Why Mastercard developed an appetite for restaurant tech

Apps that allow consumers to order and pay in the same experience are infiltrating the restaurant industry, and Mastercard is arming itself for competition.

"There's a call to action for merchant payment tech," said James Anderson, Mastercard's executive vice president of digital products. "There's been a lot of analysis and thinking and the answer keeps coming back to food, restaurants, bars, cafes."

At this week's Mobile World Congress in Barcelona, Mastercard made a series of announcements tying its mobile technology to merchant services, with a sharp focus on dining experiences.

Andrew Harrer/Bloomberg

By pursuing restaurants, Mastercard is tackling a vertical that has shown itself to be especially conducive to mobile technology. Starbucks has had success with both contactless mobile payments and mobile order ahead. Other companies such as Dunkin Donuts have followed the Starbucks example while finding ways to change the recipe to suit their own tastes. And on Wednesday, Square acquired a mobile app actually called OrderAhead to improve its ability to capture restaurant consumers before making a payment.

"[Dining] payments are low-volume but frequent. People come out for coffee and dinner a lot," Anderson said. "And the merchants are quite engaged around digital and are looking for ways to serve customers better."

The card network is collaborating with Oracle, which three years ago spent more than $5 billion to help build a range of point of sale and back-office systems for the hospitality industry, including hotels and restaurants. Mastercard will integrate with Oracle to power in-store and online payments through Mastercard Payment Gateway Services, enabling restaurants to avoid using two different systems.

"It supports functions like order ahead and pay-at-table. Restaurants can embed that into the Oracle software stack," Anderson said. "Any merchant or restaurant can just turn it on."

Mastercard is also expanding Qkr, an app that uses QR codes or NFC to scan and pay for items, in an effort to make it more widely available and attractive for in-restaurant use. Qkr will now be available in Brazil, Canada, Ireland, Singapore, South Africa, Australia, the U.K., Columbia, Mexico and the U.S. As part of the Oracle partnership, Qkr will power mobile 'order and pay' via smartphones.

Mastercard is adding a feature to Qkr called "open tab," which allows consumers to place multiple orders at a bar through a smartphone. "To start a tab you have to give your card to the bartender. That can now be done electronically," Anderson said.

Mastercard's announcements were part of a busy week for both major card brands. Visa also announced a series of rollouts, mostly tied to its third party developer outreach and connected devices.

In both cases, the networks face incursions from not only startups, but potentially China's Alipay as its owner Ant Financial charts a more aggressive move into the U.S.

"Smartphones that can access products and services anywhere in the world are in the hands of nearly 2 billion consumers around the globe," said Thad Peterson, a senior analyst at Aite Group, adding online merchants are getting business from "everywhere" and need support from an ecosystem that can serve any market. "The need for a competitive global online offering is clear. It's not where things are going; it's where they are now."

Beyond restaurants, Mastercard also announced a partnership with Amsterdam-based communications technology VimpelCom to embed Masterpass. Vimpelcom customers can use Masterpass to manage their accounts and buy content and services from Vimpelcom's partner retailers.

"Digital pay has gone from being a hobby to something that is mainstream," Anderson said, adding Mastercard supports third party mobile payment apps in 17 countries and has 80 million active consumers on its own Masterpass app. "It's become very important for the banks to offer a strong digital payments service."