Apple Pay

MasterCard CEO: MasterPass Starts Where Apple Pay Stops

MasterCard CEO Ajay Banga used Thursday’s (Oct. 30) earnings announcement to make a case that the brand’s own MasterPass starts where partner Apple Pay stops, with loyalty and other promotional capabilities.

MasterCard has a strong commitment to Apple Pay, as evidenced by its recent launch of MasterCard Nearby that allows users to find locations where Apple Pay is accepted, and its development of the Master Card Digital Enablement System (MDES) that enables the secure tokenization of cardholder data. That doesn’t mean it isn’t going to push its own digital wallet services on merchants and consumers. There’s room for both in the space, he emphasized, but MasterCard wants to remain a provider its own niche space that he said is complemented, not conflicted, by Apple Pay.

“There’s a lot going on in the Apple Pay space now. I don’t know that I would sort of agree that it conflicts with the stuff that we’re doing in anywhere else in mobile. I think you have to think of mobile and digital as a very wide space,” Banga said. “One aspect to it is are you going to put your credentials on the phone like in Apple, but are you going to do it through host card emulation which is what many others will do, or are you going to do it through NFC like Apple, or is it in app like Apple or is it browser based like others. There are so many elements through mobile and digital commerce, I wouldn’t call it conflicts, I’d rather think that there is a lot of opportunity and lot of open space.”

He also emphasized that MasterPass shouldn’t be viewed as simply a digital wallet.

“MasterPass is not just a wallet by the way – please don’t think of it like somebody else’s wallet, it’s not. MasterPass is a broad set of technologies, it’s got wallet, yes, which is both wallet-branded as MasterPass but also a wallet servers for our issuers and merchants,” Banga also said. “We do value-added services with MasterPass, loyalty programs will be added in there. In the future there will be different ideas with that.”

He said MasterPass will have value-added services, loyalty programs and will possibly look toward adding outside private label cards to the platform, as well as eventually offering in-store checkout. Online payments is already an option with MasterPass.

Expanding MasterPass globally has been one aspect that Banja feels keeps MasterCard competitive in the digital space, which is a decision that aligns with the full structure of the company’s strategy for its digital wallet services. MasterPass is currently in 11 countries and is working with banks of various sizes in those countries. Banga also emphasized that unlike Apple Pay, MasterCard works with a broader audience, including in the B2B space that isn’t trying to compete directly with consumer business.

“I see this as being a series of parallel activities which are all aimed at providing choices to consumers,” Banga said. “We are not in the consumer business directly. We are a B2C company and therefore we are trying to be that in every piece of what we do.”

Although most eyes are on Apple Pay, he said there’s many more innovations going on in the digital wallet space. MasterCard’s strategy has been to embrace the new technologies to accommodate its customer base but also create its own products. Banga also stressed that Apple Pay uses MasterCard’s digital technology to enable MasterCard credit and debit cardholders to use the app, which he also noted involved two years of working closely with Apple to make the technology seen today possible.

“Apply Pay has gotten a lot of attention. However there are many other elements of mobile payments and we are working with all of them. And our strategy has been to work with all players to ensure that we have the capabilities to meet the needs of different market models and make choices available to consumers. So our most consumers have a phone, a number of them have PC, a tablet, a game system, a connected appliance and increasingly connected cars. So our innovations using MasterPass are all designed to work across all of those devices,” He said. “With tokenization used, with all of these extra payment options is based on an industry open standard that the networks have developed together. As a result, we have able to leverage this technology to secure digital transactions across any device. …That’s what this tokenization is all about.” (For more on MasterCard’s tokenization technology and vision for digital commerce, please see interview with MasterCard’s Chief Emerging Technology Officer, Ed McLaughlin.)

As for specific earnings numbers, MasterCard reported revenue of $2.5 billion, a 13 percent increase, year over year. Net income was $1 billion, a 11.9 percent increase from last year. It’s purchase volume worldwide was $843 billion, an 11 percent growth, year over year; of this $288 billion was from the United States, an 7.5 percent increase. Purchase transactions worldwide were $13.2 billion, an 11 percent increase, year over year; of this $5.2 billion was from U.S. transactions, an 8.2 percent increase. An increase in processed transactions hit $11 billion, an increase of 10 percent. Number of cards hit roughly 1.4 billion, of this 349 million comes from the U.S.  As of September 30, 2014, the company’s customers had issued 2.1 billion MasterCard and Maestro-branded cards.

These numbers were backed with a few concluding thoughts from Banga, which focused on the company’s global growth and technology partnership.

“Apple Pay and Transport for London are just a couple of recent examples of how we are creating better shopping experiences for our cardholders using contactless technology. As you know, we just opened our new technology hub in New York City earlier this month. And we’re just continuing to invest in innovation designed to make payments easier and safer,” he said.



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