MasterCard (NYSE: MA) is the latest contender to jump into the ever escalating payment app wars.
The credit and debit card giant is now offering MasterPass a digital wallet similar to Apple Pay. A press release claims that MasterPass will be available at five million merchants in 77 countries or 33 markets. If that is true, MasterPass is the most widely available payment App in the world.
The MasterPass website states that instore is coming soon and does not list any US brick and mortar retailers that take the app. That conflicts with a MasterCard press release that states Office Depot (NASDAQ: ODP) and BJ’s Wholesale Club will take the app.
MasterPass will also be available through a number of retailers’ apps; including Lord and Taylor, Jet Blue, Saks Fifth Avenue, Subway and the Cheesecake Factory. The website does not say when the solution will be available in the brick and mortar stores. Bass Pro Shops, Budget Rent a Car, Avis Rent a Car, Gilt, Broadway.com, Burger King, Neiman Marcus, CheapoAir, Golfsmith, Newegg, Major League Baseball, and 1-800 flowers are mentioned at the MasterPass website.
The contactless payment solution will be first rolled out on Alphabet’s Android in the US, then made available in other nations. According a press release more than 80 million MasterCard accounts will be automatically enabled for the solution. The press release did not say when MasterPass for Apple will be available.
Supported by the Big Banks
MasterPass is supported by the following banks: Aly Bank, Associated Bank, Bank of America (NYSE: BAC), Bank of the West, Capital One, BMO Harris Bank, Citi, Fifth Third Bank, Central Bank, First Hawaiian Bank, First Tech Federal Credit Union, KeyBank, People’s United Bank, Security Services Federal Credit Union, Sun Trust and Virginia Credit Union.
MasterPass looks like a serious contender in the payment wars that has a few advantages over Apple Pay. A big one is the existing MasterCard payment network. One critical step the company has done is to get the big monster banks including BOA and Citi (NYSE: C) onboard. Notably missing is Chase which is pushing its own Chase Pay solution.
A next step will be to integrate the app with other solutions like Walmart Pay, PayPal and Chase Pay. One interesting development will be to see if it will work with PayPal’s popular credit cards. Another interesting aspect to this is to see if Masterpass will ever be accepted by Amazon (NASDAQ: AMZN). That might be critical to its success in today’s world.
The appearance of Masterpass will certainly put pressure on competitors like Visa (NYSE: V) and American Express (NYSE: AXP) to roll out payment apps of their own. It’ll also help existing solutions like Android Pay and Apple Pay, by giving merchants more incentive to accept them.
There are some initial advantages to MasterPass including the ability to rent cars with it, something that is not available with Apple Pay. There are some notable absences including no gas stations or vending machines which I think will be some of the biggest markets for payment apps.
Another fascinating question is whether users will be able to get cash from Bank of America ATMs with Masterpass; Android Pay users in San Francisco now that have capability. A more interesting question is whether Masterpass will work with Bitcoin.
The advent of MasterPass proves how quickly the worlds of finance and technology are coming together. Fintech organizations like PayPal (NASDAQ: PYPL) are slowly evolving into payment processors, meanwhile payment processors like MasterCard and banks like JPMorgan Chase (NYSE: JPM) are gradually becoming Fintech organizations. Even some retailers like Walmart (NYSE: WMT) are slowly taking on the attributes of both Fintech and payment processing companies.
One has to wonder how long before every credit company and bank is offering its own payment app. The day is coming when brick and mortar banking will be a quaint memory.