Payments Innovation

How MasterCard Vets Innovation

MasterCard Vets Innovation

Just because an idea is great, doesn’t mean it’s going to lead to true innovation. The trouble is, how do you know the difference? MasterCard Chief Information Officer Ed McLaughlin let Karen Webster in on the critical decision-making process behind going from an idea to fostering meaningful innovation.

As Nobel prize-winning chemist Linus Pauling put it: “If you want to have good ideas you must have many ideas. Most of them will be wrong, and what you have to learn is which ones to throw away.”

You don’t have to look far to see and hear how a lot of “good ideas” are stirring up the payments landscape these days. From hackathons to startup pitches, startup accelerators and innovation labs, there are no shortage of ideas – and, it seems, the money to keep a steady stream of them flowing.

But as Pauling wisely remarked, starting with a ton of what could be great ideas doesn’t in any way guarantee that you’ll end up with a ton of exciting and meaningful innovation as a result.

As the CIO of MasterCard – and before that, global head of emerging payments at the card network – Ed McLaughlin has seen and heard his fair share of pitches as innovators seek out MasterCard as an investor or partner to ignite their “good ideas.” As an entrepreneur before that, it’s also fair to assume that McLaughlin even pitched a few of those “good ideas” himself.

Over the years, McLaughlin has developed his own framework for deciding which of the many ideas he’s pitched to examine further and which are better left on the sidelines. McLaughlin shared that framework with the assembled crowd at the “Matchmakers” book launch in New York last week.

In response to the question, “how do you decide which meetings to take, and then which innovators to invite back?” McLaughlin said he follows a two-step process which can be summed up as the “whats” and the “whys.”

To get past the first gate, McLaughlin said that innovators have to pass the “what” screen. If any idea checks any one of the following three boxes, it’s immediately put on the sidelines.


  • A Concept that requires everyone, everywhere to change everything all at once.
  • An Idea with zero evidence of eventual scalable/sustainable business model, and/or
  • A set of capabilities that cannot be delivered with foreseeable terrestrial technology.

Provided these great ideas pass the “what” test, the “why” test is really where the good idea rubber meets that next great innovation road.


Why This?

“It’s never how it works, but why would someone want it?” McLaughlin said.

When thinking about the audience that may be adopting the potential concept, McLaughlin said that it’s important to consider what about “it” will make anyone actually want to use it – and keep using it.

Is “it” profoundly better than the current practice? Will the new value of this option be easily understood? Is it worth the effort on the part of the relevant stakeholder to make it a habit?

McLaughlin then used the example of the use of bitcoin for payments. When MasterCard asked consumers whether this was an innovation that they might like to use, they were unclear about why they would pay a service provider to use that payment method when their current method offered cash back.

So, he added, there has to be a value proposition that adds value, not takes it away.

Oh, and it never hurts to ask the target customer, either – and then to listen to what they have to say.

Why Now?

Timing can always be tricky, McLaughlin asserted, but even more so when it comes to introducing a new product or service to an existing market with established preferences. Whether it’s too early or too late, the wrong timing can leave any great idea essentially dead in the water.

“Products don’t make markets, markets make products,” McLaughlin explained. “Market forces create the opportunities to be exploited, winners are the ones who get it right — and at the right time.”

He added that it’s important to never confuse the clarity of the idea with the proximity to adoption, noting that the insight really comes from the larger environment itself.

He used the video sharing concepts, which were around from the early days of the internet boom. Great ideas, but the growth of adoption of a service like YouTube wasn’t truly realized until the proliferation of smartphones with video cameras and increased broadband/wireless connections made them that much more accessible for both content generators and content users.

Why You?

McLaughlin pointed out that there’s often very little that’s not obvious to practitioners of a given art, and similar concepts always spontaneously generate from a shared view. Finding success, he says, never lies in the idea alone, but how it’s executed.

“The key is what unique advantages will enable a given company to succeed. What can they do that many similar competitors cannot replicate?” he added.

Innovators have to go beyond patents and intellectual property and truly hone in on what they can bring to the table that no one else can in order to make an idea reality.

Though Jack Dorsey wasn’t the first person to have the idea to utilize a mobile device as a point-of-sale system, McLaughlin noted that his connections, access and leadership made a critical difference that helped propel Square forward, and carve out and maintain a leadership position in what has become a very crowded space.

McLaughlin’s insights that evening sparked a series of conversations about how the three “whats” and the three “whys” are not only appropriate for companies to use to vet potential partners – and even strategic investments — but for innovators to ask of themselves before asking for that meeting.

Answering them – clearly and compellingly – all agreed, could be the difference between another “good idea” and a great opportunity to transform the status quo.


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