MasterPass And The Digital Wallets Refresh


While most people walk about the consolidation of digital wallets, MasterCard sees a world in which digital wallets expand and localize. On the day that MasterCard announces the expansion of its digital wallet operator program globally, MasterCard CIO Ed McLaughlin describes the future of commerce – and the framework he believes is essential to enable it.

The push toward the always on, always available transaction ecosystems may be technology-enabled but is consumer driven, as they see a world in which cash and plastic gives way to  mobile and digital.

It’s a trend that MasterCard has helped innovators seize by enabling access to its MasterPass platform over the last several years. The MasterPass digital platform, which operates as a storage destination for both payment and destination or shipping data, is designed to bring speed and security to digital and mobile transactions.

In a recent interview with PYMNTS, MasterCard CIO Ed McLaughlin said that MasterCard’s vision though isn’t just enabling digital transactions via that platform, but using its depth and breadth as global platform to give innovators the chance to reimagine commerce in new ways locally.

An important enabler of that vision is MasterCard’s digital wallet operator (DWO) program, a program that it launched three years ago in the U.S. Today, MasterCard announces that it will expand DWO globally.

“We designed [the digital wallet operator program] three years ago to answer the question ‘how do we foster innovation, enable compelling use cases, and handle all the credentials securely?” said McLaughlin – leveraging the MasterPass API, and its digital enterprise services program to keep digital credentials secure in the pursuit of commerce.

But as more commerce is moving digital everywhere in the world, enabled by the massive diffusion of mobile and other connected devices, the premise, said McLaughlin, is one in which there are more digital wallets than fewer because commerce is, at heart, a local phenomenon.

McLaughlin contends that with its DWO program, hypothetically speaking, there’s no reason that innovators in Stockholm couldn’t create a “Stockholm wallet,” a local wallet that also has the benefits of being accepted anywhere in the world.  Different than a global acceptance mark, the utility here, McLaughlin emphasized, is that DWO can help innovators develop digital commerce experiences that reflect the nuances and preferences of a local culture and the establishments operating within it without that innovator having to build a separate payments platform or app to enable it.

“MasterCard has always been a platform that people have built great businesses on top of,” McLaughlin said. “In the case of Stockholm,” he said expanding on the example, “how that consumer interacts with the bicycle system, and goes skating in the winter, well, that’s great localization that can be made possible with DWO,” he said.

McLaughlin emphasized that MasterCard views DWO as a way for innovators to support merchants who want to offer a local experience – and leverage a single “local” wallet that consumers will want to use. For innovators, that also helps them build their commerce enterprises and evolve them as they see success and traction – and do that easily and at scale. And, McLaughlin says, since MasterCard is always refreshing its network, accommodating new capabilities and enabling new devices, those innovators are able to take advantage of  a consistent and transparent service that enables “precise localization” and continue to serve the needs of those local communities.

DWO,  he said, applies to anyone who wants to be a digital wallet operator, from the smallest player to the largest. There has been no change in pricing for the transaction fees that debuted three years ago, said McLaughlin, and a tiered system still remains in effect.  Fees, he stated, are a “non-issue.”

McLaughlin also pointed out that the digital wallet operator program is a program, not a specific technology. “As new capabilities roll out or new threats emerge, we make it possible for innovators to work with a consistent framework based on what we are doing today – and that will include new capabilities coming into the marketplace tomorrow.”

McLaughlin believes strongly that MasterCard’s DWO will allow innovation to flourish locally in a consistent, secure and compliant way. Noting that demand for such a program has accelerated as localization has become increasingly appealing to consumers, McLaughlin also noted that cash and plastic has been increasingly less important. “When you move into the device-based world, anyone facilitating commerce is going to want to hold and use digital credentials, and the consumer will expect nothing less.”

The goal, McLaughlin said is to give innovators a secure way to hold, use and keep credentials, and a standard technology that helps them develop new and creative ways for commerce to happen. As for how the wallet world all shakes out?

“That’s for the consumer to decide,” he said. “We just want to provide the tools so that innovators can give them many options to choose from.”