Retail and financial companies are rapidly creating new tools to manage the mobile cashless society. As these ideas spread worldwide, financial companies will be challenged by the need for accuracy and security — and even the emergence of robotic transactions — to make these new systems work.
Now credit giant Mastercard has introduced Masterpass as a way of combining transaction, payment and delivery of products and services in one app. The company is touting this as the next big step in managing everyday consumer decisions, as it tries to manage processing and transaction costs for purchases large and small.
These new mobile payment apps have been popular with consumers, but the adoption of Masterpass and similar apps will depend on three key factors, according to Mallory Duncan, senior vice president and general counsel of the National Retail Federation.
"For a mobile payment to be successful, it must provide value for the customer, value for the merchant and not adversely affect the pricing of goods and services," he said.
He pointed to the success of the Starbucks mobile payment app, as "It creates loyalty for Starbucks, it allows Starbucks to provide a loyalty benefit to customers, that is, free coffee or other benefits that go along with using the app." Additionally, the app does not affect the transaction cost for merchants. "It actually lowers the cost of a transaction, of a payment transaction, in a Starbucks restaurant. So you put all three of those [factors] together and you get an almost guaranteed win."
Not just for smartphones
"Just about any device you can think of can become a device for conducting commerce," said Craig Vosburg, Mastercard’s president of North America markets.
Vosburg was referring to the array of connected devices recently on display at a Mastercard event in New York. Among them were smartphones, connected home appliances and even robots.
In addition to unveiling a new logo, Mastercard executives were there to explain how its digital payments service, Masterpass, works in-store, in-app and online.
"What we want to do is enable our customers ... to have the ability to pay anywhere, anytime, anyway," Vosburg said.
On hand for demonstrations was humanoid robot Pepper, who took lunch orders via voice command and processed payments wirelessly.
The robots will be test-piloted in Pizza Hut locations in Asia by the end of the year.
The Samsung Family Hub smart refrigerator was used to demonstrate how one could easily order and pay for groceries directly from the fridge's touchscreen.
Using the Fresh Direct grocery delivery app integrated with Masterpass, a representative breezed through the checkout process without having to enter a credit card number.
Transactions also can occur within text messages, as representatives demonstrated how plane tickets could be purchased within messaging apps like Facebook Messenger.
Masterpass digitally stores users' credit card and shipping information, accessing it during checkout after user authentication.
Mobile banking apps
In this latest expansion into the digital payment sector, Mastercard is relying primarily on partnerships with banks and their mobile offerings.
"Banks already have a fantastic digital relationship with customers today ... [mobile] bank applications are among the most widely used applications in the app store," said chief innovation officer Garry Lyons.
Citing consumer trust and reliance on mobile banking experiences, Lyons explained how Masterpass will be integrated into existing mobile banking applications to further enhance ease of purchase and payment transactions.
Bank of America, Citi and Capital One are among the 16 initial U.S. banks incorporating the new Masterpass experience, which will launch later this month. Eventually, more than 80 million accounts will be enabled automatically through this preliminary network.
Access to Masterpass is planned for Europe, the Middle East and North Africa by the end of the year, with additional regions like Latin America, the Caribbean and Asia Pacific being added through 2017.
"We do business in well over 200 different countries and jurisdictions around the world," said Ed McLaughlin, chief information officer at Mastercard. McLaughlin acknowledged, though, that more work is needed to give populations in developing countries access to the internet, which in turn would drive access banking.
"They're not truly participants until they can also engage in commerce," McLaughlin said.
To that end, the company has worked with non-governmental organizations (NGOs) and governments to increase connectivity and offer financial inclusion programs in communities that have a shortage of banks.