What is MasterCard PayPass?

MasterCard® was an early entry in the world of contactless payments, originally launching PayPass™ in 2005 after a nine-month market trial that ended in 2003 and involved some 60 retailer locations and more than 16,000 cardholders. Over its first six years in general availability, PayPass continued to gain traction with a reported 92 million PayPass cards and devices issued and over 310,000 merchant acceptance points worldwide by late 2011.

Leveraging contactless payments via a key fob or card, the company expanded its PayPass offerings in May 2012 to the PayPass Wallet, which expanded consumer options to include allowing users to create free accounts and pay for purchases on identified partner websites using the identity, credit card, and shipping information they’ve stored in their PayPass Wallet. And most, recently, the company announced its next generation wallet under a new name, MasterPass – expanding the value proposition of the wallet for merchants and consumers alike. 

The original PayPass digital wallet relies on near-field communication (NFC) technologies for proximity based contactless payments via smartphones, cards, key fobs or mobile tags. Merchant acceptance is available at some 441,000 locations worldwide and expectations are for the number of acceptance points to grow substantially as mobile payments gain additional momentum and U.S. merchant prepare for EMV in late 2015. Interestingly, both PayPass and MasterPass are positioned as open solutions, allowing customers to add competitive card brands (American Express, Visa and Discover) whether debit, credit or prepaid. 

According to the PayPass website, the wallet delivers the following merchant benefits:

  • Adding the wallet’s checkout button to an online shopping cart gives shoppers a faster, easier way to checkout. Plus, it can help the merchant increase sales without significantly changing the way they process payments.
  • The mobile wallet (NFC) enables faster checkout transactions and increased turnover
    • Quicker than contact and cash
    • Signature or PIN is not required under the floor limit
    • No need to print, sign, or handle paper receipts
  • Reduced costs per transaction due to cash handling, security, and transportation costs
  • Less equipment wear and tear (no contact); paper receipts not required for low-value payment (LVP) unless requested by the customer

Currently, MasterPass, in beta, is being offered to merchants solely for online checkout, but there is no question that MasterCard is, like so many others in the mobile commerce space, committed to delivering an omni-channel solution to merchants, so expect MasterPass’ capabilities to expand greatly and quickly in the coming months.