Consumer digital wallet options:masterpass
MasterCard will both charge fees to digital wallet vendors AND introduce MasterPass for quick purchasing with MasterCard.
master pass: overview
MasterCard MasterPass is already in the market and might become a key player in the digital wallet actions worldwide over the next few years. While usage in the US is limited to date, and primarily part of Google's Digital Wallet App., MasterPass is growing globally beginning in 2012 in countries like Australia and Poland. In fact, cashless transactions are a key focus, and the logo is beginning to popup at local retailers and partners. Just as you see MasterCard's logo almost everywhere, so will you see their MasterPass logo. Unlike some digital wallet transactors, MasterPass allows you to create an account and use not JUST your MasterCard, but also Discover, Visa, Diner's Club, and American Express. They likely will also include loyalty reward cards and gift cards in the future. The concept will be a true 'digital wallet', as your MasterPass account would be a wallet of payment options. They will leverage all their existing payment system partnerships and either replace or supplement these systems. Using your mobile # or an e-mail account as your account ID, you would see a personalized message you setup so you trust the buyer's veracity, and then enter your password. You can add may ship addresses and cards to select on checkouts, and you can add a second security check ( a 4 digit pin essentially) if you'd like more security than just the password (great idea!). Check out the MasterPass video and demo from MasterCard.
what we like?
Quite a few things we like. First, we love the option to always receive a text to your mobile to confirm an order. What a great, simple way for you to know your account activity. If your account is every hacked, you'll know quickly and be able to protect yourself. Also reduces consumers concern. As we know, the easier you make payments, the more concern about the security. By notifying you of a purchase, you're informed instantly and simply. Second, consumers like options, for some an additional layer of security using the pin # is simply too much information to remember. For others, we are glad to have more security. Consumer choice allows your preference
Since MasterCard has the infrastructure and consumer confidence, their robust digital wallet system might help drive consumer use of digital wallet, domestically in the US and globally. We love the personalized message, since this truly allows a consumer confidence that they're using a good vendor. We imagine this type of technology could reduce internet fraud, as sites today 'phish' and duplicate an existing site to 'trick' people via spam. Now, a site could try to pretend to be a legitimate site, and but either you would the scam during the checkout process, and report it quickly. Another tool in the fraud tool belt can help reduce theft. In the end, all consumers pay for consumer fraud through higher prices.
what you need to know
First, every transaction has a cost, and costs and fees are always passed on to consumers in higher prices. MasterPass might have the existing infrastructure so they have the power to charge higher fees and keep cheaper options from competing. In fact, we think small business might pull away from the credit card companies to use lower fee options like PayPal's payPass or startup Square's digital wallet App.. For consumers, hopefully a few big players will emerge since competition means better pricing.
|Type||key benefits/features||digital wallet concerns, issues, limits|
|tap & go ability||
Uses the digital wallet concept, your account 'holds' various credit cards, shipping addresses, and you login, select the payment options, shipping from your listing. Default security is password, and your mobile or e-mail as the 'ID'. You can set defaults for payment/address for quick processing, and you can add a second layer of security via pin #. Personal message created by you confirms vendor authenticity, and you can set the account to always text you a purchase summary on all purchases.
what do you need to know?
Like all digital wallet apps and features, support will grow in 2013. MasterPass logo will be on websites, and the company expects to provide a consistent checkout experience across online retailers and in-store as well. As a digital wallet, you can select from various types of credit cards, including competitors like Discover, AMEX, Visa. MasterCard intends for MasterPass to be a digital wallet, and for use anytime, anywhere. Also, like all digital wallet options, only purchase from trusted online retailers. MasterPass sends you to the cardholder to resolve any charge issues, while Square will attempt to resolve any complaints. We're not sure how that works in real life.
what's on the horizon
Available in US, UK, Spain, and others with ongoing global rollouts. You'll likely see the MasterPass logo popping up on digital storefronts as they execute partnerships.
is it secure?
Given MasterCard's capability, we expect a secure experience. However, say you use a Visa card in the 'wallet' and you believe there's an error. MasterPass makes you go through the actual card vendor, which is a problem when MasterPass makes an error. For now, we can't recommend using MasterPass except with MasterCard.