Hany A. Fam, MasterCard's president for global strategic alliances, on how years of careful construction of the elements of a global mobile payments system are ready to bear fruit.
The industry has been pushing mobile payments of all sorts for more than a decade. Has it finally reached an acceptance tipping point? MasterCard seems to think so. Its recent research found that consumers have moved from questioning whether to use mobile payments to deciding which mobile payments option to use. And that’s just the beginning.
As MasterCard's president for global strategic alliances, Fam is charged with forging partnerships with and developing solutions for large multinational corporations and public organizations. He's held a number of senior positions at MasterCard, including president for the United Kingdom and Ireland markets.
OMM's Susan Kuchinskas asked him why he's so optimistic about the future of mobile payments.
Do you think consumers are really ready to adopt mobile payments? There have been so many failed attempts.
The willingness to use mobile payments has never been higher. Our latest research shows that, in 2013, 81% of social media conversations related to mobile payments were driven by adopters, versus 32% in 2012. The handset manufacturers have made their interfaces and devices user-friendly, not just for payments but for digital convergence overall. Consumers want these devices in their lives, and they want them all to talk to each other. The consumer expectation is that they are able to interact and transact across multiple channels. It's broader than just payments.
MasterCard says it is building "the operating system of digital commerce." What does that mean?
We're not just fixated on how you shove the number on the credit card onto a mobile device, that's so not it. It's about creating an OS that all players in the value chain can embrace. It means bringing all the pieces together in such a way that consumers don't have to connect the individual pieces themselves. We believe that, in the very near term, every digital device will become a commerce device, but consumers don't want to see the plumbing behind it.
Are all those pieces there, or do some still need to be built?
We've been involved in this for a long time. We wrote the standard for NFC (near field communication), and we have more than 30 mobile partnerships around the world. We have the fastest globally consistent payment network in the world. You need to be able to say [that] these things will work anywhere on the planet. Next, any device that connects to the MasterCard network connects through a consistent API. That's not a small achievement.
The third, very big area is security. Can this device handle a secure token or credential and pass that to the network? That's heavy lifting, and something consumers don't give you credit for. But, in the scheme of the operating system for digital commerce, those things are important. We have all those pieces globally today. The last part is protecting the consumer and their credentials, so we're not passing around live numbers through the system. We're passing unique tokens.
On the other side of the equation is the ability of merchants to accept these transactions. We expect to see a significant number of new acceptance locations, not only physical stores but also service providers like your plumber and in-app purchasing. Our open API lets anyone developing an app to … accept payments through a mobile device.
We also are working to overlay value-added capabilities, including our ability to prevent fraud through a slew of safety and security initiatives, including our partnership with Syniverse. MasterCard has a global exclusive partnership with Parkeon, and we're working on making parking meters talk to your device and to your car.
We are also working with leaders in transit systems to change the way consumers get on trains by allowing your digital device to intelligently know whether you've opted in to paying with it. We're hearing from cities, 'If you've got parking, transit and geolocation, can you do these other things, so we end up with a smart city program?'
So the operating system for digital commerce is not isolated apps. We're talking about getting seamless interoperability going between apps and what you're trying to do.
You've partnered with network operators in Europe to enable contactless mobile payments and mobile wallets. Do you have to get this done country by country?
We've gone player by player, getting stuff going, taking things live. The partnership with Syniverse is one of a new breed. Syniverse connects to 1,000 mobile network operators around the world. MasterCard already connects to financial institutions, retailers and others. Once we've built the bridge between us, we are able to enable players through a single connection to us to be able to do all these things. Then, you don't have to go one by one and country by country. We'll be able to say to a global retailer or telco, 'Through one connection, you can reach the world.'
Can you give us a use case for this?
We've identified a dozen or so. One example is an opt-in service for consumers that lets them protect themselves from fraud while traveling. Syniverse handles roaming settlement for network operators around the world, touching five billion mobile devices. So, when you turn on your phone, it knows where you are. We can triangulate that with a merchant to see whether the transaction and the phone are in the same location. If they are, this is probably a legitimate transaction.
In another example, we all worry about turning on data on our phones when we travel abroad. With MasterCard and Syniverse, you could get a pre-bundled package … offered by us on behalf of the phone companies. You'll be able to say yes and pay for it instantly, for example, through our MasterPass service.
What are the barriers you see to implementing this vision?
This year versus last year, I'm much less worried about consumer education and adoption. Using mobile payments is very intuitive. We will always continue to work on global common standards. There are a lot of standards, like near field communication or MasterPass. But we need to work on bringing them together so they'll be a standard on the phone.
How do we continue to establish standards for handling fraud and security, so that, whether you are a bank or a telco, you can confidently offer a service and know it will work the same way anywhere in the world?
Finally, we've made our API available to anyone who wants it to enable payments in their apps. MasterPass can store credentials from any brand, not just MasterCard. We'll continue to educate and inform them to make sure there is consistent adoption of APIs among app developers.
Susan Kuchinskas is a regular contributor to Open Mobile Media.
For all the latest mobile trends, check out Mobile Payments and VAS Europe on May 6-7 in London, The Open Mobile Summit on May 19-20 in London, Telematics Detroit 2014 on June 4-5 in Novi, Michigan, Wallet Wars USA on June 19-20 in New York, Mobile Enterprise Summit USA 2014 on Sept. 23-24 in San Francisco, Connected Healthcare 2014 in October in San Diego and The Open Mobile Summit and Appcelerate in November in San Francisco.