The Relentless Drive of Payments Innovation
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7 March 2013Zilvinas Bareisis
I just came back from three weeks of being on the road. I ran a workshop on merchant-funded rewards at Merchant Payments Ecosystem event in Berlin, presented on mobile payments at Celent's own (and very successful!) Insight and Innovation Day in Boston last week, and managed to squeeze a holiday on the snow in between. While I was away, there were a lot of interesting news and announcements in the mobile payments space, particularly last week at the Mobile World Congress in Barcelona. As I was catching up on all the latest developments, I wanted to share a few announcements that especially caught my eye. 1. MasterCard introduced MasterPass, the "future of digital payments." According to the company, MasterPass is "a digital service that allows consumers to use any payment card or enabled device to discover enhanced shopping experiences that are as simple as a click, tap or touch – online, in-store or anywhere", and represents an evolution of PayPass Wallet Services, itself announced only last year. At first glance, MasterPass appears to be a solution to bridge the chasm I was describing between online and offline payments in my recent digital wallets report. While the initial focus remains on e-commerce and online/ remote transactions, MasterCard was apparently demoing how MasterPass can be used for proximity payments with QR codes on posters and even TV. Naturally, MasterCard will want to make sure it also works well with PayPass contactless to be a truly universal solution, but the direction is definitely encouraging. 2. Visa introduced Visa Ready Partner Program "designed to accelerate the introduction of innovative payment solutions globally and further drive the global migration from cash to electronic payments." The program has two main components: the existing program for the approval of mobile NFC-enabled devices, and a new one for Mobile Acceptance (mPOS) Solutions. Ingenico's ROAM is the first partner to participate in the mPOS solutions program. However, it was the announcement of a new deal between Visa and Samsung under the NFC program that I found particularly interesting. Future NFC-enabled Samsung phones will come with Visa’s PayWave applet and pre-certified to work with Visa's payment system. Another important feature is the new NFC integration allowing banks and others to launch mobile payment services using Visa’s new Mobile Provisioning Service to download payment account information to the devices. This has the potential to simplify the existing complex process of provisioning payment accounts to secure elements, one of the barriers for widespread NFC adoption today. 3. Bankinter in Spain also announced a new way to circumvent secure element hassle for mobile NFC payments. Their customers will need an app on their NFC-enabled phones, and then, instead of using a secure element from a handset manufacturer or network operator, the customer will temporarily download virtual one-time use replicas of their physical credit or debit card every time they make a payment. The service was developed with Visa Europe, Net1 UEPS and Seglan. While such a solution clearly puts the bank in control of mobile payments, it relies on ubiquitous network connectivity and ability to download a virtual token before a payment can be made, which may not be practical in all circumstances. There were more news in the start-up world, from Stripe entering the UK to PayPal co-founder Max Levchin launching a new payments venture Affirm focused on streamlining the mobile checkout process. All of which only confirms that there is no respite when it comes to innovation in mobile payments.