MasterCard, is developing some new exciting concepts that, although are not yet available in the marketplace, give us an idea of how MasterCard sees the future of mobile payments and of the role they want to play within the ecosystem.  Let's look at some of those concepts: 

*  Xbox Kinetic prototype:  The idea is to allow consumers to purchase a product on TV by, for example, waving your hands at an icon in the corner of the screen.  Another example, being able to pull up shopping menus at any time using body language such as putting your hand into your mouth in an 'I'm hungry' gesture.  

Although this is only a prototype and it is clear that agreements with TV manufacturers, broadcasters and retailers are required to launch this service, it is a great example of how easy and seamless technology may allow payments to be in the future.

*  QR codes:  QR Codes have become a societal norm within the last several years. Yet, there is untapped potential in the TV world. For example, imagine watching the Home Shopping Network, or just a random commercial, with a QR code in the corner that allows you to order the product being shown (perhaps at a discount) from your phone. Yet, instead of scanning the QR code and being taken to HSN's or the product's website, there is an app - QkR - that processes the entire transaction through your phone, stores it and saves the receipt. Again, just as with the Kinetic prototype, scaryingly easy to shop.

*  Audio cues:  Another way to seamlessly shop while comfortably resting in your favorite armchair is to have your phone listen to the TV to have it pick out any high-frequency codes that an advertiser has embedded into the product. An example showed at MasterCard Labs was of NFL products during a football game. Of the concepts that MasterCard Labs has developed, this one may be the most far-fetched since broadcasters might need to alter their signal to make it work. Not to mention the change in smartphone audio functionality to register this signal. 

*  Pre-paid wristbands:  VIP guests to the 2011 Isle of Wight Festival, held in June, had the opportunity to pay for their purchases with UK's first ever MasterCard PayPass prepaid contactless wristbands.  The feedback received from the users was extremely positive, to the point that the wristbands were the preferred method of payment.  Respondents to a survey said that this solutions was quicker (96%) and easier to use (98%) than credit or debit cards, while a resounding 100% said they’d want to use the PayPass prepaid wristbands again to pay at other festivals, concerts and sporting events.

In addition to this deployment, MasterCard also put terminals in some public areas for faster card payments and integrated them with the main gate access points, to demonstrate another aspect of its technological innovation: access control.  All together, a success for MasterCard in showcasing the benefits of their technology in a real-world setting.

MasterCard's effort to develop mobile technology is not new but, unfortunately, some of the efforts it has launched in the past have not been as successful as they would have hoped.  Again, let's discuss two of those examples: 

*  Mobile Payments Gateway:  MasterCard's Gateway is a turnkey mobile payment processing platform that allows issuers, acquirers, merchants and mobile network operators to  provide customized mobile solutions in developing payments markets by tapping into the MasterCard Worldwide Network, a globally integrated network. As a result, banked and unbanked mobile consumers gain access to a wide range of MasterCard Mobile payments solutions, which provide greater payment convenience and security over cash - using their mobile phone to make purchases, send and receive money between family and friends, transfer funds between accounts, pay bills, deposit funds such as payroll or social benefits, top up mobile airtime, load value to prepaid accounts, get cash from ATMs, and keep track of their balances and activities with mobile alerts.

MasterCard launched this turnkey solution a few years back but, at the moment, only has one customer live on the platform - in Brazil since 2009, the partnership that includes Itau Unibanco, Redecard and mobile network operator Vivo.  Just recently, a new opportunity has developed in the Indonesian market, although whether or not this will develop into an actual deployment in Indonesia and beyond is still not clear.  

*  MobileSend:  This product is MasterCard's response to PayPal for mobile.  The service is relatively similar to that of PayPal with the solution offering peer-to-peer transfers after registering and entering a MasterCard card number to be associated to the transactions.  The user will create an ID and password to access his account and will only be able to exchange funds with other MobileSend users.

Although the service is fast, secure, relatively inexpensive and available via mobile browser, app or text message, it has not gained widespread popularity, probably, in part, because both users - sender and receiver - need to have a MasterCard credit / debit card.  

Nevertheless, the company has learned from these two initiatives and is sure to continue building upon them.  The hiring of Mung-Ki Woo as Group Executive for Mobile, which took place earlier this year, is a sign that things will continue to move in the right direction for MasterCard in this area.  Woo is helping the company further clarify its mission and vision for the mobile future.  What will the story be 12 months from now?

MasterCard approach to mobile commerce and payments seems to be a bit different from the approach taken by Visa and American Express.  There are fewer partnerships, at least in the US, and for the moment, no relevant acquisitions. 

For starters, there isn't a 'MasterCard Wallet' in the US although the company is involved in two major initiatives:   

• Google Wallet:  They were the first to partner with Google - at the moment, only two cards are accepted in Google Wallet:  Citi MasterCard and Google's prepaid card - and this partnership continues to be the main company focus.  Participating in the testing process and then in the national rollout has allowed them to learn a few things around mobile commerce, NFC and consumer adoption such as the need to have a good  locator service and an audio confirmation of the correct download and deployment of the app.  Small things that greatly contribute to consumer experience and, thus, to adoption.  
  
