MasterCard unveils secure-payment prototypes for 2016 delivery

Matt Hamblen

"This is still early days for this Internet of Things market and something that will take time to manifest itself," McKee added. "MasterCard's announcement is an indication of where things are headed, with the inventions less around mobile phones and more around connected [device] commerce."

Visa also has its own Visa Token service in the works and is expected to have its own announcement soon with a variety of partners, somewhat similar to MasterCard, McKee said.

Patrick Moorhead, an analyst at Moor Insights & Research, said a bank stands to gain financially by having its credit card applied to a variety of different wearables or objects. "Card providers want consumers to use their card first" before competitors on a variety of devices, he said.

MasterCard didn't give a formal name to the program behind its prototypes announced on Monday, but called the program an extension of its Digital Enablement Service and its Digital Enablement Express program.

Because of MasterCard’s Digital Enablement Service, about 100 banks have aligned with MasterCard’s technology to allow any device maker to create a product to provide secure NFC payments, said James Anderson, MasterCard’s group executive for platforms in emerging payments.

That means hundreds of millions of MasterCards worldwide will work with a device, Anderson said in an interview. "With that connectivity in place, device manufacturers can get going quickly, with products introduced in 2016. You’ll see a lot of activity in 2017."

Reaction to Chase Pay announcement

Also on Monday, JP Morgan Chase launched its own smartphone payment platform that will rely on using barcodes, instead of NFC.

Chase has partnered with 40 major retailers in the CurrentC payment system, finally expected to launch in mid-2016. The system will provide an app connected to a credit card to display a barcode on a customer's smartphone display, which is read by a retailer's payment terminal.

CurrentC and Chase view the barcode approach as easier to implement for merchants and compatible with more smartphones than Apple Pay, Android Pay and even Samsung Pay.

McKee said it is a big advantage for CurrentC to work with established card issuer Chase. But he also called using QR codes "kind of clunky and almost a step backwards." It would probably be difficult to put a readable QR code on a small wristband display and impossible to use a QR code with a ring or another device with no display, he noted.

The fact that Chase is working with CurrentC and Capital One is working separately with MasterCard are signs that "banks are trying to regain control" over mobile payment technology advances, wresting away control from Apple and Google and others, McKee added.

"Banks don't want to be the dumb pipes and are really trying to reposition themselves in mobile and don't want to be trapped in a third-party container like Apple Pay," McKee said.

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