Meet MasterCard’s ‘CHIEF’ of Emerging Payments… :: THESMARTSENSE.COM

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Meet MasterCard’s ‘CHIEF’ of Emerging Payments…

The emergence of mobile payments has been the talk of town. This innovation-driven phenomenon is slowly striking traction as it prepares for more roll-outs. Share the views of Ed McLaughlin, Chief Emerging Payments Officer of MasterCard as he unfolds the forthcoming payment trends.

Cover Personality: Ed McLaughlin

Designation: Chief Emerging Payments Officer

Company: MasterCard Worldwide

The SMART Sense: Brief us on your career path to MasterCard. What led you to your current position?

Ed: My career is rooted in the technology and financial services industries. I came to MasterCard from Metavante, a U.S. financial services company, where I was responsible for Product and Strategy for the Payments Group. In 2002, Metavante acquired Paytrust, a venture-backed online bill payment company where I was the CEO and a Co-Founder. Prior to Paytrust, I served as the Executive Vice President of Product and Marketing at LogicWorks, Inc., a data modeling software company. LogicWorks issued its initial public offering on the NASDAQ exchange in 1995.

I joined MasterCard in 2005 in the Global Product organization, and subsequently served as the Group Executive for Franchise Development, responsible for global rules, licensing and compliance before taking on the Emerging Payments role.

The SMART Sense: In MasterCard, what exactly is under your command?

Ed: As MasterCard’s Chief Emerging Payments Officer, I am responsible for leading the worldwide development and commercialization of platforms and solutions that deliver innovative new consumer experiences, in order to create a sustainable competitive advantage for MasterCard, our partners and our customers. At MasterCard, the “Emerging Payments” area consists of MasterCard’s products and initiatives in the areas of e-Commerce, Mobile, Transit, PayPass/NFC, EMV Chip, Bill Payment, Payment Gateways, MoneySend and inControl, along with our Mobile Payment Solutions and Telefonica joint ventures.

The SMART Sense: As Chief Emerging Payments Officer of MasterCard, what would you deem as “emerging payments” that we can expect in the near future?

Ed: We see lots of opportunities in the payments space, especially with the ongoing activity and developments in mobile payments. We expect to see great things in 2011 – now that the mobile phone is becoming a device that can be used to make purchases as well as a sophisticated tool for searching, shopping, loyalty and personal finance applications. We are envisioning that in the future, a mobile phone could even replace the traditional wallet and payment cards. At MasterCard, we are excited about all of the enthusiasm, interest and momentum in mobile payments – and NFC payments in particular. The latest news around NFC technology continues to show the progress that is being made to enable mobile contactless payments around the world, with MasterCard PayPass leading the way in retail, transit and other locations.

Citi MasterCard Payment Tag

At MasterCard, we’re also focused in enhancing consumers’ e-Commerce experience and bringing that experience to the mobile device. Recently, we launched the ability with airtel Africa and Standard Chartered Bank to link the mobile accounts of subscribers in Africa to a virtual MasterCard account number to complete e-Commerce transactions – creating new opportunities for financial inclusion in that part of the world. This innovation was recognized at the recent GSMA World Congress as the “Mobile Money Product or Solution” of the year, and is just one example of how MasterCard is bringing together financial and telecom partners to create unique consumer value.

Another area of interest is cardholder controls and the development of technologies that empower consumers to personalize their experience and determine how their cards are used. We launched inControl which enables consumers to establish how, when and where their cards are used. The potential for this is enormous: parents could give their child a card with inControl before he or she goes off to college, setting it to be used for books and the necessities, and not at the bar or the pizza place. It can also be programmed to help you manage your spend on specific categories – like send you an alert when you are about to go over your Starbucks allotment for the month.

Our inControl capabilities are also very compelling for small business and corporate applications, for example; allowing individual employee spending limits and authorized purchase categories to be adjusted in real-time by the business owner or controller, creating virtual numbers that can only be authorized for up to a certain amount for a specific supplier, and receiving real-time notifications of purchasing card usage. These capabilities turn traditional purchasing cards into dynamic spending control devices, fundamental increasing their utility.

The SMART Sense: What role does MasterCard play in the mobile payment realm? What value can MasterCard bring to the table?

Ed: Since 2003, we have been actively involved in driving mobile payments forward and today remain on the cutting edge. We were an early pioneer of proponent of contactless payments with PayPass and NFC technology, which is at the heart of today’s discussions on mobile payment. As a result, MasterCard PayPass is already accepted at hundreds of thousands of contactless payment terminals around the world – which we are leveraging for mobile payment programs around the world.

MasterCard brings a unique advantage to any entity wanting to develop real mobile payment solutions. We operate the world’s fastest, most intelligent payment processing network, which is crucially important, because we can help ensure that the handling and processing of mobile payments is always secure, reliable and consistent for consumers and merchants.

