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MasterPass, Digital Wallet Solutions at Your Fingertips


By Phil Loyd

NEW YORK (MainStreet) --If you're angling to say goodbye to bulgy old billfolds forever and hello to the digital wallet, you have yet another option in MasterPass, the new digital wallet service from Mastercard.

MasterCard officially debuted MasterPass at the Mobile World Congress in Barcelona, where the company announced that it will be partnering-up with global telecommunications service VimpleCom and VeriFone, the global leader in secure electronic payment solutions. This is an example of an old-school plastic company getting in on the ground level of the future.

MasterPass puts the power of convenience right in the palm of your hand by turning your smartphone into a digital wallet. All it takes to get started is downloading one simple app. While shopping, simply scan the barcode on your items with your phone, then place them into your shopping cart. When you're ready to check out just tap the "BUY WITH MasterPass" button right there on your touchscreen, and you're done. Say goodbye to long lines forever.

"Every device is becoming a shopping device," says Ed McLaughlin, chief emerging payments officer at MasterCard. "MasterPass brings together all of the ways we pay for things, from traditional plastic cards to digital wallets, and gives consumers the ability to make a payment from wherever they are and with one simple experience."

While this is all great news for the consumer, what does it mean for merchants?

For brick-and-mortar retailers, it means a faster, more pleasant shopping experience for their customers and a way to compete for convenience with online merchants. Once shoppers find out a store has no long checkout lines, at least not for them, they'll be beating down the doors to get in--at least that's the theory.

"The convergence of the physical and digital worlds is increasingly offering more payment and commercial options along with increased consumer choice and greater convenience," says Hany Fam, president of strategic alliances at MasterCard Europe.

The new service also has its online shopping advantages, too. For e-commerce vendors it means a faster, more secure experience for the customer. Since the customer's information is already stored at MasterCard, all it takes is the touch of a button. MasterPass works from any smartphone or tablet, even that clunky old computer. "We want to let consumers choose their own device, and we've built the platform to enable that," says Ed Olebe, SVP & group head at MasterCard Worldwide.

For MasterCard, the new service means increased transactions as consumers find it faster and more convenient than paying with check, plastic or even cash. This advent to MasterCard's repertoire means a greater share of every electronic payment for the company, whether the customer is using an actual MasterCard or not, because MasterPass accepts all cards: Visa, American Express, and Discover, too.

The digital wallet industry is still a fledgling one, but more and more consumers are becoming aware of its presence in the marketplace. A recent comScore survey showed that while 72% of consumers are aware of digital wallet services like PayPal, but only 13% so far have heard of MasterPass. That awareness could grow soon: MasterPass will be available at more than 5,900 merchants worldwide, according to the company. MasterCard says it is currently ramping up MasterPass access to consumers in Australia and Canada. Availability in the United States and the UK will soon follow, with worldwide access to begin later in 2013.

MasterPass supports technologies like NFC, Near Field Communication, and QR, Quick Response. NFC mobile transactions are already a booming industry and are expected to reach $74 billion globally by the year 2015. 85% of all terminals are expected to take non-cash payments by 2016, according to Jupiter Research.

For Q4 2012, MasterCard says it beat Wall Street estimates, reporting a net income increase of 18% to $605 million, or $4.86 per diluted share, up from $514 million, or $4.03, the year prior. Average estimates came in at around $4.80.

For the Q1 2013, ending April 30, analysts estimate earnings of $6.18 per share. Annual estimates are $25.42 for 2013 and $30.21 for 2014, this as MasterCard continues its expansion into international markets with its digital wallet foray.

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