MasterCard has revised its year-old mobile payment strategy by unveiling a digital, cloud-based service called MasterPass that moves well beyond near-field communication technology used in smartphones to support QR codes, traditional credit cards and other ways to make payments.
In an announcement at the start of Mobile World Congress in Barcelona, the company called the change to MasterPass an "evolution" of its PayPass Wallet Services, first launched in the spring of 2012. MasterPass will allow consumers to make payments from digital wallets or traditional credit cards. Consumers can also rely on NFC or QR codes scanned with optical readers if such technologies are supported by the banks and stores that they use.
Because the new MasterPass system is cloud-based, consumers will be able to use their MasterCard or any other branded credit, debit or pre-paid card they want from any bank or merchant, officials said.
Purchases can be made at store checkout counters, or if customers don't want to wait in a checkout line, they can make purchases while standing in a store aisle via their smartphone or a salesperson's tablet. Consumers also can use the service from a mobile device or PC at home or elsewhere.
"MasterPass brings together all the ways we pay for things," said Ed McLaughlin, chief emerging payments officer for MasterCard.
The announcement is an indication of the slow global advance of mobile payments made with NFC technology, which requires consumers to use smartphones equipped with NFC chips and merchants to install NFC readers at checkout counters.
NFC technology has been used by consumers for transit and retail purchases for years in South Korea and Japan, but has been slow to catch on in other regions.
"We are still believers in NFC and think it will continue to progress, but there will always be merchants where NFC might not be the right solution and we don't want to be wed to one technology alone," said Ed Olebe, a senior vice president at MasterCard and head of MasterPass, in an interview.
"Where before we said to merchants to use NFC and PayPass using a secure element, you're now seeing us doing a lot more for those who want to use bar codes or QR codes or even sound waves to accept payments. Some technologies are more secure than others," Olebe said.
"Our insight is that the merchant is going to control their store and invest in the technology that might be right," Olebe said. "It's unlikely we'll be able to force merchants to pick a technology that's right for them. In some situations, plastic is still oftentimes right, so why force another mechanism on that?"
For payment technologies that are less secure than NFC, a merchant will incur greater liability and costs for theft, which could raise the price of products purchased in other ways than through NFC, Olebe added. That might include non-NFC payments made from a device carried in an aisle that scans a barcode or QR code using an optical scanner.
Consumers will be able to sign up for MasterPass through banks in the U.S. sometime in the spring, following the end-of-March launch in Australia and Canada, Olebe said. The U.K. will be added in the summer, followed by Belgium, Brazil, China, France, Italy, Netherlands, Singapore, Spain and Sweden.
More mobile payment options at MWC
NFC will be one of many mobile topics at MWC, and MasterCard competitor Visa has scheduled an announcement for later Monday. Also, the head of product management for Google Wallet is making an appearance at MWC, even as Google has markedly toned down its presence at the annual event, which is expected to attract 75,000 visitors. Google is not sponsoring a booth this year or providing a keynote speaker. Last year, Google's Executive Chairman Eric Schmidt spoke at the conference.
Google Wallet was first introduced in the fall of 2011 and relies on NFC in Android smartphones for mobile payments. In late 2012, Isis, a consortium of three U.S. carriers, launched NFC payments in Salt Lake City and Austin, Texas.
The GSM Association, representing 800 GSM carriers globally and the host of the MWC event, is also providing an NFC app that will work with Sony Xperia smartphones and 20,000 checkpoints at the new MWC venue (called the Fira Gran Via) and in some taxicabs in Barcelona. The app is based on a partnership of companies in the region that includes CaixaBank, Gemalto, Telefonica Digital and Visa Europe.
Even though mobile payments has been a major focus for NFC, some vendors promote it primarily as a data transfer technology between NFC-ready smartphones brought within about one inch of each other. Phones like Samsung's Galaxy S III use Android Beam software to rely on the NFC chip in two phones to kick off a Bluetooth data transfer.