MasterCard predicts digital payments to extend beyond the phone

MasterCard says that consumers are embracing the next generation of payments, and expects digital payments to extend into the world of connected devices.
Written by Asha Barbaschow, Contributor

MasterCard has said that consumers are embracing the next generation of payments, and expects digital payments to extend beyond the phone as the use of connected devices grows.

In its fourth annual MasterCard Mobile Payments Study, conducted by Prime Research, MasterCard tracked 2 million global social media posts about mobile payments across Twitter, Facebook, Instagram, Forums, Google+, and YouTube.

According to the payments giant, cardholders are asking banks and retailers to provide real-life, ready-to-use mobile payments options.

"As more choices are made available to them, the conversation has evolved and consumers seem to be fully embracing the next generation of payments," Marcy Cohen, vice president of digital communications at MasterCard, said.

The study revealed that digital wallets dominated 97 percent of total mobile payments conversations held on social media in 2015.

MasterCard said the safety and security of mobile payments continued to drive conversations, as 94 percent of consumers continue to take a positive or neutral view of the services being offered to them.

In 2015, the end of passwords and biometrics were among the most engaging topics, MasterCard said, with fingerprint and electrocardiogram payments-related technology becoming an engaging topic for users throughout the year. Facial recognition, or Selfie Pay, held a 55 percent coverage of biometrics-focused conversation.

Outside of digital wallet discussions, MasterCard said contactless cards drove 47 percent of conversations, followed by biometrics with 33 percent, and personal payments with 14 percent, while wearables claimed 6 percent of the conversation space.

In response to the research, MasterCard announced a partnership with internet security firm WiseKey at the Mobile World Congress (MWC) in Barcelona this week.

The partnership will enable contactless payments on select luxury brand watches and wearables, with WiseKey currently working with premium watch manufacturers, including Hublot and Bulgari.

"Our collaboration with WiseKey is a great example of how payments functionality can deliver transformative more value for a variety of device manufacturers, and create safe and convenient shopping experiences for their consumers," Sherri Haymond, senior vice president of Digital Payments and Labs at MasterCard, said.

The partnership with WiseKey brings the payment giant another step closer to converting every device into a payment device, after announcing a partnership with consumer ecommerce player Coin last month to enable payments via smartwatches, fitness bands, and other wearable devices.

Currently, fitness tracker manufacturer Atlas Wearables, wrist-worn fitness coach maker Moov, and smartwatch creator Omate are working with both MasterCard and Coin to make selected devices payment-capable.

Expanding on its partnership with Coin, MasterCard also announced a developer program at MWC for accelerating the integration of payments into wearables.

The program will enable access to the MasterCard Digital Enablement Service (MDES) to digitise MasterCard payment credentials. Approved developers will have access to Coin's proprietary technology for enabling payments, and later this year, to digitised MasterCard credentials though Coin's integration with MDES.

According to MasterCard, the volume of wearable payment transactions is expected to grow to $501 billion by 2020, attributing the anticipated growth to consumer expectation that wearables will shift from single-use to multi-purpose products

"Signing up for the Coin developer program gives wearables manufacturers transparent access to a turnkey solution," Kanishk Parashar, CEO and co-founder of Coin, said.

"The program makes commerce accessible to device makers as payments on wearables become table stakes. We are confident that our miniaturised and secure payment technology, combined with MasterCard's tokenisation, will benefit our wearables partners with increased engagement of their products."

With plans for rollout before the year is out, MasterCard also showcased its Digital Enablement for Merchants, a tokenisation and digitisation solution for ecommerce merchants that uses a token and a transaction-specific cryptogram.

MasterCard said the service helps merchants minimise fraudulent transactions and associated costs, and has the potential to improve approval rates as well as drive more transactions through merchant checkouts.

Also at MWC, PayPal announced a collaboration with one of Europe's largest mobile carriers, Vodafone, that would enable the payment giant's European customers to make payments using Android smartphones at Visa contactless terminals with the Vodafone Wallet.

The service will start in Spain and expand to additional European markets later this year, PayPal said.

PayPal is also working with leading telecom providers in Mexico and Brazil, Telcel and Claro, on their digital wallets to allow purchases via mobile devices.

"We have a tremendous opportunity to transform commerce and financial services, and mobile is at the centre of that evolution," Dan Schulman, PayPal president and CEO, said.

"We are committed to giving people flexibility and choice in the ways they move and manage their money.

"We believe the financial system should be more seamless, secure, and affordable to drive the hopes and aspirations of people outside the traditional financial system."

Earlier this week, Samsung announced that it was partnering with American Express to bring Samsung Pay to its customers in Australia.

"We leverage our unique technology and capabilities to provide our customers around the world with seamless, differentiated experiences, giving them more flexibility and choice for how to pay," American Express said.

"As part of that strategy, we are excited to work with Samsung on the expansion of Samsung Pay for our card members in Australia, Canada, Singapore, and the UK."

Although Samsung Pay is not currently offered in Australia, a spokesperson for Samsung Electronics Australia told ZDNet in January that it expects to be available Down Under sometime this year.

According to American Express, it is the only card issuer currently in the market to offer both Apple Pay, and soon Samsung Pay, options to its customers.

"It's important for us to be at the forefront of seamless and innovative payment solutions, as that's what our customers want," the company said. "We deliver that now with Apple Pay and we look forward to offering Samsung Pay in the future to our personal, corporate, and small business card members."

Apple Pay was launched in Australia in November, with American Express the only financial institution partner joining the iPhone maker's near-field communication (NFC) payments solution.

Android Pay works on smartphones running Android KitKat 4.4 and higher, with the platform set to support Visa and MasterCard debit and credit cards within the first half of 2016. Eftpos support for Android Pay is also on its way.

Google announced in December that it would be partnering with Westpac, ANZ, St George, Bank of Melbourne, Bank of South Australia, Bendigo Bank, Cuscal, ING Direct, and Macquarie Bank to launch Android Pay in 2016.

The National Australia Bank (NAB) last month announced an update to its own mobile banking app that now allows Visa users with an Android smartphone running KitKat 4.4 and above to make NFC payments.

The Commonwealth Bank of Australia implemented its own tap and go payments system on NFC-enabled Android devices in October 2013. At the time, the only compatible devices that customers could use were the Samsung Galaxy S4 and S5, as they were the only smartphones on the market that supported NFC technology.

Those with another device were required to purchase an NFC-enabled sticker from the bank to attach to their phone before using the technology.

Since March last year Android-owning Commonwealth Bank customers could use the tap and go functionality on any locally purchased NFC-enabled phones running KitKat 4.4 and above.

Westpac customers have also been able to utilise their phone's inbuilt NFC to tap and pay from their compatible Android devices since April last year, while AMP Bank activated its AMPwave technology last year to allow customers with an NFC-enabled smartphone to make purchases with their Android device.

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