INTERVIEW: MasterCard exec talks mobile payments

James Davlouros

MasterCard plans to become a major player in the mobile payment space. Here, MasterCard’s mobile development VP, James Davlouros, tells us why mobile operators, payment providers, manufacturers and retailers must collaborate to win over customers.

¤ The mobile payments market is extremely crowded. Who do you see as your chief competitors? 
For us it’s all about partnering with the various stakeholders out there in order to provide the right solutions. Yes, there are various players; some people may even say Amazon, or Google or all of those other things. But I think it’s about seeing the mobile payments space as a partnership or corporation. Of course there’s going to be competitive solutions out there. Some of them will succeed to a degree and some will fail. Isis is a consortium that is working with us, for example, and others to enable mobile payments in the US.

¤ Who are you partnering with? 
It’s all about finding the right partners to deliver the right solutions that add value to the customer. We have partnerships with a number of people out there, be it operators, like in Latin America, with Telefonica, partners that provide various couponing capabilities, such as Boku, or Intel to provide a much stronger security on the platforms.

¤ What needs to happen for mobile payments to hit the mainstream? 
The various players that you see in the market today will become more involved. Payments are just one piece of a much larger puzzle. You need to show value add. How would you target customers with relevant offers? When it comes to mobile phones, it’s not just about payments. It’s more about engaging with customers: providing what they need, when they need it; be it location-based services or others. This will help adoption and making customers use [contactless payments] more frequently. Customers need to see the value in order for them to use it.

¤ How much of the challenge is about winning consumer trust? 
There are two aspects to that question. There’s the actual security and there’s the perception of security. They are very different, but equally as important, I would argue. The MasterCard system has very strong security within it of course. In terms of perception, the way to engage is to educate. It’s a very challenging topic by all means. How do you make the consumer trust it, rather than just telling them that it is trustworthy? There’s a lot work to be done there, especially on the perception side. It’s a question of education and providing value-added services. It’s about engaging with the customer and making sure that you provide them with something that they want.

¤ What stage would you say MasterCard is at with mobile payments? 
Today our work with stakeholders on mobile PayPass is purely for commercial launches. In July last year it was more about trials, but now we’re basically at full commercial rollout. In Turkey we have partnered with Avea, the largest operator with over 30 million subscribers. In the UK, MasterCard, Barclaycard and Orange launched a mobile payment solution just a few months ago, and in the US we have partnered with Google Wallet alongside Citibank. There’s still a long way to go by all means, but I think the interesting thing now is that all those stakeholders, be it mobile manufacturers, be it MNOs, be it banks, are all looking at mobile payments as a pure commercial proposition.

¤ How you differentiate yourselves from rival services such as Visa’s? 
There are some small differences, but the point here is that the customer never sees those differences. If they tap their phone or their card on a terminal, that payment will take place. So the differentiation is I think about the partnerships we have. It’s about the programs and solutions, the products we have and how we actually target those in specific markets. Every region has a different strategy. In Latin America, there are not that many smartphone handsets. There are a lot of under-banked or underserved populations. The mobile space can provide them with the capability to do remote payments and move money just with a mobile phone.

It’s not just about focusing on the smartphone market. It’s fair to say that at least half of the world [population] doesn’t have a smartphone. So it’s not just a question of smartphone capabilities. Over 80% of transactions today still take place via cash. All those things are important to take into consideration.

¤ Is there more to mobile payments than paying for goods on a phone?
Absolutely. The phone is not just a form factor. The phone is about the experience of shopping and being involved in the whole payment process. It’s about cash replacement and providing flexibility. Someone asked me once what’s the difference between a card and a phone and I think it’s the difference between paying and buying. That the buying experience could be so much more interesting for our consumer, whereas the paying, arguably, is one of those last things they’ll do or last things they want to do. The phone also plays a big role in engaging with the customer or providing things like location-based services, or coupons, loyalty, those kind of things that customers don’t just want to tap but also reasons about why to tap. I think we all have a bizarre relationship with our devices. We pretty much have them on us 24/7. If we look at the speed bumps that we have had so far, one of the key steps is getting devices that make tap-and-go payments, like the Blackberry X device, into the hands of the consumer. Blackberry already has devices with cardless payment capability in them, as does Samsung, HTC and Sony. They’re all releasing smartphone devices that are more attractive to the consumer to buy.

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