasterCard and terminal maker VeriFone Systems Inc. announced an arrangement that will enable consumers with a smart phone or tablet to make MasterPass transactions while standing in the aisle of a store. The arrangement relies on technology from Global Bay Media Technologies, a company VeriFone acquired in 2011. For online transactions, the wallet stores card credentials and shipping information so consumers don’t have to enter the data on checkout pages, MasterCard says.
U.S. consumers can start signing up for MasterPass in the late spring, MasterCard says, following launches in Canada and Australia next month. Some 28 financial institutions around the world have agreed to offer the platform, including Citigroup Inc., Fifth Third Bank, Lake Trust Credit Union, and TMG Financial Services so far in the United States. In addition, MasterCard lists 16 retailers that have agreed to accept MasterPass wallets, though the card network says about 5,900 merchants will take MasterPass transactions via gateway arrangements.
Banks and merchants will be able to develop new wallets based on the MasterPass technology, MasterCard says. Indeed, in its announcement last May for what it then called PayPass Wallet Services, MasterCard introduced an application programming interface (API) that would allow issuers to use the platform to create a customized digital wallet.
Jeff Russell, president and chief executive of TMG Financial Services, Des Moines, Iowa, says his company plans to begin its MasterPass rollout this summer, targeting the 65,000 MasterCard cardholders it serves on an agent-issuer basis for some 250 credit unions. TMG Financial Services is a sister company to The Members Group, a credit union service organization that processes for a further 3 million Visa and MasterCard cards. While the MasterPass platform originally worked only with NFC, its inclusion now of QR codes ought to let it reach a much wider segment of consumers, Russell says. “The mobile environment is evolving,” Russell says. “MasterCard decided to support as many [methods] as it can, not knowing where adoption is going to be.”
Still, Russell predicts the point-of-sale implementation of MasterPass will likely come into play later than the online version.
Though a powerful technology for mobile payments, NFC has won limited acceptance among both merchants and handset makers. Only an estimated 400,000 merchant locations are equipped with contactless readers that can accept NFC transactions. For the time being, many experts see QR code scanners as a quicker and less expensive route to mobile-payment acceptance.
As for the new name, Russell says MasterPass conveys MasterCard’s branding more effectively to consumers than does PayPass. “It aligns better with their product line,” he notes. “PayPass created a little confusion. [MasterPass] is clearer in the mind of the consumer.” With a recent survey showing high levels of consumer ignorance concerning digital wallets, branding could be crucial. “The biggest issue we have going forward is educating consumers about how wallets work,” says Russell.
