By Andrew R. Johnson
MasterCard Inc. (MA) is angling to capture more electronic
transactions by eliminating the plastic from the equation.
The Purchase, N.Y.-based company, which operates the world's
second-largest payments network, is rolling out a digital platform
it says will make it easier for consumers to pay for purchases
online, on mobile devices and in stores by eliminating the need to
pull out a physical credit or debit card.
MasterPass, due to be announced Monday at the Mobile World
Congress trade show in Barcelona, Spain, will allow cardholders to
store their card information in a single software program that can
be used to make payments through merchants who sign up for the
service. Consumers can load information for credit and debit cards
from competing brands--Visa Inc. (V), American Express Co. (AXP)
and Discover Financial Services (DFS)--and not just those carrying
MasterCard's logo.
Customers will be able to access the program across multiple
devices, including smartphones and tablet computers, MasterCard
said.
The service, based on technology MasterCard announced last year,
is one of a growing number of applications analysts have dubbed
"digital wallets" that allow consumers to store multiple accounts
in a single program. Visa in November said its own service, V.me,
has attracted more than 50 banks that have agreed to make it
available to their customers, and companies including Google Inc.
(GOOG) and eBay Inc.'s (EBAY) PayPal also have their own
programs.
For MasterCard, its service is an "opportunity to get at the
85%" of global transactions that are paid for with cash and checks,
said Ed McLaughlin, the company's chief emerging payments
officer.
While some transactions made with MasterPass would have
otherwise traveled over MasterCard's processing network via use of
a plastic card, Mr. McLaughlin said the service can help improve
the shopping experience for consumers, potentially increasing
overall use.
"We see this as another channel of transactions for MasterCard,"
Mr. McLaughlin said in an interview.
MasterPass includes technology merchants can use to accept
payments by tapping mobile phones equipped with technology called
near-field communication, or NFC, against a checkout terminal; by
scanning digital barcodes and other methods.
To make a purchase on a website, a MasterPass user would enter a
password on the checkout page of a merchant who has installed the
service as a payment option instead of typing in their card number,
security code and other information that experts say slows down
e-commerce transactions.
MasterCard says the service will also be available in physical
stores. For example, a consumer could use their mobile phone to
order a product by snapping a digital barcode and have the item
shipped to their house, Mr. McLaughlin said.
Banks including Fifth Third Bancorp (FITB), Bank of Montreal
(BMO) and others have signed on to offer the service, and merchants
including AMR Corp.'s (AAMRQ) American Airlines and
Runningshoes.com have agreed to accept MasterPass as a payment
option.
But payment networks and technology companies face an uphill
battle in gaining consumer adoption for such services. In the U.S.,
consumers have been slow to adopt mobile-payments products that
enable transactions by tapping a phone instead of swiping a piece
of plastic.
That's partly due to there being few phones equipped with NFC
technology and slow adoption by merchants, analysts say.
"Regardless of how advanced a technology is, if there is no
merchant adoption, then there will be no consumer adoption and vice
versa," Sanjay Sakhrani, an analyst with KBW, wrote in a research
note this month. But the intense focus on "digital wallets" by
traditional card companies and new entrants "is an indicator of the
... inevitability of mobile payments."
Visa said Friday it created a program that can help mobile-phone
manufacturers, point-of-sale terminal makers and other companies
speed up the process of certifying their products under Visa's
security standards. The company is expected to announce
partnerships this week in conjunction with Mobile World
Congress.
"Visa does not want to be the bottleneck" that slows down the
introduction of new payments technologies, said Bill Gajda, head of
global mobile product for Visa.
-Write to Andrew R. Johnson at andrew.r.johnson@dowjones.com
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