The MasterPass Master Plan

More than 40,000 merchants in 10 different markets are now accepting MasterCard’s mobile shopping platform MasterPass, and there’s more to come. MPD CEO Karen Webster caught up with Vib Prasad, Group Head of MasterPass, to talk about how the app is continuing to grow into different market segments around the world, how MasterCard is motivating consumers to use it, and how the company plans to keep issuer brands alive.

KW: The digital wallet space is getting more and more interesting by the day!  Given your announcements last week and the launch of Visa Checkout, I thought it would be a good time to get caught up on MasterPass and the latest and greatest developments in market. So, Vib, what’s new?

VP: Well, first of all, let’s talk about what’s been a pretty consistent part of MasterPass since day one. We’ve been working in the digital wallet space for a very long time now with a pretty singular focus, how to leverage our merchant acceptance network and build out MasterPass. MasterPass isn’t a wallet – it’s really a commerce enablement platform – one where MasterCard can serve as the basis of innovation for a number of players who want to add value to merchants and to consumers. We’ve really invested in that approach and that has defined our strategy from day one.

Now let’s talk about what’s new.

What we announced last week is that in addition to our ongoing expansion – we’re now up to 10 markets now with the launch in Poland and South Africa – we’ve introduced new capabilities to bring more value to merchants. We announced our in-app payment capability. We believe that is how we really take the MasterCard experience and embed it into the new shopping experiences that merchants are trying to build. We’re launching that next month, and we have a number of merchants that are committed to embedding it into their apps. One of them, for example, is Starbucks in Australia. We think that the path to winning is to focus on “high frequency” merchants, to give consumers both the mechanism “the wallet” and the merchants the ability to accept it, in venues where consumers visit frequently enough to form a habit  – a consumer preference  – on a daily basis.

KW: If I were in the digital wallet space, I’d be working like crazy trying to get consumers to load up my wallet especially now that just about everyone is in the market with one. As we discussed, it’s how you build frequency, but many of these merchants tend to be very local. How do you reconcile the need to get massive merchant acceptance and frequency at places that are very local and therefore much harder to get to and acquire merchants?

VP: That is a challenge – payments is about scale and digital payments is about scale, too. But as we’ve become more mobile and more local, the ground game here is all about reaching the long tail of those merchants  – those “mom and pops” that would love to embed MasterPass into their new shopping experience and take advantage of our consumer base. So, in addition to bring larger online merchants on board, one of the things we’ve focused on is serving the long tail of merchants at scale. For example, we are developing partnerships with e-commerce platform providers or website hosting providers to enable MasterPass for 15,000 merchants at a time. We’ve also developed a number of plug-ins for shopping carts through e-commerce platforms. Those are some of the things that we are doing to drive distribution and get scale in what is a very important but fragmented merchant market.

KW: I think that it’s fair to say that the jury is still out in terms of what technology will define mobile payments and commerce worldwide. So, how does the MasterPass platform support the variety of technologies that are available to merchants that, for example, may want to accept a QR code and not NFC? And, how do you help merchants decide what’s best for them?

VP: You’re right. No one has the crystal ball to know what technology will emerge to become the standard five or ten years from no. So, rather than pick one and run with it, we have chosen to support all of the emerging standards, whether it’s a Beacon or a QR code. We’ve tried to stay out of defining a preferred standard on how to do that. Our APIs need to support all types of transactions through whatever means and they do. And, to that end, we’re opening up our APIs to allow for any of those channels to drive a MasterPass transaction.

KW: There are a lot of options now in the marketplace for consumers to choose – and consumers probably won’t have a million digital wallets. So, what is MasterCard doing to give consumers the incentive to want to download and then use the MasterPass wallet on their phone?

VP: This is where being a platform is critical and being an acceptance mark and not a wallet is a big difference. So, we’re focused on how we can payment enable via MasterPass the apps that consumers want to use on their phones, for instance. And, we saw an opportunity to really double down on that strategy after recognizing that we hadn’t made it all that easy for developers to connect with us. Now, we have and are committed to a bigger focus on making it easy for the developer community in each market segment, once we fully understand the markets, to engage with MasterPass, helping them integrate payment and commerce with their apps in hours rather than days.

