By Dow Jones Business News, February 25, 2013, 12:14:00 AM EDT
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
Customers will be able to access the program across multiple devices, including smartphones and tablet computers,
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
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
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 email@example.com
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