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Monday, January 25, 2021

Mastercard, Visa move contactless to cloud

Mastercard and Visa want to make contactless payment acceptance a no-brainer for businesses, particularly small merchants wary of the customary cost and hassle of new POS devices and software. Mastercard is launching a first-ever U.S. deployment of Cloud Tap on Phone, a cloud-based platform that turns any NFC-enabled Android smartphone or tablet into a contactless payment acceptance device.

Mastercard said it is partnering with leading acquirer Global Payments Inc. and the payment gateway firm NMI to support Tap on Phone payment acceptance by Computer Engineering Group, a California-based IT services firm.

News of the Mastercard pilot comes on the heels of word that Visa plans to roll out a similar program, called Tap to Phone, in the United States this year. Visa Tap to Phone is now up and running in about 15 markets around the globe, Visa stated. Mastercard said its Tap on Phone solution is being piloted in about 16 markets, but that the CEG pilot “represents the first live deployment” of its technology “anywhere in the world.”

COVID-inspired traction

As the COVID-19 pandemic rages on, consumer demand for faster, more convenient and safer ways to pay at the POS has been fierce. And most experts expect the demand to continue after the pandemic is under control.

“We continue to see an accelerating shift to digital payments, with businesses of all sized wanting to provide swift, secure, compelling point-of-sale experiences,” said Milan Gauder, global head of acceptance solutions at Mastercard.

Mastercard reported that in the third quarter of 2020, 41 percent of all in-person transactions globally were initiated using contactless cards or apps. That was up from 37 percent in the second quarter and 30 percent in the third quarter of 2019. Visa said its global contactless volume was up 40 percent, year-over-year, in the second quarter of 2020.

“With billions of phones around the world at the ready, the opportunity that comes with lighting them up as payment acceptance devices is enormous,” said Mary Kay Bowman, global head of buyer and seller solutions at Visa. “Visa Tap to Phone could be one of the most profound ways to reinvent the physical shopping experience.”

Results of a global consumer survey published last summer by Visa revealed that 50 percent would use an option like Tap to Phone if it were offered.

Among consumers worldwide surveyed in 2020 by Mastercard, 46 percent had swapped out their top of wallet card for one that supports contactless payments; 74 percent said they planned to continue using contactless payments once the pandemic is over.

“The pandemic has permanently shifted the way global commerce operates, forcing companies to respond to increased demand for safe commerce solutions, such as mobile ordering and contactless payments,” said Jim Egbert, senior vice president for business development and strategic partnerships at Global.

Cloud as game changer

Tap on Phone (Mastercard) and Tap to Phone (Visa) leverage the cloud to handle the heavy lifting typically supported by software on POS devices and smartphones – such as authorization and processing – and builds on EMV chip security. This slashes development and maintenance costs and creates scalable distribution channels, Mastercard pointed out.

Merchants download an app that’s supported by their acquirer, and after registering and selecting a participating bank, start accepting payments. The process can be completed in minutes. In addition to the obvious appeal to small merchants, cloud-based contactless solutions could appeal to larger merchants, too, particularly those that dispatch employees with mobile devices to check out customers throughout their stores, a process known as line busting. They also facilitate curbside pickup and pay-on-delivery services by eliminating cumbersome cash and card exchanges.

“This is a ground-breaking step in creating a world that enables merchants to turn their smartphones into a payment acceptance device without the need of an externally paired physical card reader,” Nick Starai, chief strategy officer at NMI, said of Mastercard’s Tap on Phone.

“With traditional solutions, we are relying on Bluetooth or audio jack connected credit card acceptance devices that are all prone to connectivity issues between the device and the smartphone, causing merchants to have transaction issues and downtime,” said Ryan Theis, chief strategy officer at BNG Payments, a North Dakota-based ISO that works with CEG. “With Cloud Tap on Phone, we are reducing potential failure points to just a smartphone and data connection as well as reducing upfront cost by eliminating the need for additional hardware. This will be the future of mobile card-present transactions.”

Mastercard said it is making its pre-certified Cloud POS software development kits openly available in multiple cloud environments for use by fintechs, acquirers and processors. Visa said it plans to fast-track global product availability through a pre-certification process that could reduce the evaluation process for solution providers from two months to just a few hours. end of article

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