Mastercard today announced the appointment of CIO Ed McLaughlin to president, Operations and Technology.
In an interview with PYMNTS’ Karen Webster, McLaughlin spoke to the developments and challenges in the latest payments industry shift toward device-based and contextual commerce, the role of operations and technology in meeting consumer demand and what’s next for payments on the global stage — especially as it relates to financial inclusion.
“This is the third wave for our industry,” McLaughlin told Webster. “I think we’re in the middle of an accelerating shift which is just as profound as plastic.”
Mastercard started completely offline with charge plates and knuckle busters, he noted. The push to put a machine-readable device in everyone’s pockets — a piece of plastic — and to create a real-time network around it was a major industry undertaking.
Now, the industry is in a similar position — only digital and moving ever more toward device-based and contextual forms of commerce. In this space, customer experience is more important than ever.
“Everyone likes to talk about the T in operations and technology,” McLaughlin said. “But the O is the consumer experience that everyone, justifiably, is so focused on. That’s how it lives every day, everywhere — the consumer experience is the operation.”
The challenge for a payment network then becomes finding ways to maintain a consistent, reliable consumer experience across a growing number of devices.
For Mastercard, this means operations are also about enabling people in the broader technology ecosystem to manage that payment experience and make it good for consumers. And likewise, knowing when to hold back.
“There are lots of things that you can do,” he noted, “but what you really should be asking is: is this a better context? For decades, we wouldn’t allow merchants to have a terminal that failed every third time, and we’ve always had standard about things like responsiveness. This directly applies, and probably even more so, when it comes to the digital world.”
The only reason customers begin to do something — pay a certain way, for instance — is because it’s easier and better than previous methods. Many would even argue that shifting entrenched behavior requires a 10x improvement over past methods, McLaughlin said.
It’s all about knowing your audience — recognizing first and foremost who the consumers are, what they want and what they’re ready for.
In navigating the growing device- and context-based commerce, ensuring products and services that roll out don’t diminish the overall consumer experience is key.
“I need to know not just that it’s working as designed, but that it’s working in the consumers’ hands everywhere, every time,” McLaughlin said. “That’s another big part of this shift to digital.”
Likewise, consumers aren’t one for diminished options.
“When Apple Pay was launching, one of the first questions from consumers, which I didn’t even think would be a question was, ‘can I still use my card?’” McLaughlin said.
In general, he noted, consumers are enthusiastic about new technology — as long as it works with what they already have and ties everything back together. For the ecosystem, this means that collaboration between device makers and payment companies is moving upstream.
And more than ever, anticipating where the technology is headed is key.
As an example, McLaughlin pointed to Mastercard’s work in the mobile point-of-sale space as the movement first emerged. Thinking about some of the more profound digital disruptions in recent years — Amazon in retail, iTunes in digital media or Uber in personal mobility — it was in a sense, he said, the underlying payments services that enabled those to take hold on the market.
Collaboration and anticipation in the ecosystem points to one of the promises of digital payments, McLaughlin noted — the combinatory effect.
“As you get more API-based services operating in an absolutely secure and well-behaved way,” McLaughlin said, “that can now be combined with services to create these new commerce context or experiences for consumers. Having it all work together is powerful.”
All of these points are converging globally. But nowhere is it more apparent than in rapidly digitizing emerging markets.
India, for example, is a huge market for Mastercard. The company has been involved developing systems within the context rapid adoption of mobile payments in the country of 1.2 billion since the beginning, noted McLaughlin. The recent push to demonetization has only worked to accelerate it.
Some examples include a QR standard that allows brick-and-mortar merchants to be able to display code that, when scanned, would push funds into a prepaid or electronic receiving account.
“With mutual inclusion through prepaid with the ability to have a trigger to push a transaction using this QR code along — whether it’s a Mastercard, Visa or RuPay transaction,” said McLaughlin, “that merchant moved beyond cash which helps all of us, and then we get to have a share in that market as we transition.”
This points to another promise of digital payments — growth in financial inclusion.
“The digital divide is real,” McLaughlin said. “Everything online that we enjoy — just getting access to it isn’t enough. Unless you can also participate economically, you’re still cut off.”
He pointed to work Mastercard had done in Zimbabwe working with local banks and HomeSend, the company’s digital remittance solution.
Once remittance funds began flowing into mobile money accounts, they found that within a short time, over a third of what McLaughlin called “classic” eCommerce in Zimbabwe was coming from a population that hadn’t been able to participate before.
This is what McLaughlin looks forward to most in his new role as president of Operations and Technology — the ability to connect the world.
“That’s the power of having that 16-digit number — it’s the token that enables your passport to the existing online world,” McLaughlin said. “To have the ability to drive where it goes and what it becomes is pretty amazing.”