Another Day, Another PayPal-esque Digital Wallet: Here’s MasterCard’s High-Tech Billfold
No surprise here: MasterCard also has a digital wallet strategy.
The global payments provider is making the announcement tonight at a special event tied to CTIA, the wireless industry’s annual conference in New Orleans.
MasterCard is the latest — but probably not the last — to unveil its plans for the future of credit card transactions.
To date, a host of other competitors, spanning Visa, American Express, PayPal, Google and the U.S. wireless carriers, have also made announcements.
While all of the payment companies are approaching the digital wallet space with a slightly different product, from the consumer’s perspective they all end up looking somewhat the same — like PayPal.
In the case of MasterCard, PayPass Wallet will allow consumers to buy things online without having to memorize a 16-digit card number or in person by tapping a payment terminal with their phone. The solution is similar to Visa’s V.me digital wallet and American Express’s Serve-branded wallet.
For example, when checking out online with retailers that support PayPass, consumers can choose to enter a username and password to access their wallet. The PayPass Wallet will support multiple accounts, including competing payment providers.
“We spent a lot of time on the underlying technology,” said Ed McLaughlin, MasterCard’s chief emerging payments officer, in an interview. “It is designed for our partners to make sure consumers have a great experience online or in-store on your app. The ability to use any device you have and any account you’d want to invoke is a different approach to the closed-loop accounts.”
MasterCard will allow consumers to sign up for the wallet on its site, but it is primarily relying on banks to get users interested. This summer, it will be going live with the help of a dozen or so banks worldwide, including Citibank. Other major merchants are committing to adding PayPass to their online checkout systems, including American Airlines, Barnes & Noble and Newegg.
Mark Hung, a research director at Gartner, said it’s natural for MasterCard, American Express and Visa to move from the physical world of payments to online because consumers are already entering their credit card number online to check out. “They would like to see the same user experience, whether they are transacting online or offline,” he said.
With banks and retailers on board, Rick Oglesby, a senior analyst with Aite Group, said the focus for MasterCard will have to be on getting consumers interested in signing up.
“There’s definitely going to be some risk of consumer confusion,” Oglesby said, given the dozen of digital wallet options. “They are going to have to invest quite a lot in branding. … Even though the traditional payment companies are entering the space, the brands are relatively unknown. There will be confusion for consumers and merchants alike, and therefore, will require a signficant investment in terms of investing in new brands.”
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