The SMART Sense: Tell us more about MasterCard’s history and experience in developing NFC and other contactless payment technologies.

Ed: We have a long history of successfully bringing together key parties and enabling them to work together seamlessly on a single platform, like we did with the first contactless payments and MasterCard PayPass. In addition, we continue to be a champion of global mobile payment standards, through our continued support of the Mobile Payments Forum and the NFC Forum to ensure that as mobile phones move more to the center of commerce that there will be open standards, supported by all members of the value chain, and all parties to the transaction.

MasterCard PayPass - Terminal

The SMART Sense: What is your take on “mobile wallets”? Will it ever gain full traction?

Ed: I am very excited about the potential of mobile wallets, and this year we will begin to see real consumer adoption – especially among the early-adopter crowd, as new devices come out with true payments functionality. However, I think it will get “full traction” when it offers fundamental advantages for the consumer over other, current forms of payment and form factors. Equally as important are the merchants. They will need to see the value and potential of mobile wallets so that they will have the incentive to do their part in investing in the acceptance infrastructure and preparing to receive the advantages of doing so.

The SMART Sense: The widespread deployment of mobile payment solutions is taking much longer than expected. Why is this so?

Ed: One reason this might be happening is because of all the different business models involved. Telecommunications carriers, the handset manufacturers, merchants, banks and payments companies like us each have a special relevance, and we’re still finding the best ways to work with each other. There must be a balance where all participants driving the evolution of mobile payments must see the value from in working together seamlessly from a business standpoint.

The SMART Sense: Consumers are still in doubt of the security surrounding mobile payments. How would you address this lack of confidence?

Ed: Mobile payment security is a crucial issue and one that we are making a top priority. Just as in the early days of e-Commerce, consumers will have questions and concerns about security that need to be addressed. We feel that the security concerns and challenges can be overcome with industry collaboration as well as consumer education to raise the comfort level for everyone. It will be very important for consumers to understand that mobile payments, properly deployed, are much more secure than traditional magnetic-stripe-initiated transactions. By harnessing cryptology capabilities enabled by the handset and the PayPass protocols, each transaction can have a unique dynamic component to ensure authenticity and prevent duplication.

The SMART Sense: Share with us some of the highlights of existing mobile payment projects that MasterCard is involved in.

Ed: Today, MasterCard is working with major telecommunication carries around the world and is involved in more than 20 different efforts globally – here are a few recent examples:

Barclaycard and Orange are collaborating in “Everything Everywhere” to roll out the U.K.'s first commercial contactless mobile payments service. We’re proud to be an integral part of this program – payments will be processed using our groundbreaking PayPass technology.
We recently announced a joint venture with Telefonica to provide mobile financial solutions in 12 Latin American markets which will bring together MasterCard's payment expertise with Telefonica's mobile expertise – connecting 87 million customers, many of whom do not have access to financial services. It will provide them with mobile payment services to transfer money, reload mobile air time, pay bills, and make retail purchases.
Our Mobile Payments Solutions joint venture with Smart Hub Inc, is deployed in Brazil, providing a bridge between telecom providers and the open financial networks. Using MPS, consumers can now initiate SMS-based MasterCard Mobile payments to merchants who have no other infrastructure than a standard handset, using their MasterCard account.
And as I mentioned before, we are working with airtel Africa and Standard Chartered Bank to link the mobile accounts of subscribers in Kenya to a virtual MasterCard account number to complete mobile e-Commerce transactions.

MasterCard PayPass - Tag-On-Phone

The SMART Sense: What are some of the valuable lessons that MasterCard has benefitted from these pilots and trials?

Ed: We are constantly learning from our pilots and programs around the world, many of which are happening in locations where MasterCard can generate real impact and benefits for people we were not able to serve with our traditional offerings. Some of the clear themes that are emerging from our trials include; mobile infrastructure can be an incredibly powerful tool for enabling financial inclusion and extending into new merchant categories, driving consumer value through mobile devices is more than simply replacing the card - it is improving the overall shopping experience, merchants want mobile services to interoperate with their existing investments in acceptance infrastructure, and, like most consumer propositions, “simple wins” – reducing complexity, removing consumer adoption hurdles, and unquestionable reliability are the critical success factors.

The SMART Sense: In a typical mobile payment environment, many players, be it system providers, telecom operators, technology enablers, etc., are involved in such a technical deployment. Who would you identify as the main “mover” in this setting?

Ed: MasterCard has a long history of helping entities like these work together, by developing standards and the processes to create balance, fairness and efficiencies. As mentioned before, with our global payment network MasterCard brings a proven platform to any entity wanting to develop real mobile payment solutions. We can also help to bring about true cooperation and collaboration among all of the players – so everyone, including consumers, can receive the benefits from mobile payments.

