On Thursday, Mastercard announced an omnichannel, digital payment service called Masterpass.
With Masterpass, a customer can check out online or via merchant apps by simply clicking a Masterpass button and authenticating to complete the transaction. In-store, a customer can tap to pay at contactless-enabled merchants.
Masterpass is currently available at hundreds of thousands of merchants online or in-app. According to Mastercard, the technology will also be available at more than five million merchant locations in 77 countries that accept contactless payments. Contactless capability will first be available to Android device owners in the U.S.
Merchants expected to deploy Masterpass in the coming months include JetBlue, Saks.com, Lord and Taylor.com, Subway's app and The Cheesecake Factory's app.
White label solution
Masterpass will also be available to Mastercard’s issuing partners to deliver a bank-branded digital payment solution. Over 80 million accounts will be automatically enabled through issuing partners as the service rolls out globally.
Initial partners supporting Masterpass include Ally Bank, Bank of America, Citi, Capital One, Federal Credit Union, and others. Rollout of Masterpass-enabled solutions from issuers in the U.S. will begin later this month, with global rollout expected to complete by the end of 2017.
"The ‘new normal’ for customer engagement means giving customers the ability to buy something wherever and whenever they choose." said Paul Moreton, vice president, digital product management at Capital One, in a press release. "The Masterpass digital payment service will allow us to provide our customers with another convenient and easy way to pay," he said.
The state of mobile payments
Digital wallet transactions are expected to grow to $668 billion by 2019, according to WorldPay’s 2015 global payments report. According to the report, digital wallet transactions should overtake credit cards by 2019.
A market leader has yet to be crowned in the digital payments market. Many heavyweights, including Apple, Samsung, Google, Alibaba, Visa and Chase are competing for customers. Among the barriers digital payments face to winning the market are reach and scale, security concerns, and ease of use.
If a customer isn't sure her preferred payment option is accepted in a particular store, she can easily opt to use other forms of payment. If a digital payment interface isn't easier than swiping a card or taking out a wallet, adoption would could be slower.
Loyalty programs are seen as crucial to successful adoption of digital payment solutions. Not surprisingly, one of the most successful digital payment solution is the Starbucks app, which allows customers to pay for their Frappuccinos and also receive rewards.
Mastercard's push into digital payments comes as 5 of the largest US banks have all announced that they're introducing their own forms of digital payments. Through the clearXchange network, banks like Chase and Bank America will offer their account holders the ability to send money to other account holders, even if they bank at other institutions.