Blurred Lines: Card Present And Card-Not-Present

Tim Cook may say that 2015 is the “Year of Apple Pay” but 2015 might be the year in which the split between card-present, NFC, in-store, card-not-present, online and in-app, begins to disappear, Matt Barr, SVP of Emerging Payments for MasterCard U.S., told MPD CEO Karen Webster. The reason, Barr said, is tokenization, which makes all of those distinctions “quite dated.” Barr gave Webster a look inside the MasterPass playbook for 2015, discussed the impact of tokenization on mobile commerce’s future and said why he thinks MasterPass and Apple Pay are more complements than competitors.

KW: We’re here to get caught up on MasterPass and MasterCard’s plans to expand it around the world. Before we get into that, let’s level set. Give us the state of the state with respect to MasterPass and in-store payments today.

MB: Enabling MasterPass in-store payments at a normal POS in a physical store is a service that we’ll be bringing to market later this year. That’s really part of our roadmap as we talk about convergence and the ability for payments to be made across any channel.

MasterPass today supports online through browsers, and also in application. It’s really looking to simplify and streamline that checkout so consumers don’t have to type in details every time.

KW: That certainly eliminates a lot of friction when shopping online. So, where is MasterPass available today?

MB: Today MasterPass is live and transacting in 16 countries. We’ve taken a view that digital commerce is global and the MasterPass platform is globally interoperable – there’s a very good footprint.

Some of the countries where MasterPass is active include the U.S., Canada, the U.K., Romania, Italy, South Africa, UAE, Russia and China, down through Asia, Singapore, Taiwan, New Zealand and Australia. Again, it’s globally interoperable, something that is critical for commerce.

KW: So in 2015, we’ll see 16 countries expanding to how many?

MB: Big countries that are important for MasterCard will be coming on board this year. In terms of commerce coverage and MasterCard spend coverage, we’ve got the majority of MasterCard volume covered through those countries.

That’s really been the priority, but what we’ll find over the next couple of years is that it becomes not so much about expanding into more countries, but more about getting more volume and transactions in those countries.

KW: Let’s talk about MasterPass and Apple Pay. The strategy to eliminate friction in an online and in-app situation makes sense since that’s where there’s a lot of friction today. I know that MasterCard is a strong supporter of Apple Pay and has a commitment to getting that adopted throughout the issuer community. How do MasterPass and Apple Pay complement each other?

MB: There’s definitely a complement both in terms of eliminating friction and also the imperative that we all have to secure all channels. One of the major things with Apple Pay, which is invisible to consumers, is its tokenization feature. That capability will also be brought to digital payments – in-app and online – through the integration of the MasterPass platform. That starts the really important journey to secure all channels by leveraging tokenization. So there’s absolutely a complement between the strategies when it comes to the ability to get scale and momentum on top of the platform.

The other complement is that Apple Pay is an iOS-only service, operating through NFC on the iPhone and in-app. But Apple Pay doesn’t address commerce on the Android OS and through online payments in the browser. MasterPass has been helping to make sure that we’re servicing across all operating systems and all channels.

KW: Would you consider MasterPass an Apple Pay competitor as well?

MB: There will definitely be overlap in terms of merchants using the iOS platform – there’s a choice there for using Apple Pay or MasterPass for streamlining the checkout experience.

But there’s a big market out there beyond the iOS platform, and certainly in many other countries where the iOS platform isn’t as penetrated, there’s big opportunity.

If we look at this globally, what we’ve done with Apple Pay is a fantastic start to how we start securing all channels. There’s definitely room in the market for both, and it definitely complements through the promotion of tokenization.

KW: What have you learned as you’ve observed the market for mobile payments in the countries where MasterPass is active? This mobile payments experience is certainly new for consumers in many respects, but it’s one that provides value for them, both in-app and online. What are the key insights you’ve picked up along your journey? 

