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Everything You Need to Know About Masterpass

Ben Luthi

Masterpass is a digital payment service that allows debit, credit and prepaid card holders to pay securely and quickly, whether you're shopping online or in-app. You don't even need a Mastercard debit or credit card to register. Masterpass can also be used with Visa, American Express, Discover and other card types. Thousands of online retailers accept Masterpass.

How Masterpass Works

You can store all of your payment and shipping information in one secure location with Masterpass.

The service uses the same technology as digital wallets like Apple Pay and Google Pay to secure your credit card information, says Georgia Weidman, founder and CEO of security consulting firm Bulb Security and instructor in applied computing at Tulane University. "It adds a digital identity wallet for online transactions to minimize passwords and storing names, addresses and credit card information with countless stores."

Ralph Dangelmaier, CEO of BlueSnap, an e-commerce payment service provider, says, "Masterpass offers EMV-like security across digital channels using the power of network tokenization that protects the consumer's real card details for unsurpassed fraud protection."

Tokenization replaces your card number with a unique 16-digit number. That way, if a hacker manages to eavesdrop on an online transaction or steal payment information in a data breach, they won't get your original card information.

You can use Masterpass if you have a debit, credit or prepaid card from American Express, Diners Club, Discover, JCB, Mastercard or Visa. If a certain online merchant doesn't accept your card's payment network, however, Masterpass doesn't change that.

Whether you're using the service online or in-app, you'll need your password or PIN to authorize each transaction.

[Read: Best Rewards Credit Cards.]

Benefits of Using Masterpass

The primary benefits of using the digital payment service include convenience, security and a chance to get special incentives when you shop.

Convenience. Because Masterpass stores all of your card and shipping information in one place, you don't need to carry all of your cards everywhere you go. "The main benefit of Masterpass, as well as other digital wallets," says Dangelmaier, "is that the shopper doesn't have to manually reenter any billing, shipping or payment details every time they want to make a purchase."

Keep in mind, though, that not all online retailers offer Masterpass during checkout.

Security. There's no way to prevent identity theft completely, but Masterpass makes it difficult for fraudsters to get their hands on your payment information.

When you register your card with Masterpass, the card number is not stored with online retailers. So if someone takes over your account or your login information is stolen in a data breach, thieves won't be able to use your card to make purchases.

Masterpass also requires a password or PIN every time you use it. A thief can't use cards in the app for payments unless they know your password or PIN. "That's good and arguably somewhat better than some credit cards," says Weidman.

Finally, each purchase includes a randomly generated number unique to that specific transaction, making it impossible for thieves who gain access to transaction data to use the number again.

Incentives. Masterpass users can receive special offers from some of the retailers that accept the payment service. These offers are on top of the credit card rewards you might already earn when making the purchase.

What to Consider Before Signing Up for Masterpass

While there are some clear benefits of using Masterpass, it might not be the best fit for everyone.

You'll still need to be on your guard. The service itself provides excellent security. But if you're not careful, fraudsters can still gain access to and use it to make unauthorized transactions.

To protect your information, create a unique password for the service. If you use the same password as you do for everything else and there's a data breach with another site where you have an account, hackers may be able to gain access to your Masterpass account, too.

The same goes for your phone. Try to use a different PIN for Masterpass than you do to unlock the device.

It doesn't work for in-store purchases. Other digital wallets like Apple Pay, Google Pay and Samsung Pay offer the same secure experience for online and in-app purchases, as well as for in-store purchases. If you want to use the same service for all three points of sale, one of those may be a better fit for your needs.

[Read: Best Cash Back Credit Cards.]

How to Register for Masterpass

If you want to register for the digital payment service, you can do so online. Start by visiting the Masterpass website and click on the sign-up link in the top right corner of the page.

You'll need to provide your name, phone number, email address and physical address, and create a password. You'll also add your first card during the registration process. Note that if you have a card with one of Mastercard's partners, you may be redirected to your bank or credit union's website to complete the sign-up.

How to Use Masterpass

The service is relatively easy to use, whether you're shopping online or in a retailer's app. However, it works a little bit differently with each type of use.

Online. If you're shopping on a participating retailer's website, you'll have the option to choose Masterpass during the checkout stage. Click on the Masterpass button, then enter your email address and password.

Because the service already has your card information and shipping address, you don't need to enter it again. Double-check the information, then complete your purchase.

In-app. If the app accepts Masterpass, click on the Masterpass button at checkout. You'll need to provide your PIN or password, then verify the card information and submit the payment.

[Read: Best Starter Credit Cards for Building Credit.]

Is Masterpass Right for You?

Masterpass provides both convenience and security when using your credit, debit or prepaid card to shop. But the limitations of not having a tap-and-pay feature for in-store purchases can be an obstacle for some.

If you'd rather use a mobile wallet that allows you to pay securely online, in-app and in physical stores, Apple Pay, Google Pay or Samsung Pay may be a better option. According to Dangelmaier, these payment services are more popular among both businesses and consumers.

If you have a Chase credit card, you can also use Chase Pay. Visa Checkout and Amex Express Checkout are also options if you prefer to use a digital payment service for online purchases only.

As you consider which service is best for you, consider trying a few out to get a feel of which one you like best. But don't forget that while digital wallets can help keep your card information secure, it's still your responsibility to do whatever you can to prevent fraud.

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