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MasterCard's digital wallet strategy takes a big step forward with MasterPass

MasterCard is beginning this year's Mobile World Congress by announcing the evolution of its digital wallet strategy. The payment company is introducing MasterPass, a new digital service that not only lets consumers store their payment credentials in a digital wallet for online shopping, it will also support access to those credentials through mobile devices at the point of sale.

MasterCard has also announced a number of partners supporting the MasterPass suite of services including issuing banks, merchants and payment technology providers.

MasterCard provides a missing link

MasterPass is the next step for MasterCard's PayPass Wallet Services introduced at last year. With the PayPass Wallet, consumers could store their payment credentials securely within the cloud along with information like billing and shipping addresses. Online merchants could integrate the PayPass wallet into their checkout process so that with a few clicks online customers could complete their transactions. The intent of the PayPass Wallet was to make online shopping through mobile devices simpler and quicker, eliminating the need to enter a large amount of data using tiny mobile screens. It even allowed users to store non-MasterCard brand cards.

With the new MasterPass services, payment credentials entered into the digital wallet will support technologies for payments in brick-and-mortar stores as well. That means that providers using technologies like NFC and QR codes at the point of sale can integrate with MasterPass and use it to store consumer data safely in the cloud, accessing those credentials whenever a purchase is made.

"Every device is becoming a shopping device,” said Ed McLaughlin, chief emerging payments officer, MasterCard, in a statement. “MasterPass brings together all of the ways we pay for things, from traditional plastic cards to digital wallets, and gives consumers the ability to make a payment from wherever they are and with one simple experience.”

What this cloud-based approach means for mobile payments is that one of the major players in the space seems to be moving away from storing payment data on a secure element embedded in a mobile device. Control of the secure element has been an issue as NFC-based mobile wallets have developed. For instance, Google Wallet has been effectively blocked by mobile network operator Verizon Wireless on the NFC-enabled handsets it offers to its subscribers. Instead, Verizon allows only the mobile wallet from Isis, of which it is a one-third owner, on handsets it sells.

An open wallet for all

Like PayPass, MasterCard is making MasterPass wide open so partners like merchants, financial institutions or technology providers can build their own wallets on top of MasterPass. MasterCard has even gone so far as to allow any branded credit, debit and prepaid card to be stored in a MasterPass account.

As a part of introducing MasterPass, MasterCard has also announced a large group of merchants, FIs and technology companies who are working with Mastercard in support of MasterPass. Partners include major banks like Banco Santander, Citi and Fifth Third. Financial technology companies including VeriFone, Cardinal Commerce and mFoundry are also supporting MasterPass. And MasterPass will be available at more than 5,900 merchants, MasterCard said.

"We understand the strategic importance of achieving true and global convergence in acceptance, security and simplicity across all channels, including digital," said Javier Herraiz, global director of innovation in payments for Santander Cards. "MasterPass allows us to offer to our customers, cardholders and merchants an immediate competitive solution for e-commerce, and a great foundation for new in-store experiences."

MasterCard said MasterPass will be available to consumers through FIs starting this spring. Australian and Canadian consumers will be able to access MasterPass by the end of March. The United States will see MasterPass later this spring with the U.K. getting the MasterPass service in the summer. MasterPass will be available in other markets around the world throughout 2013 including Belgium, Brazil, China, France, Italy, Netherlands, Singapore, Spain and Sweden, MasterCard said.

MasterCard is officially debuting MasterPass at Mobile World Congress, the annual wireless industry conference held in Barcelona. The event runs from Feb. 25-28 and will draw more than 70,000 attendees. A theme of this year's event is access to financial services through mobile technology.

For more on this subject, visit the digital/mobile wallet research center.

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