For instance, if we’re focused on a digital mom in Australia, how will we develop apps that appeal to that digital mom? Maybe it would include something like Starbucks in Australia, or other types of activity. It’s really a focus on how to develop those experiences or partner with developers who create those experiences to embed MasterPass. It’s a different approach than how we’ve done it in the past.

KW: That really requires that you understand the market and have the portfolio of merchants that align with the profile of your consumers. That sounds tricky. If you were designing the ideal environment for MasterPass in a market, what would that look like? 

VP: It’s definitely a challenge, and requires a strong degree of focus on understanding the segments in each market.  The ideal environment is partnering with key merchants that drive the frequency of use, and supporting those merchants by making it easy for them to integrate with MasterPass, then further supporting that with marketing around the brand that will drive awareness. That’s the approach we’ve been taking – focusing on targeting those segments and driving success through use cases like Starbucks that drive frequency.

KW: A big and important MasterCard customer is the issuer. How are you engaging with issuers who have their own concerns about the role that they will play in a digital world? Are they worried about becoming invisible with the MasterPass brand now being so dominant?

VP: Our fundamental belief is that issuers need to play a prominent role in the wallet space. All of our research indicates that consumers want to have a relationship with their bank – a wallet from their bank carries a lot of value.

Given that, the MasterPass approach has been all about putting the issuers’ brand front and center. We never saw ourselves as competing with the issuers – we just represent an acceptance mark. Our goal is to build flexibility for the issuers so they can brand the wallet however they’d like to brand it.

KW: MasterCard has had the advantage of deploying “digital wallets” on a global basis, but as we know, the U.S. is just a very different market to introduce these capabilities into. What you think makes the U.S. market so different?  

VP: For me, I think the thing that jumps out is the level of fragmentation in the U.S. market. It just makes driving to scale that much more challenging. And, in response, for us it’s been about focusing on a few key issuer partners to help make them extremely successful. And, that success begets more success and so on.  The acquisition of C-Sam, which powered mobile payment services in countries like India, Japan, Singapore, and the U.S., has really helped a lot. It’s on-device application and back-end infrastructure has helped enable consumers to use MasterPass both in stores and online across many mobile technologies including NFC and QR codes. We’ve been able to tailor our platform in a way that is much more responsive to issuers who want to bring their own unique capabilities to their consumers.

C-Sam gives us a way to extend our brand and our issuers’ brand into places that they might not have otherwise been able to appear – and on a global scale. We want our issuers to be able to extend those capabilities anywhere their customers want to shop.

KW: What is the biggest misperception that people have about the MasterPass platform?

VP: I think that the biggest misperception is that it’s just “a wallet.” We use the word “wallet” as shorthand because we all know that that means, but we really do think that shortchanges the power and potential of this digital commerce opportunity that is before us. MasterPass is a platform to enable different shopping experiences across channels, merchants, and geographies, safely and securely – and, most importantly, to enable issuers, merchants and consumers to have the best user experience in the world.

Vib Prasad
Group Head, MasterPass Global, MasterCard

Vib Prasad is group head, MasterPass Global, MasterCard’s digital commerce platform. He is responsible for end-to-end product management, including strategy, platform development, online merchant acceptance and digital wallet issuance.

Prior to joining MasterCard, Vib worked for Group Commerce as chief operating officer overseeing the performance and design of products and services, including marketing, product management and business operations. Prior to that, he was vice president, Web Marketing & Merchandising at 1-800-Flowers.com where he was responsible for managing web, mobile and social media channels. He also served as director of Pricing and Online Analytics at Duane Reade, part of the Walgreens family of companies. Vib was also a senior consultant at Accenture and a founder of legal startup, CourtLink.

Vib holds a Bachelor of Science in Mechanical Engineering and Materials Science from Duke University and a Master of Business Administration from the Wharton School at the University of Pennsylvania.