MasterCard moves towards MasterPass tokenization

MasterCard is to incorporate tokenization technology into its MasterPass digital wallet in the near future, CEO Ajay Banga has told analysts during the payment network’s 2014 year end earnings call.

MasterCard CEO Ajay Banga
BANGA: “We are very focused on tokenization; it’s a very important aspect of where we’re going for safety and security”

“We are very focused on tokenization; it’s a very important aspect of where we’re going for safety and security,” Banga explained. “Apple Pay was the first version of that to come out. We’re putting it into MasterPass, just regular MasterPass, over the next period of time.”

“Let me put it that way, so I don’t give you information that’s beyond what is likely. You’ll see, in a year or two’s time, tokenization will become kind of fiddlesticks in the game of ecommerce. That’s the right way to go.”

“If you kind of bust it up between in-app, contactless and online browser, contactless is still relatively small in the US, online browsing tends to be the large amount,” Banga continued. “My sense is you’re going to get NFC growing decently, particularly with terminalisation and I believe terminalisation will happen with all the EMV and chip migration as well as the fact our new terminals are coming contactless-equipped.

“So, you’re probably seeing a two or three-year cycle of a fairly dramatic increase in contactless-equipped terminals in the United States. That’s already happening by the way in Australia and Canada, Turkey and some other countries. But the US, which is the large one, I think you’ll see that.

“You’ll get a lot of efforts made around improving the use of easy-use checkout wallets, whether it be MasterPass or Visa’s offering or PayPal or other such offerings. And, I think you’ll get all of those getting a degree of capabilities built with tokenization, just making it safer and safer over the next few quarters.

“So, we’re all working on similar things and I don’t think you should read too much into a quarter here or a quarter there. These things are slow burns. You saw Apple Pay talk about their mobile payment growth and, at the end of the day, yes, they’ve done a great job and it’s excited the market but it’s still a very small percentage of what the total number of transactions are. So, I would take all this in that context, and not run to the races with more than that.”

“The big picture here is we are trying to expand our presence in the payments value chain, not just in being in the clearing, authorisation and settlement business but everything before, during and after a transaction,” Banga added.