MasterCard makes it easier for member banks to launch NFC services

The new Mobile MasterCard PayPass solution makes it much easier for MasterCard member banks to offer NFC-based payment services to their cardholders

MasterCard has launched a new service that enables card issuers to offer NFC-based services to their cardholders by giving them the option of uploading their MasterCard to their mobile phone and using it to make payments at merchants equipped to handle the card system’s PayPass contactless card technology.

To participate, cardholders need a mobile phone equipped with near field communication capabilities, a mobile data subscription and a MasterCard issued by a participating card issuer. Setting up the new Mobile MasterCard PayPass service then runs as follows:

  • The PayPass application is securely transferred onto a secure area of the consumer’s mobile phone via the mobile network.
  • The PayPass application is then personalized with the consumer’s individual payment account details over-the-air, using the new MasterCard over-the-air provisioning service.

“We are dedicated to the development of a sustainable mobile payments eco-system in which all of our customers and every major mobile player can participate,” said Art Kranzley, chief emerging technology officer for MasterCard Worldwide. “By managing the device personalization process for our customers from beginning to end, we are offering a service that is consistent with both customer demand for ease of implementation and consumer demand for ease of use.

“Through our extensive trial experience with contactless mobile payments, implementing a new provisioning process emerged as a challenge for our customers,” Kranzley added.

“We are talking to serious banks… and not about trials, but about commercial launches,” James Anderson, a vice president at MasterCard’s mobile business told Reuters:

Anderson said that during the next two years he expects to see substantial activity from retail-focused banks, whose plans to develop mobile payment services have been little affected by the financial crisis.

“We have not seen a lot of impact,” Anderson said.

It would still take at least until 2010 before any wider availability of phones equipped with such technology and the financial industry and telecom operators would need to agree on some kind of revenue and role split.

“Traditional financial industry met telcos by going mobile. Now telecom operators want to play a part in that chain. These talks are well under way,” Gerhard Romen, director for strategic alliances & partnering at Nokia, told Reuters.

“Now it’s like the Olympics, everyone is on their starting blocks, and just waiting,” he said.

MasterCard has run a number of NFC and mobile payments trials around the world over the last eighteen months, including:

  • In May 2008, MasterCard Canada announced that it would test near field communications-enabled phones with MasterCard PayPass capability on the Bell Mobility wireless network. The four-month trial will be the next major step in bringing contactless payments via mobile phones to the Canadian market.
  • In January 2008 in Turkey, MasterCard Worldwide, Garanti Bank and Turkcell announced the pilot of Turkey’s first mobile phones enabled with MasterCard PayPass technology. The ‘mobile wallet’ project, estimated to be completed by the end of 2008, will enable PayPass transactions linked to a Bonus Trink credit card.
  • Also in January, U.S. Bank, MasterCard Worldwide and Nokia announced the introduction of a mobile payments pilot program in Spokane, Washington. Program participants received a new Nokia mobile phone equipped with MasterCard PayPass payment functionality, allowing them to pay for purchases with a tap of their mobile phone.

MasterCard is also heavily involved in mobile payments and, in June, signed an agreement with Obopay to offer a fully-integrated on-demand person-to-person mobile payment service in the United States. The service, offered via MasterCard MoneySend, gives MasterCard member banks the ability to provide an innovative mobile payments service to their cardholders on all MasterCard-branded credit, debit and prepaid products.

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