MasterCard Revives Digital Wallet Program to Take It Global

MasterCard is taking an obscure domestic mobile service global, with the hope of jump-starting innovations that would otherwise be locked to a specific region of the world.

The program is called the Digital Wallet Operator Program, launched three years ago to help digital payment systems reach new users with the necessary compliance and controls in place.

"We don't see a lot of attention in the industry being paid to 'innovation everywhere,'" said Ed McLaughlin, MasterCard's Chief Information Officer.  "There is amazing stuff being done to solve problems locally that can be transferrable, such as an app in Turkey that allows for mobile gas station payments, or taxi technology in Singapore. What we see in Berlin, or Brazil or Stockholm…we want to work with folks to scale up fast."

MasterCard helps these innovations expand by using its global network to provide scale. It also aids in managing risks such as safety, security and adherence to digital transaction standards in different jurisdictions.

The card network's strategy is to take some of the worry out of adding payment functions to apps or connected devices, and fostering a development environment that's more geographically diverse and is conducive to new payment options and omnichannel commerce.

"It's designed for developers and third parties that want to access our network," McLaughlin said. "As we move away from cards going into terminals and more toward digital wallets storing credentials, this is the framework for them."

McLaughlin, who became CIO at the beginning of the year following a stint in which he helped develop new digital payments for the card brand, did not provide a lot of detail about how the program has worked in the U.S, saying "most of the larger players" that are holding card credentials have used the program to initiate digital transactions on behalf of consumers.  

The program's revenue structure is variable and based on how successful the new app or payment technology is in reaching consumers or merchants. "It's a tiered system based on volume," McLaughlin said.

The Digital Wallet Operator Program is a cousin to other programs MasterCard has developed in recent years to extend access to mobile payments and other forms of digital financial services, though McLaughlin said it's a lesser known program. "It's been obscured," McLaughlin said.

MasterCard's more prominent strategies paint a picture of a card network that's not just seeking to extend its brand in an age where people rely less on plastic cards, but do so in an environment where the alternative channels are always changing.

"This is all about accelerating embedded payments," said Richard Crone,  a payments consultant. "If they can provide this service on a consistent basis globally, it also allows MasterCard to embed in new applications. That positions MasterCard for acceptance and for usage."

MasterCard has made more than a dozen moves to extend digital payments with varying degrees of success.  For example, it recently introduced wearable payments for golf courses and is collaborating with multi-account payment technology company Coin to spot new opportunities for connected devices.

MasterCard's digital wallet, MasterPass has expanded quickly, is now approaching 300,000 merchants in 29 countries, McLaughlin said. The card network has also expanded its Digital Enablement Service to bolster tokenization, which protects digital transactions by replacing sensitive account data. MasterCard has also pushed its API and developer zone programs to reach new payment technology developers.

"And people still ask about plastic cards. With a lot of these new programs, people ask us if they can use their cards," McLaughlin said. "There is a blurring of plastic and digital instead of digital taking over. The innovation is taking advantage of all devices…phone, car, smartphones, gaming, etc. People want to see more commerce to go along with these connected devices."