Juniper interviewed Christophe Zehnacker, Head of Strategic Digital Partnerships, Mastercard, in March 2017
As part of Juniper's Contactless Payments: NFC Handsets, Wearables & Payment Cards 2016-2020 research, MasterCard were interviewed and case studied. The full contactless payment report is available to purchase from our researchstore. It includes 8 unqiue interviews with leading players, OS-Pay market analysis, 5 year forecasts for contactless wallet adoption and an Interactive Scenario Tool with over 15,000 data points.
i. MasterCard Background
Founded in 1966, Mastercard is a technology company in the global payments industry. The company operates an international payments network (the Mastercard Network), facilitating the processing of payments transactions. Mastercard processes these through its network of issuer customers in more than 150 currencies in over 210 countries and territories.
ii. Market Positioning: Contactless
Mastercard launched its contactless cards under the PayPass brand in 2006; the branding was subsequently ended in August 2015. By the end of 2007, there were approximately 20 million PayPass cards in issue worldwide, a number which rose to 88 million by the end of 2010. MasterCard has not disclosed any details since that date.
However, Zehnacker confirmed that Mastercard has seen astonishing growth in contactless payments: ‘Driven by our mandate to enable all POS terminals in Europe to be contactless capable by 2020, we have made great progress over the past 12-24 months, especially in Europe. In 2015, we passed the 1 billion transaction mark for European Mastercard transactions processed by our network; we are in the range of several billions for 2016.’
Zehnacker provided Juniper with the latest data demonstrating Mastercard’s contactless growth:
- On the card enablement side, Mastercard had a contactless presence in 54 countries in Europe by end of 2016, up from 41 in 2015.
- In terms of contactless acceptance, Mastercard had a presence in 50 European countries by the end of 2016, up from 42 in 2015.
- 1 in 4 (25%) Mastercard/Maestro cards issued in 2016 were contactless. The number of contactless cards and devices increased by 16% in Q4 2016 compared to Q4 2015.
- Mastercard also reported an increase in active contactless payment usage, a 96% y-o-y (year-on-year) increase in card usage in 2016.
- Meanwhile, merchant acceptance increased by 69% y-o-y in 2016. Globally, Mastercard has over 6 million merchant locations (not terminals); a large proportion of them are in Europe.
- In terms of contactless transactions, Mastercard reported several billion payment transactions in 2016. The number of transactions grew by 118% y-o-y in Europe, about double that of North America (Canada 60% and US 49%).
- Meanwhile, an increase in the number of active users translated to a 143% y-o-y growth in terms of volume spend. In Europe, the total number of contactless transactions was 23% of all processed transactions.
Mastercard also reported around 80 million active Masterpass enabled consumer wallets in 2016.
In terms of mobile contactless payment, Mastercard is processing tens of millions of contactless transactions. Zehnacker commented: ‘When it comes to mobile and wearables, we are witnessing huge growth in contactless adoption, but not the same level of usage compared to plastic, due to different maturity levels.’
‘A lot of work is happening behind the scenes, with a number of “large” consumer brands expected to launch key wearable products later this year, using MDES (Mastercard Digital Enablement Service), Mastercard’s tokenisation offering,’
In October 2016, FitPay and Mastercard announced a partnership to integrate FitPay’s contactless payment platform with MDES. Mastercard also partners with GM and IBM to bring Mastercard payments to cars.
Mastercard launched MDES in September 2014. Beyond providing access to digital wallets such as Apple Pay, Android Pay, Samsung Pay and IoT devices, the MDES tokenisation solution enables merchants to convert bank card numbers into tokens.
iii. Juniper’s View
Mastercard’s position as a leading global payment network means that it holds a central position in the payments value chain. It can leverage the tokenisation offering to improve security and potentially adoption of Masterpass.
Mastercard is very optimistic about the future for wearable payments; Juniper also expects the company to focus on expanding its reach in developing markets.
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