MasterCard: Digital wallets will replace plastic and drive mcommerce

By Rosie Baker | 15 August 2013

Australia has set the pace for smartphone and tablet penetration. Yet it is lagging on ecommerce. Latest local figures are hard to come by but Nielsen data released this week in the US suggests that only around a quarter of smartphone owners user them to make purchases. It would be a surprise if that figure was any higher in Australia.

Arguably that's because they either don't like, or don't trust the payment infrastructure, or providers simply haven't made it simple and attractive enough.

MasterCard is hoping to change that by tying on some new bells and whistles to its digital wallet.

The company will next week add around 10 new partners to the MasterPass scheme which it aims to make a main payment option by making online payments easier, particularly on mobile and tablet devices. The plan is to do away with cumbersome online forms by storing payment and delivery details in the wallet.

The bells and whistles, or sweetners being launched next week come in the form of integrated coupons and retailer branded giftcards. That will sit alongside the ability to integrate retailer loyalty programmes into MasterPass.

Matt Barr, MasterCard's head of market development and innovation, believes MasterCard is getting a step closer to ending the “fragmentation” that currently exists in the digital payment space and helping retailers build multichannel businesses.

Barr, told AdNews: “MasterPass is designed to help support our customers in the transition from plastic to digital. We believe a wallet based experience is what's going to be successful in the future.”

For customers, the payment method provides a “frictionless” transaction experience online and on mobile devices, he adds. For online merchants MasterPass offers opportunities for more revenue and fewer abandoned baskets at the checkout because the process is too complex.

The new partners announced on Monday will help Mastercard “scale acceptance” of digital payments, says Barr adding that he believes within a few years digital wallets will be the main method of online payment for Australian consumers.

“Our vision for the future is one that is seamless. The fragmentation that exists today between cloud based systems, tap and go etc., we see those coming together under the digital wallet relationship with the banks.

“If you're a traditional retailer with a physical and an online offer, you're already starting to see demand for these multichannel experiences and you need the services to support that. If you're not supporting that I would say you're not listening to your customers,” he says.

“Like other markets, we're at the start of an exciting journey but Australia is ahead of markets such as the UK. For example, contactless payments here are way beyond tipping point. Around 30% of all transactions under $100 are contactless. It's the highest in the world. Our aspirations for MasterPass are similarly high.”

Traditional financial brands such as Mastercard will need to move fast. Competitors including Facebook have eyes on the market, today outlining plans to trial of a mobile payment scheme that will let users store payment details within the network for use on mobile shopping apps.

Digital wallets such as MasterCard's MasterPass could “absolutely change the face of commerce” in Australia, agreed Jodie Sangster, CEO of the Association for Data-driven Marketing and Advertising (ADMA). But, one thing holding it back is consumers' trepidation over the security of storing their details.

Australian e-commerce hasn’t taken off as much as it has elsewhere, she said, but the development of payment technologies that simplify the transaction process could mean that online commerce here skips past e-commerce and goes straight to mobile commerce.

Barr believes because it has partnered with banks including Commonwealth bank and Westpac, consumers are more likely to feel comfortable using it than branded payment apps. He believes the relationship with banks will also help scale digital wallets and bring them into the mainstream quickly.

Mastercard's Matthew Barr is speaking at the Online Retailer Conference in Sydney on the topic of digital wallets next week.

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