  Their position as single provider will soon change as Discover, Visa and American Express will also be available in the next release of Google Wallet - planned for later this year.  But this is not an issue for MasterCard, in fact, the company understands and supports this development since they also believe that in order for an e-wallet to become widely adopted, it needs to be convenient and actually improve upon our current physical wallets.  Having several e-wallets would reduce the value to the consumer and limit adoption.

• ISIS:  Isis is a joint venture in the United States of AT&T, Verizon Wireless and T-Mobile USA, the top three telecommunications operators, and the credit card companies Vis, MasterCard, Discover and American Express The approach taken by ISIS is fundamentally different to that of Google:  The carriers that are part of Isis will charge banks / credit cards for the network and cell phone space used for mobile payments.  Not only the corresponding data charges – as Sprint does in the Google Wallet solution – but additional, or alternative, fees.  MasterCard, like the other credit card companies, has opted to back both approaches since, from their perspective, the choice should be left to the consumer and they want to be part of whatever solution their customers favour.
  
  The fact that Isis will not launch its first trial until the first half of 2012 - it will take place in Salk Lake City, Utah, and Austin, Texas - will allow MasterCard to apply the knowledge acquired while working with Google to make this deployment easier and smoother for themselves.

Outside of the US, MasterCard has been involved in a number of initiatives in markets as diverse as Canada, the UK, Turkey and India.  Some of these initiatives have been large-scale trials that may not yet have developed into full-fledge commercial products - for example in Canada or India - while some other - the most notable case being the UK - are now services available at a national level.  Let's look in more detail at a few of these initiatives: 

• United Kingdom - Partnership with Everything Everywhere (a merger of Orange and T-Mobile)  and Barclaycard:  As early as May of this year, consumers across the UK could use the Samsung Tocco ‘Quick Tap’ to 'wave and pay' for purchases of up to £15 with active PayPass payment systems.  The partners chose to use a sim card-based level of security, a different model than the 'secure element' implementation preferred in the US.  It is true that the limit in the amount to be paid (£15 is aprox. $23) and in the choices of phones available - the Samsung Tocco is a fairly simple phone - may be a drawback to some potential users but this is the first step and, Mastercard, is taking a key role in making it happen.  

• India - Partnership with Vodafone and Citibank:  This was the first large-scale trial launched in India.  It started in June 2009, reaching over 3,000 customers and involving the 250 retailers that accepted PayPass for the 6-month duration of the trial.  Over 43,000 transactions were recorded (an average of 14 transactions per user).  Considering that there was a financial incentive to use the mobile payment application over 12 times, it could seem that the main reason for usage was financial benefit rather than convenience or interest for the technology.  However, it is also true that users that participated in the trial and that also had Citi card, steeped up the use of the latter ones with retailers that did not have PayPass.  Possibly proving that, easier methods of payment will be well received in developing markets even though adoption may be slow and need to include education and incentives.
  
  Possibly, this first foray into mobile payments in India gave MasterCard a good platform from where to jump into other opportunities within emerging markets such as the two that are presented below.

• Tanzania, UAE and other countries in Asia, Middle East and Africa - Partnership with Etisalat:  Etisalat, in partnership with MasterCard and Oberthur Technologies, launched the fist mobile payment system in Tanzania back in July with zPesa.  The company plans to roll out different flavors of this system, with the same partners, across 18 countries in Asia, Middle East and Africa, including UAE before the end of the year if government regulatory approval is achieved.  It is still too early to say whether this business will be a success but it clearly highlights MasterCard commitment to the development of mobile payments in developing economies.

• Kenya and across Africa - Partnership with Airtel:  In partnership with Standard Chartered and Airtel - Airtel Wallet and Airtel Mobile Money, Mastercard is launching a service that allows on-line purchases from your mobile phone using a 24-digit number uniquely assigned to a customer for a specific transaction.  The purpose, once again, is to empower the large number of mobile users across Africa to purchase goods more easily.
  

There are also other opportunities that, although have not yet crystallized, could turn out to be great wins for MasterCard including possible deployment of MasterCard Mobile Payment Gateway in Indonesia - the company already has the blessing of the Central Bank but needs to get banks and telcos on board - and testing of in-flight contactless technology with GuestLogix - with cards and NFC technology to achieve real-time online card authorization and reduce fraud. 

Clearly Mastercard is working hard to further promote and leverage PayPass, its contactless payments system, which is already widely used across the world.  It is only reasonable to assume that the company will use this infrastructure to move ahead with NFC as the next wave of contactless payments. 

Next week we will discuss some of the other initiatives where Mastercard is involved, focusing on their R&D activities around the QkR app, motion with Xbox, sound and QRs in ads.