Not to be outdone by other card brands or mobile network operators, MasterCard Worldwide and PrePay Solutions plan to launch a Mobile PayPass prepaid account for smartphones in a few months.
Telecommunications operators, financial institutions and retailers in Europe will have the opportunity to market, brand and distribute the Mobile PayPass software, an "end-to-end" prepaid mobile payment service, PrePay Solutions and MasterCard announced June 15.
The Mobile PayPass service allows users access to a MasterCard prepaid account through a mobile phone.
It enables phones to make payments from the prepaid account at any terminals accepting MasterCard PayPass, Aoife Hurley, head of mobile and corporate payment at PrePay Solutions, tells PaymentsSource.
Essentially, MasterCard PayPass uses the MasterCard debit or credit networks to access a prepaid account or "purse," Hurley says. The purse is connected to a PrePay Solutions system that supports loading the account through cash collection networks, bank transfers or other payment cards, she adds.
PrePay Solutions, a London-based company jointly owned by Edenred Group and MasterCard, is the trading name of PrePay Technologies Ltd.
MasterCard and PrePay Solutions believe distributors will market Mobile PayPass to first-time users of mobile payments. The use of a prepaid account gives consumers full control over their finances and spending.
Prepaid accounts and contactless technologies represent a "marriage made in heaven" in Europe, according to Zil Bareisis, a London-based senior analyst for research firm Celent.
"When you start using your mobile phone for payments, particularly for smaller contactless payments, you need the equivalent of cash, which is essentially what a prepaid account is in a digital context," Bareisis tells PaymentsSource.
Mobile wallets will likely be the key driver for the growth of prepaid in Europe, Bareisis says.
"While few people in the UK would see a need to have a prepaid plastic card, they are likely to want a prepaid account as part of a mobile wallet service to control their mobile purchases," he says.
Many mobile wallets recently announced in Europe include, or are expected to include, some form of prepaid account, Bareisis notes.
For example, Vodafone Italia and CartaSi SpA announced late last year the development of what they touted as one of the first prepaid cards in Italy to support both online and contactless in-store payments through a smartphone (
Such announcements continued to fuel mobile wallet rhetoric in Europe, which heated up even more in March when Visa Inc. and Vodafone Group PLC announced a partnership to establish the Vodafone mobile wallet in Europe. That announcement, in turn, triggered speculation about Samsung Electronics Co. Ltd. establishing its own wallet technology to operate with its NFC-enabled phones (
Seattle-based Starbucks Corp. is an example of a company using a mobile application tied to a prepaid account with great success, Bareisis says. Starbucks revealed in late 2011 that it accepted nearly 26 million mobile transactions in the first 10 months of tying its closed-loop system to a mobile app (
After consumers adopt the Mobile PayPass prepaid account, PrePay Solutions intends to also offer the account as a funding option for online transactions, Hurley says.
PrePay Solutions and MasterCard expect most major financial institutions in Europe to offer the Mobile PayPass prepaid service to its customers, Hurley says. Mobile PayPass operates on a subscriber identity module-based technology that supports payment from a Near Field Communication-enabled phone.
Neither PrePay Solutions nor MasterCard provided information about the fees they apply to Mobile PayPass.
"In my view, a prepaid plastic card and a prepaid mobile account should be two completely different products because they serve a different purpose, and therefore should have a different set of fees," Bareisis contends.
However, some issuers might look to replicate a prepaid card product on a mobile phone and keep the same fees, he adds.
Prepaid card fees remain a hot topic in the payments industry (
