As every player in payments grapples with the speed of innovation in the market, MasterCard is making several strategic moves in the first half of this year to position itself as an innovator in mobile commerce. The company made a number of announcement this week at Mobile World Congress that will be “the de facto operating system for future commerce,” says Mario Shiliashki, MasterCard’s group head of emerging payments.
“These [initiatives] are about how we are now playing in a convergent world of digital and physical commerce. Mobile is changing the way people and merchants interact, so we have built new capabilities on to our platforms [to address these changes],” Shiliashki adds.
MasterPass In-App Payments - MasterCard announced yesterday that it is opening up its MasterPass online payments platform to retailers to use for mobile in-app purchases. The in-app payments capability will be made available to merchants in the second quarter of this year, and will enable quick checkouts for in-app purchases while supporting retailers’ loyalty and offers programs.
“We realize that more and more purchases are being made in mobile apps, and we’re seeing more mobile-optimized sites… MasterPass in-app payments will help drive e-commerce while enabling new in-store experiences. Consumers are already browsing products online through their mobile phones while in store locations. Now consumers will be able to get all that online info in the app,” Shiliashki shares.
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MasterCard will also open up the MasterPass platform to developers to add new services on top of the platform. “We’re providing the platform for the developers to build the services on… and our strategy is to allow the merchant to choose how they want to integrate the platform and services, giving them the ability to let the customer choose how they want to pay,” Shiliashki says.
Shliashki acknowledges that the recent retailer data breaches has probably affected consumers’ trust in giving their payments information to retailers, but says that MasterCard is working to beef up security for mobile payments as well. “Consumers definitely view the retailers differently after the breaches. But the introduction of EMV [which MasterCard is pushing] will change the security paradigm for in-store payments. And we are working on a tokenization initiative with Visa and American Express that will help combat online fraud. There are a lot of retailers that have strong PCI compliance and still have massive amounts of data exposed. Tokenization will help with making that data unusable for the fraudsters,” Shiliashki explains.
C-SAM Acquisition - MasterCard is also upping its internal development capabilities for mobile products by acquiring C-SAM, which helped developed the ISIS wallet and a number of other mobile wallet initiatives around the world.
“We see the acquisition as a key way to speed up innovation. It will help other companies develop on top of what we’ve built. The C-SAM team has a good set of engineers focused on mobile platforms, and they will be working closely with our MasterPass team,” Shiliashki shares.
Acquiring a company with that kind of engineering talent will give MasterCard an advantage in a space where such talent can be difficult to find and recruit, he notes. “We have been lucky to have such a great brand, but everyone [in this market] is having a tough time to get the right talent. Getting on the front-edge of innovation will help us be attractive though,” Shiliashki adds.
Mobile Payments Collaboration - Mastercard will be joining forces with the three leading telecom providers in Germany - Deutsche Telekom, Telefonica Deutschland and Vodafone - to create a new mobile payments platform. The three telco’s represent around 85% of the mobile market in Germany, and with the new platform, issuers will be able to integrate with mobile payments applications with all three of the issuers via a MasterCard subsidiary called Trevica. This arrangement will cut a lot of the complexity in a traditional mobile payments environment where all the issuers need to connect individually with each of the mobile network operators, Shiliashki explains.
“This will accelerate mobile payments, as in the past you had to have each bank connected to each telco to [gain mass penetration]. We’re hoping to prove this model in Germany and then export it elsewhere,” Shiliashki says.
Foreign Transaction Decline Rates - In an effort to reduce decline rates for card-based transactions made by customers who are traveling, MasterCard is teaming up with Syniverse, the international switch behind telcos’ roaming partnerships. The two companies have developed a new geo-location technology that will be able to provide issuers with data on where the customer’s mobile device is when they make a transaction abroad.
“We pair the transaction data with the phone location and send that to the issuer for acceptance or decline. The issuer could then potentially ping the customer for added assurance that it is the customer making the transaction. Hopefully this will help reduce decline rates, as those declined transactions are lost to us and the bank,” Shialsihki point sout.