MasterCard Inc. has unveiled the next iteration of its digital wallet that the card brand says can be used for online, mobile and in-store purchases.
Dubbed MasterPass, the service enables consumers to store online payment card information, billing and shipping addresses, and loyalty account numbers they can use when paying for purchases. MasterPass replaces PayPass Wallet Services, which MasterCard had been testing since May 2012.
“We’re trying to enable consumers to expand the way they buy things,” says Ed Olebe, group head of MasterPass Services. Merchants that adopt MasterPass may experience reductions in shopping cart abandonment, potentially improving their conversion rates, he says. Abandonment rates could decrease, especially for mobile commerce sites, because consumers only would need to enter a user name and password to access their payment information, instead of typing in a 16-digit credit card number and shipping address each time they purchase.
Consumers can store MasterCard and other branded credit, debit and prepaid cards, such as those issued by Visa Inc., Discover Financial Services and American Express Co., in their MasterPass accounts.
MasterPass can be used for e-commerce, mobile commerce and in-store purchases, Olebe says. For example, a consumer using it for an online purchase would click or tap the MasterPass button upon checkout, which connects to MasterCard where all of the MasterPass account information is stored.
From there, the consumer’s web browser is redirected to a log-in page to input her user name and password, Olebe says. She verifies the payment card to use and the shipping address and is then redirected back to the merchant’s site to complete the transaction. Merchants process the payment as they would any other, Olebe says.
The mobile commerce version of MasterPass uses a large button to make it easy to tap and a vertically scrolling interface, he says. MasterPass is optimized for mobile web sites, and later will be developed for use in apps, Olebe says.
MasterPass also supports technologies such as Near Field Communication, which enables two devices to communicate wirelessly, and Quick Response (QR) codes, both of which can be used for in-store payments, Olebe says.
For example, a consumer may be walking through an aisle and see a product she wants. She could then scan the QR code the merchant created for the item with her smartphone. That then could open a mobile commerce web site or app, MasterCard says. From there, she could tap the MasterPass button to pay for the item and, depending on the merchant, have it shipped to her home or take the item from the store, MasterCard says.
MasterPass, offered at no cost to merchants beyond their already established payment processing fees, will be available in the United States this spring and this summer in the United Kingdom. It will be available in Australia and Canada in March and in other markets later this year, MasterCard says.
Consumers will enroll in MasterPass either through a participating financial institution or a retailer, Olebe says. Retailers will be allowed to create their own wallets using MasterPass coding, and consumers can use any MasterPass account at any MasterPass-accepting merchant, Olebe says. No proprietary data, such as transaction history or a loyalty account number, will be shared between merchants, Olebe says. “The only information the receiving merchant will get is what they need for the transaction,” Olebe says.
Merchants like American Airlines, Hikingboots.com and MLB Advanced Media are among the early adopters of MasterPass. MasterPass will be available at more than 5,900 merchants worldwide later this year, MasterCard says.
Payment processors Adyen BV and CardinalCommerce Corp. and online technology providers Demandware and Usablenet Inc. are among the technology companies supporting MasterPass. Demandware, an on-demand provider of e-commerce software, is No. 10 among web hosting vendors in the Leading Vendors to the Top 1000 E-Retailers guide. Usablenet is No. 3 among mobile commerce technology providers.
Online retailers may view MasterPass as an alternative to PayPal, the payments unit of eBay Inc., or Google Wallet, Google Inc.’s digital wallet, suggests Rick Oglesby, senior analyst at financial services consulting firm Aite Group LLC.
Like PayPal and Google Wallet, MasterPass could expedite the online and mobile checkout processes because consumers won’t have to enter their payment and shipping information for each transaction or store it on multiple retailer web sites, Oglesby says.
Merchants that offer their own MasterPass wallets also may be better able to compete against Amazon.com Inc., No. 1 in the Internet Retailer Mobile 400, which has its own wallet, Oglesby says.
MasterPass also has a broader focus beyond just one technology or channel, says Patricia Hewitt, director of the debit advisory service at consulting firm Mercator Advisory Group Inc. “MasterCard is interested in creating an environment that enables electronic transactions,” Hewitt says. “MasterCard has said, ‘Here’s all the technology available to us now. We’re going to enable as much as we can.’”