MB: One of the things I have learned is that this is a “slow burn” game. When it comes to payments, trust is critical to any of these services in becoming adopted and becoming “business as usual.” Having a really good customer experience and making sure the solution is secure is really important. Then there’s the need to build out merchant acceptance, because if you don’t have merchant acceptance, there’s limited value regardless of the quality of customer experience and security.

But if you get the customer experience right, I think we’ve seen many examples that show that services could really take off when acceptance gets to a point to ignite.

We’ve taken a long-term view of this, and certainly investments made by our competitors and other players in the space all help to increase awareness that there are these services out there, they are secure, it is a better experience and we’ll see adoption in the long run.

We are confident that we have a really good service to offer, and we will increasingly be building awareness and understanding of it.

KW: Can you help us understand about some of the technology enhancements that you’re planning around MasterPass as you think about its journey in the next 12 months or so, especially as it relates to tokenization?

MB: Certainly. In the end, we’re trying to get to a very simple place. It has to be a simple place otherwise consumers and merchants won’t adopt it. We want to get to a place where consumers can simply click, touch or tap to make a payment.

That’s all through the same application, and in our view that application comes from the consumer’s main bank. It’s an integrated component of the services that consumer gets from their main bank. We’re not going to be asking for consumers to sign up for a new app and a stand-alone service that a consumer has to register for. Maybe it will start in that place but that’s certainly not the long-run vision.

Getting to that, where it’s just a service that’s part of what the consumer is using anyway as just an extension or upgrade, we think is a terrific and a place where you’ll see adoption.

And from 2015 to 2016, we’re really bringing to market the capability to work with our partners to bring those simple services to market finally. From 2012-14, it’s really been split between card-present, NFC, in-store, card-not-present, online and in-app, and as we look forward with the arrival of tokenization, there the distinction becomes quite dated.

Getting to a position where, simply through one digital wallet from your main bank, you can pay through any channel with power of tokenization within it, we can both remove friction across all channels and make them critically secure transactions.

In the U.S. with the migration to EMV and the liability shift, securing digital channels does become a mission that’s imperative for the industry to solve for. That’s why we’re bringing these capabilities to market now.

KW: I agree. It’s something that is critically important and very much needed, but as with everything that sounds simple, it’s a process that’s not necessarily simple to do. How complicated is what you just described? 

MB: We’re having a discussion this week and a headline for it was creating simple customer experiences with complex technology. There’s definitely truth to that – hiding that complexity is really important.

There was about two years of work getting to the Apple Pay launch, and in the end, you don’t get a mobile payment experience that’s much simpler than Apple Pay. But that’s a lot of work to get to a simple place. This is definitely not trivial – if it was we’d have solved it many years ago.

But where smart devices and online commerce has evolved to, and with in-app as a way to make payments, we’re seeing all of these opportunities converging at the right time. It’s not trivial technology, but we are bringing it to market to make it easy for customers to embrace it and offer it to their customers.

It isn’t an easy process, but we have to get to a very simple place in the end.

Matt Barr
Group Head, Emerging Payments U.S Region, MasterCard

Matt Barr is responsible for the delivery and development of the emerging payments strategy across U.S. Region, including MasterPass, MasterCard Digital Enablement Service (MDES), contactless and EMV adoption.

Barr has held this role since 2014. In his previous role as head of Market Development and Innovation based in Sydney, he was responsible for the development of emerging payment services, including both mobile and e-commerce payments, in the Australasian markets. Barr was instrumental in establishing the Australian market as a key lead market across contactless, MasterPass and commercial mobile NFC solutions.

Prior to joining MasterCard in 2011, Barr was an executive at Telstra, where he was responsible for core mobile services product development.

Barr has also worked in Retail Banking, New Media and Management Consulting in a broad career that has provided invaluable experience in the definition and delivery of technology and service based innovation.

Barr holds an Honours Degree in Electrical Engineering from Canterbury University, New Zealand, and, as a Rhodes Scholar at Oxford University, a Bachelor of Arts in Politics, Philosophy and Economics, and an MSC in Economics.

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