Internet of Business speaks to Christophe Zehnacker, head of strategic digital partnerships at global payments company Mastercard, about the coming ‘Internet of Payment Things’.
After years of promises and some false starts, the mobile payments revolution is now in full swing. Consumers around the world are increasingly comfortable with using their smartphone to make payments. It’s a quick and convenient way to get their hands on that rush-hour train ticket or vital, pre-meeting cup of coffee. It’s a great way too to make that in-app purchase to access new levels of a game, for example, or renew a magazine subscription.
But mobile payments are just the start of a much bigger revolution, says Christophe Zehnacker, head of strategic digital partnerships at global payments company Mastercard.
The next big wave in what he calls “friction-free commerce”, he says, will see consumers able to make payments through the many of the smart, connected devices that make up the IoT. Mastercard is committed to playing its part in making this vision a reality through its ‘Commerce for Every Device’ program.
From wearables to washing machines
“The way we see it, every connected device is going to be a commerce device – whether it’s a wearable device, a car, a consumer home appliance like a fridge or washing machine, or another smart home device, perhaps smart home speakers… They can all become shopping devices,” he says.
That means, for example, that a homeowner will be able to pay their electricity bill directly from their smart meter. A runner will be able to pay for a refreshing post-10k drink directly from their wrist-worn fitness tracker. A driver will be able to order and pay for cinema tickets directly from their smart car, while on their way to the cinema.
Mastercard’s digital transformation journey thus far has been built on two key assets, Zehnacker explains, and these will continue to be key as this second wave of new payment types takes off.
The first is Masterpass, a digital payment service that enables consumers to make fast, simple and secure digital payments in store (via contactless), in apps and online and is typically distributed to consumers via their issuing banks. Over 80 million Masterpass consumer accounts are already enabled, says Zehnacker, with acceptance at over 300,000 online merchants worldwide and over 6 million physical contactless point-of-sale terminals. Masterpass will also integrate with Microsoft Wallet, Android Pay and Samsung Pay in the future.
The second asset is the Mastercard Digital Enablement Service (MDES), an industry standard tokenisation service that facilitates ApplePay, AndroidPay and SamsungPay, and that will also help transform any connected device into a commerce device to make payments. Later this year, Mastercard plans to announce partnerships with a number of well-known brands that manufacture IoT devices, according to Zehnacker.
Partnership, of course, is key to all these plans, which is where Zehnacker and his team come in. Mastercard must increasingly collaborate not only with the banks and retailers that have been its traditional partners, but also with smart device manufacturers and the technology companies that help build Masterpass wallets and that connect to the MDES tokenization service.
In the space of connected cars, Mastercard is working with tech giant IBM and carmaker General Motors to embed Mastercard payments in future GM models, as part of GM’s OnStar Go in-car system. It has also worked with Samsung to allow consumers in the US to order items from FreshDirect and ShopRite supermarkets, via Samsung’s Family Hub refrigerator.
In the future, Zehnacker envisages consumers strapping on a virtual reality (VR) head-mounted device (HMD), in order to roam the aisles of a retail brand’s ‘virtual store’, regardless of their actual physical location, and make purchases from their HMD while inside that VR experience.
“The possibilities are almost endless,” says Zehnacker. “Some time in 2018, there will be more IoT devices in the world than there are mobile devices, according to industry reports. That calls for a very wide ecosystem of ideas and skills and technologies, including those that we already have at Mastercard and those we continue to develop, to bring to reality our vision of every device as a shopping device.”