Payments and commerce players are used to rapidly changing landscapes. One of the defining characteristics of the past decade or so has been that what’s an industry-disrupting innovation one day is old news within six months. But even by that standard, the recent COVID-related moves by consumers around the world to digitize their entire daily routines have been incredibly rapid, as Ken Moore, head of Mastercard Labs, told Karen Webster in a recent conversation. And he noted that those changes are increasingly likely to hang around even after the pandemic has ended, as consumers will have permanently changed.
“We’ve all developed new behaviors and new patterns and then repeated them over months,” Moore said. “I think we've changed — and we’ve changed for good.”
And as consumers have changed, so too has the digital commerce ecosystem into which they’re increasingly filtering. Moore told Webster that’s what inspired the collaboration with Microsoft that Mastercard announced on Tuesday (July 28).
It’s a merging of capabilities with three primary goals: 1) to build new commerce experiences; 2) to expand financial participation in the digital ecosystem globally; and 3) to drive startup innovation to push those goals forward worldwide.
“There’s a wealth of different collaboration opportunities across the ecosystem between ourselves and Microsoft,” Moore said. “We’re both going to bring assets in the form of platforms and capabilities across each of those focus areas. And then we will jointly collaborate on building off of each other’s capabilities and reach worldwide.”
.@Microsoft is collaborating with @Mastercard to accelerate innovation across digital commerce and startup ecosystems. Learn more about how we will help build pathways to financial security with the power of #Azure: https://t.co/wX5mPKORGA
— Microsoft Stories and News (@MSFTnews) July 28, 2020
How Mastercard And Microsoft Can Boost Each Other’s Efforts
Moore noted that as the commerce frontier is changing and expanding rapidly, the first part of Mastercard and Microsoft’s collaboration will involve building capability around things like virtual reality, gaming and “even emerging commerce surfaces.”
He said the two firms will develop infrastructure that augments the Mastercard platform with the Microsoft Azure cloud-computing system and the software giant’s artificial intelligence (AI) services.
Moore noted that the companies are also jointly pursuing what has long been a shared goal: to make commerce experiences and offerings broadly accessible to consumers and businesses worldwide. He said Mastercard has already launched inclusion initiatives all over the world in healthcare, agriculture, education and micro-retailing.
In partnering with Microsoft, Mastercard aims to broaden the reach of those programs, expanding them beyond the financially excluded to the financially vulnerable. That, in turn, will extend the system’s relevance to users in both the developed and developing world.
And that eye toward expansion is also relevant in Mastercard’s collaboration with startups. “For the startups and partners that we work with, we’re going to work with Microsoft to help accelerate the growth of those companies,” Moore said. “As they move from being successful in one country — or maybe one country and a few of its neighbors — they can think at a larger scale [and] look to either regional or global expansion. We will look to collectively support them in doing that.”
Moore said Microsoft and Mastercard share something of a joint vision to build pathways to financial security and help improve consumers’ and SMB owners’ lives around the world by buttressing startups that can create solutions to accomplish that.
Mastercard recently set a goal of extending financial inclusion to 1 billion consumers and 50 million small and micro businesses worldwide, but that was before the Microsoft tie-up. Adding Microsoft’s technological platform to the mix should only help the firm achieve that.
Access Creates Security
As Webster pointed out, the great challenge to building access for those who lack it comes when it's time to validate the new consumers or businesses showing up to transact.
There’s often a dearth of information available to do that, Webster said. The challenge is to find a way to build digital identities for underserved consumers and businesses so they can fully integrate into the digital economy.
Moore said the solution to such problems involves not viewing them as discrete tasks, but as two goals to pursue concurrently. For example, he said the Mastercard Farmers Network in Africa and India allows local merchants to buy and track inventory digitally via connections to local warehouses. That beats an older system of sending a courier on a scooter once or twice a day to order goods and pay in cash.
Similarly, Mastercard’s Kupaa program creates a single digital location where NGOs, private sponsors, parents and governments can make payments directly to local schools. That solves an endemic problem of teacher truancy caused by instructors having to go out and make school purchases.
These products all offer an easy entry point to the world of digitized commerce where one is needed — but they also do so in a way that surfaces data previously hidden in cash transactions, making participants more visible and viable to the financial system as a whole.
“We can make data that was previously invisible, visible,” Moore said. “And by making it visible, we've been able to connect the people and have allowed them to grow their businesses, grow their farms, grow their shops and better serve their educational needs.”
Surfacing such data also has a broader future than just making the world of financial services more inclusive for the locked-out and vulnerable. Moore said that from Mastercard’s R&D perspective, it’s part of the future face of commerce.
Building Blockchain And The Identity Of Things
Moore said blockchain technology is exciting to Mastercard — especially its ability to create an easily accessible log of a physical good’s entire lifespan. That runs from the moment an item is created through when it ships to customers, is sent out to the world via a consignment marketplace or is consumed.
“We see blockchain and its ability to build trust in complicated ecosystems … as a network business we’re particularly interested in, because it lends itself to everything from a piece of fashion [to] food,” he said. “It lends itself to pharmaceutical-grade drugs. It lends itself to car parts. Because what you’re doing is proving that something is what it seems to be and [where] it came from.”
And in a world that’s going increasingly digital and is likely to stay that way, that kind of transparency will be more and more important, Moore said. After all, consumers are transacting more online, and the digitization of commerce worldwide will require new mechanisms for transferring data that will seamlessly follow transactions.
(This article has been updated.)