MasterCard Gives Sneak Peek Into Mobile Payments Future
MasterCard on Thursday gave a sneak peek into the near future of mobile payment systems and said that the Google Wallet application is within weeks of being rolled out commercially.
Google Wallet, announced in May, lets mobile phone users pay for purchases in stores by tapping their phones against point-of-sale terminals. At the tail end of a media and analyst day in New York, MasterCard demonstrated the application as well as other, future mobile payments systems.
Initially, Google Wallet will work only on Nexus S phones, made by Samsung, on the Sprint network. Nexus S phones now on the market incorporate Near Field Communication (NFC) technology on an embedded chip, which allows for payment information to be transmitted via the tapping technique.
Google Wallet will work on PayPass terminals already deployed in stores, though some of the terminals will need an upgrade to work with the applications, according to officials at the demonstration. In the U.S., there are about 150,000 retail locations equipped with PayPass terminals, according to Kathleen Reilly, vice president and senior business leader at MasterCard, who said the Google Wallet application will be rolled out "within weeks."
How It Works
Up to now, the PayPass terminals have worked with NFC chips embedded in cards or special stickers placed on the outside of mobile devices. However, chips embedded in mobile phones offer big advantages, according to Mario Shiliaski, senior vice president of Innovative Platforms.
"A big advantage is that the chips are embedded in secure elements in the hardware, and if they are compromised they are designed to self-destruct," Shiliaski said.
In addition, there will be a range of complementary applications for the technology that users will be able to download, Shiliaski noted. Google Wallets will initially offer the ability to store electronic coupons that can be redeemed at retail outlets, he said. Later this year, MasterCard's inControl will be available for download, he added. InControl is designed to let parents or employers establish parameters for when, where and how their cards are used. Users will get text messages, for example, when certain limits are met.
Major retailers including Macy's, Walgreens, Subway, Noah's Bagels, American Eagle, Bloomingdale's, Peet's Coffee and Toys 'R' Us have signed up to work with Google Wallet.
MasterCard also opened the kimono on a number of projects cooked up by the MasterCard Labs, established after the financial services giant acquired Dublin-based OrbisComm in 2009.
The projects demonstrated Thursday focused on the company's QkR platform, technology that embraces motion and audio signals as well as touch to allow for a range of applications. One application demonstrated Thursday allowed a phone user to scan a rebate coupon and share it via Facebook or Twitter.
"This allows for a different type of viral marketing, where people using this technology and sharing information with friends can get additional rebates," said Garry Lyons, chief innovation officer at MasterCard.
The social-network sharing technology is working now in a pilot with more than a hundred users, Lyons said. A more futuristic application involves audio signal technology. In one demonstration, audio signals embedded in a TV commercial were detected by a mobile phone application that a person could then use to download coupons related to the advertisement.
QkR technology goes beyond mobile phones, however. Lyons showed off one application where users could input payment information via the Xbox Kinect, using gesture recognition to select items and go through a checkout process.
Though some of the applications demonstrated by MasterCard are not likely to be rolled out any time soon, the company is looking to officially announce details related to the technology soon, possibly over the next few weeks, officials said.
The QkR platform, with its range of input capabilities, is a good hedge to the NFC-oriented Google Wallet application. NFC will have plenty of competition, including a PayPal mobile payment initiative announced Thursday that works by having mobile devices scan product bar codes and authorize payments through PayPal mobile accounts.