MasterCard Inc. (MA.US) is on the go with plans to launch its MasterPass digital wallet in China next month as it tries to cash in on rising demand for mobile payment services, according to the head of the company’s Greater China division.
“We are signing agreements with some customers on this and we should be able to disclose them by the end of the year,” MasterCard Greater China president Ling Hai told the Hong Kong Economic Journal’s EJ Insight.
Ling said talks are still under way with clients but the goal is to roll out payment devices embedded with technology such as near field communication and QR codes.
MasterPass is up and running in the United States, Britain, Canada and Australia, and lets shoppers — whether at home, in a shop or on the street — use any payment card or enabled device to pay for goods via a simpler and speedier virtual checkout that securely stores each shopper’s preferred payment and shipping information.
Alibaba Group affiliate and MasterCard partner Alipay launched a similar service last month.
That was also the month that MasterCard teamed up with rivals Visa Inc. (V.US) and American Express (AXP.US) to work on a new global standard to improve the security of digital payments and streamline shopping on smart devices.
The companies proposed that traditional account numbers for online and mobile transactions be replaced with digital payment “tokens”. The tokens are expected to make the process more secure and relieve merchants, digital wallet operators and others of the need to store account numbers.
Ling said it was early days for the token idea and players needed to work together so that much more could be done on it.
He said the industry also needs to work together to raise awareness on the mainland about electronic payments. In China, 85 percent of purchases are made with cash while e-payments through MasterCard, Visa or China UnionPay account for the rest.
“There are never 100 percent competitors or partnerships, but as we are all serving the industry… my point is, the biggest competitor for us is cash, so we should work together and steal more of cash’s lunch and the industry will grow,” Ling said.
He forecast that the market will be evenly split between cash and electronic payments in three to five years e-commerce continues its expansion.
Spreading the e-payment word
Regulatory limits restrict MasterCard’s mainland activities to cross-border deals but Ling is optimistic that the company can be a player in the domestic market in the short to long term.
He’s also optimistic that the national drive for urbanization and the development of online commerce are great opportunities for the e-payment business in China. “There are still a lot of places on the mainland that don’t take e-payments or cards. They only accept cash because they think that taking cash is free,” he said. “But cash isn’t free. They have to find somebody to guard and count the cash, and there are counterfeits and theft.”
But merchants won’t make the switch unless the industry actively promotes the business advantages of doing so, he said.
Besides providing services for foreign tourists in China, MasterCard also works with China UnionPay on their dual-currency credit card, serving Chinese tourists overseas; other card issuers in the country; and third-party payment platforms such as Alipay and Tenpay. And, as demand rises for mobile payments, telecommunications firms could be the next frontier in terms of MasterCard’s future partners.
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