How MasterCard Is Working to Secure Its Place in Mobile Payments

MasterCard is planting its roots deeper into mobile commerce as a growing number of rivals try to edge it out of the market.

The Purchase, N.Y., company's planned updates to its MasterPass digital wallet are focused on making payments as seamless as possible. Ideally, consumers would be able to automatically invoke their MasterPass credentials when shopping through a merchant's mobile app or website.

"Our API [application programming interface] will allow us to embed MasterPass into the merchant experience more deeply than before," said Vib Prasad, the group head of MasterPass at MasterCard.

The MasterPass' digital wallet will support in-app payments starting next month, a project that MasterCard previewed in February. The feature's first users include Shaw Theaters in Singapore and Starbucks in Australia.

The API upgrade was built with the help of MasterCard Labs, which is part of the card network's research and development operation. It hopes that building market-ready features will entice developers to integrate MasterPass and other MasterCard technology and merchant services.

"We want to make it easier for developers to be able to engage with us to bring concepts and products to market," Prasad said. "We have invested in a lot of pre-canned apps that allows developers to add code and have the apps up and running a matter of hours instead of days or weeks."

Merchants will be able to use MasterCard's upgraded API to enable payments without requiring consumers to leave the merchant's mobile app. The feature will be available in all MasterPass markets, which included ten countries as of July, and will be accessible through MasterCard's partnership with online service provider Web.com.

The API upgrades will also enable the option for consumers to store their MasterPass credentials with frequently-visited merchants for a single-click checkout. For less-frequently-used merchants, consumers can share check out with a few more clicks, but would not have to exit the merchant's app, Prasad said.

MasterCard has made a number of enhancements over the past couple of years to position itself as more of a merchant services provider than an enabler of card payments.

The card network recently invested in Monitise, joined the U.K. mobile commerce venture Weve and worked with technology companies like Samsung and Intel.

The card network has also invested in technology that allows consumers to order items in a store via their smartphone for later shipping, as well as a feature that allows shoppers to choose between NFC and QR codes when making a mobile payment.

MasterCard faces a lot of competition in mobile commerce. Visa recently redesigned and rebranded its V.me digital wallet as Visa Checkout. Visa's digital payment system, like MasterPass, is designed to simplify online and mobile commerce.

Apple is also testing technology that could leverage its existing iTunes accounts to build a mobile payment service for merchants. The Merchant Customer Exchange (MCX) is working on a retailer-driven mobile payments network, and Amazon.com recently began offering a digital wallet to streamline the use of loyalty and gift cards.

"MasterCard needs this API so they can be where the customers are when making a purchase. MasterCard wants to make sure it enables easy payment registration and access to their card brand inside someone else's app," said Richard Crone, a payments consultant.

MasterCard would not comment directly on competitors, but Prasad said the card network hopes to be the go-to source for merchants to add new shopping experiences.

"If it's getting wireless access in stores, or transacting inside an app, we want merchants to come to us with their consumer demands," Prasad said. "So if it comes down to building a sample app or creating videos to explain a process, we will work with merchants to drive innovation."

MasterCard executives in the past have also expressed a willingness to partner with alternative mobile payment companies, though the card network was also behind the concept of a "staged wallet fee" charged to third party payment providers such as eBay's PayPal.