With emerging payments technology, it's important for legacy companies cover as many bases as possible. For MasterCard, this means putting its technology into everything from jewelry to home appliances to a reimagined take on the classic plastic payment card.
The card network is partnering with Coin, developer of a high-tech multi-account payment card, to blend Coin's underlying technology with MasterCard's network. In a collaboration announced Wednesday morning, Coin's hardware will be used in the design of other devices, such as smartwatches and fitness bands, to enable MasterCard payments.
This is a natural extension of MasterCard's "Commerce for Every Device" initiative that is diversifying the devices than can make payments, but it's a departure from Coin's original mission of modernizing the payment card. The Coin card's accompanying smartphone app can load multiple accounts onto the high-tech plastic card, providing the full functionality of a mobile wallet in a form factor that is more familiar and widely accepted.
"It's impossible to know which [connected devices] will take off and which will not, but by laying this groundwork, MasterCard is putting many chips on the table in an effort to win as frequently as possible in a situation where the outcomes are unknown," said Rick Oglesby, a partner and head of research for Double Diamond Group.
Until recently, Coin's biggest challenges have been in fulfilling orders of the earliest version of its high-tech card, and in updating its product for the modern EMV environment. The pact with MasterCard provides a different way to adapt to the modern payments market by making Coin's technology less reliant on its form factor.
Initial partners for the Coin/MasterCard collaboration include Atlas Wearables, which designs fitness trackers; Moov, a personal fitness coach that consumers wear on their wrist; and Omate, a smartwatch maker. These companies will use Coin and MasterCard to integrate payments technology into their products.
"This makes the products more useful for consumers and enhances the value device manufacturers can deliver to their customers," said Sherri Haymond, group head of digital channel engagement for MasterCard, in an email.
MasterCard and Coin's products will begin rolling out in the 2016 in the U.S., with plans to expand globally where the MasterCard Digital Enablement Service, which provides security technology for mobile payments, is available. Other new MasterCard payment options such as GM's key fob, Nymi's wristband and payments options for Ringly and Adam Selman clothing will also initially roll out in the U.S. in 2016 before debuting elsewhere, according to the card network.
This week, MasterCard also announced plans to work with Samsung to enable payments from a new Internet-connected refrigerator. Through a built-in app, fridge owners can replenish their grocery supplies by ordering food from participating grocers.
"In both cases, MasterCard appears to have a vision for embedded payments in the physical world that could accelerate the sublimation of payments into a customer's daily activities and habits," said Thad Peterson, a senior analyst at Aite Group.
Wearable computing is starting to take off, particularly given the popularity of fitness apps. For payment companies, the devices are an obvious opportunity to bring payments closer to an activity such as exercise, or allow a watch to pay by tapping it against a point of sale terminal.
But there have been some early growing pains, including user experience, price and execution issues with the actual devices. These challenges are encouraging flexibility since companies don’t know what consumers will want to use ahead of time. RBC, for example, is examining different wristband technology while also considering other wearable devices.
The MasterCard/Coin collaboration won't push the Internet-connected payments evolution much, but it will be an enabler, according to Oglesby.
"The push will come from consumer adoption of new devices such as the Apple Watch, the Samsung Family Hub and others," Oglesby said. "MasterCard is doing the right thing by enabling as many of these devices as possible."