Consumers will be able to use their mobile phones to complete EMV-compliant mobile payments for online transactions if MasterCard Inc.’s current testing with ING Group employees in the Netherlands expands.
Even though the ING project is focused on enabling mobile PayPass transactions in Europe, the Purchase, N.Y.-based card brand views the technology as a global product, says James Anderson, group head and senior vice president of mobile product development for MasterCard.
Because MasterCard’s PayPass contactless payment technology was built on “the same foundational principles” as EMV smart card technology, its development has always been closely tied to the EMV migration in the U.S., Anderson says.
“Assuming the trial produces positive results and we choose to commercialize it, we would build it as a global product,” Anderson says. “Commercial-launch decisions, especially timing, are made by our regional teams based on market conditions, merchant and consumer interest, and readiness of infrastructure.”
Using the secure element in the mobile device to store data, the companies are testing mobile online payments in two scenarios. In one case, the consumer using a mobile phone to shop online would select the merchandise and payment method, provide shipping information and enter a PIN to authenticate. The phone would supply an EMV-compliant cryptogram directly to the merchant’s payment gateway for processing.
In another scenario, the consumer would start shopping on a personal computer or tablet, but complete the payment step on their phone using a secure quick-response (QR) code that ties the mobile PayPass application in the phone to the merchant’s online shopping cart.
In both cases, consumers can apply coupons and vouchers while shopping, and merchants can send e-receipts after a successful transaction, the companies say.
The mobile commerce or PC-to-phone use cases can be performed on any phone, even if it does not support contactless payments, Anderson says.
“The phone we used for the trial happens to support contactless payments as well,” Anderson says.
In developing this product, Anderson says MasterCard felt that use of the secure element in the handset made sense. “In doing so, it enabled us to use all of the expertise we had developed around mobile PayPass,” he adds.
The alternative is cloud-based security, and MasterCard always evaluates both options, Anderson says.
“In some sense, the whole MasterCard network is a cloud-based service, and we certainly take its security very seriously,” Anderson says.
Taking EMV-compliant mobile payments online is “a great step forward,” Anderson says. “It brings the same benefits of EMV to the fast-growing business of e-commerce,” he adds.
MasterCard realized that mobile technology can't be an afterthought for EMV technology, says Brian Riley, senior research director and analyst with Needham, Mass.-based CEB TowerGroup.
“The whole play of the card brands importing EMV into the U.S. was sloppy to begin with because no one addressed mobile or prepaid cards with EMV,” Riley says. “It's been all showroom for [promoting] EMV, but it's really kind of shallow without addressing mobile-pay and prepaid."
The MasterCard trial with ING employees, which the companies announced last week, is scheduled to run through the first quarter of 2013.