MasterCard has signed an exclusive deal to develop a pay-by-wave platform for Everything Everywhere over the next half decade – hopefully one with greater impact than the existing QuickTap service.
The first product of the deal will be a co-branded payment platform, using Near Field Communications (NFC) to facilitate pay-by-bonk. The plan is to then extend that platform into the usual mix of loyalty cards, money transfers and online payments, with the interesting addition of phone-as-cash-register functionality which is very much flavour of the month right now.
Orange, one of EE's consumer brands, has had an NFC payment system since June last year when we managed to score some free cookies using a Samsung Tocco handset. Since then the range of supported handsets expanded, and contracted again, to the point where Orange isn't selling any compatible handsets at all.
Quick Tap worked, but was cumbersome and needed finessing, which us what this deal should do. The development deal is exclusive, but that won't stop MasterCard-branded cards being used by other carriers, and on other handsets. Google Wallet is based around a pre-paid card, and MasterCard's PayPass platform is already embedded in millions of plastic cards and an increasing number of phones around the world.
But those platforms rely on deals with banks, or other financial institutions, who buy into the PayPass network in order to have their cards (by they physical or electronic) processed by PayPass terminals. Those banks can equally go to Visa and buy into its PayWave network, as Barclays (for example) has with its PayTag stickers.
The duopoly which exists in the West suits the industry well. Most terminals accept both PayWave and PayPass, and in the UK, retailers are already accepting a million bonks a month. Visa and Mastercard are generally competitive enough to keep costs down for everyone, though new challengers are seeking to upset that balance.
Processing credit cards on phones was only slightly novel when Square splurged $10m on a flimsy plastic mag-stripe reader. These days companies are falling over themselves to enable the functionality. Dublin startup SumUp launched only last week with $20m or so in VC cash, and the big players are getting in too with VeriFone launching Sail in May.
But for the next five years MasterCard won't be helping anyone else to develop their payment platform, while EE won't be flirting with Visa or selling Square boxes to customers. ®