The SMART Sense: How important is R&D to MasterCard? How much is reinvested into the development of new payment technologies?

Ed: R&D is extremely important to MasterCard. From our very inception, MasterCard has been rooted in the idea of constantly improving the way consumers and businesses make payments. From the original retail credit cards, through the development of global electronic authorization and settlement networks, to next-generation mobile and e-Commerce applications, we’ve been at the forefront of payments innovation every step of the way. Through it all, MasterCard cardholders have helped us invent the future with us by telling us what they need to make their lives better and easier. This focus on improving consumer lives and building value for our business partners drives a continual investment in R&D.

One way we stay focused on disruptive innovation is through MasterCard Labs – an incubator for payment technology that will allow MasterCard to bring new, leading-edge payment solutions to market faster. MasterCard Labs will tap into the ingenuity of software developers around the globe to help unleash innovation and create the next generation of game-changing payment applications, including: software for online games, merchant e-Commerce websites, mobile applications, and payroll systems.

The SMART Sense: Describe the progress of PayPass. Will this be the next compliance of payment modes?

Ed: MasterCard PayPass technology was designed from the start to support a wide range of payment device types; cards, fobs, tags, watches, handsets, etc... It was specifically designed in anticipation of the mobile payments boom that we’re all experiencing. Today, with PayPass we are opening up new acceptance channels in areas that were once the exclusive domain of cash or closed-loop payment systems. For example, PayPass is working in the world’s busiest commuter hubs to improve the speed, convenience, security and reliability of transit systems by displacing cash and outdated payment methods. With PayPass, commuters always have the exact change they need to speed their trip.

MasterCard PayPass - Watch

In Brazil, we worked with Credicard and Redecard to launch the first contactless payment product for public transportation in Latin America. Powered by PayPass technology, the solution is being used in Rio de Janeiro for mass transit and quick service merchants. In the U.K., MasterCard partnered with RBS WorldPay to roll out “Tap & Go” payment technology in Liverpool on Stagecoach’s 200-strong bus network. And here in the U.S., MasterCard, the New York MTA, PATH, and New Jersey Transit worked together on the acceptance of PayPass for fare payments on select train and bus routes throughout New York City and New Jersey in a six-month open, contactless payments trial. Our MasterCard solution allows turnstile authorization to occur faster than other card transactions.

The SMART Sense: With the emergence of different payment form factors, will the “card” format be obsolete one day?

Ed: I think anything’s possible in the future, but I don’t think we’ll see that ‘one day’ where cards go away completely any time soon. Card payment will continue to be relevant, especially in specific circumstances, for some time. What we do see is more consumer choice and more opportunities to empower the end-user to use new form factors to their own advantage and take control of their personal finances, give them more insight to make intelligent buying decisions.

MasterCard PayPass - KeyFob

The SMART Sense: In your opinion, when would consumers and merchants expect a full scale rollout of mobile payments?

Ed: I think 2011 will be a pivotal year for the development of mobile payments, with more and more programs contributing to the excitement. Full-scale rollout will likely happen in phases, as merchants, banks, the telecom companies, handset manufactures and others continue to collaborate and cooperate to develop and evolve the mobile payments value proposition for consumers.

The SMART Sense: Tell us more about the recent accolade received at the Mobile World Congress.

Ed: airtel Africa, Standard Chartered Bank and MasterCard Worldwide were honoured for mobile payments innovation at the recent Mobile World Congress. The award for the GSMA 2011 Best Mobile Money Product or Solution Award was given for our recently launched virtual card product, which leverages our MasterCard inControl technology to enable people to connect to the global marketplace through their mobile phones. We believe that innovations like the virtual card product will help ensure the long-term growth and sustainability of mobile commerce in Africa.

The SMART Sense: Finally, what can we expect from MasterCard in the next 5 years?

Ed: Today, we are growing commerce and driving efficiencies and expanding acceptance and usage of electronic payments around the world – and in turn providing a safer, more convenient alternative to cash and creating opportunities for financial inclusion. In the next five years, we will continue this focus and continue to innovate in these emerging areas of payment, and deliver solutions that will impact and improve people’s lives. TSS

: MasterCard; Ed; McLaughlin; U.S.; NASDAQ; Metavante; Paytrust; payments; LogicWOrks; emerging; e-Commerce; mobile; transit; PayPass; NFC; contactless; EMV; chip; MoneySend; inControl; Telefonica; airtel; Africa; Standard Chartered; bank; GSMA; Mobile World Congress; Starbucks; terminal; NFC Forum; telecommunications; U.K.; Barclaycard; Orange; Latin America; Smart Hub; MPS; SMS; software; RBS; MTA; PATH; smartcard; Citi; wallet; keyfob


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