Mastercard and Visa are reaching out to the technology's industry's largest players to smooth out the bumps in how payments operate today.
Two new partnerships—a collaboration between Mastercard and Samsung and one between Visa and Intel—have a particularly good chance to simplify and extend the reach of secure digital commerce.
Mastercard is integrating its Masterpass digital wallet with Samsung Pay. Mastercard is also expected to announce similar deals with other third party wallets. On Monday, Google announced strategic partnerships with both Visa and Mastercard to support payments at merchants that accept Visa Checkout or Masterpass.
"We want to make it easier for consumers to use their wallet of choice," said Kiki Del Valle, senior vice president and group head for social networks and operating systems at Mastercard, saying the integration will impact hundreds of thousands of merchants.
The integration also continues recent work Mastercard has done to break down the barriers to using Masterpass, which is now available at about 300,000 merchants."Merchants can reach millions of customers using Samsung Pay without having to do any more development work," Del Valle said.
A relative lack of interoperability among mobile payment methods has left an impression that consumers and retailers have to make choices about which to support. For example, early after Apple Pay's release, companies like CVS and Rite Aid shut off their NFC readers to favor the CurrentC wallet (which never left pilot).
By contrast, Mastercard CEO Ajay Banga said at an earnings call after Apple Pay's release that the app wasn't a competitor to Mastercard but actually an opportunity.
Visa's big collaboration with Intel will place encryption on any device that uses Intel technology. "Everybody is moving fast and security is often an afterthought," said Mark Nelsen, senior vice president of risk products and business intelligence at Visa.
Intel develops the guts behind data centers, connected device deployments, PCs and other computing devices. It's behind a lot of payments hardware, including EMV and NFC-equipped tablets, and collaborates with hardware makers such as Panasonic.
The Visa encryption partnership is aimed at protecting the variety of devices that the card network believes will be used in the near future to collect payments.
"As more payment devices come from connected devices, securing those devices becomes more important," Nelsen said.
As part of its digital security program, Visa is additionally working on a roadmap for the next version of 3D Secure, which is expected to begin deployment in early 2017.
3D Secure was initially developed to provide extra authentication for digital transactions, but merchants found it too cumbersome. It's being redeveloped to be more streamlined, and to be easier to bypass traditional authentication steps while not sacrificing security for contactless payments and other m-commerce transactions.
Visa's roadmap will rely on feedback from merchants as the protocol evolves. "In general we want to do more transactions with fewer 'turn downs,' so we need more data on where the transaction is originating from," Nelsen said. "If there is more data we can increase sales and reduce fraud and friction at the same time."
Mastercard is also making other moves to further bring tokenization and connected payments technology to new consumer use cases.
Mastercard is partnering with Fit Pay to bring contactless payment capabilities to connected devices and Fit Pay's broader "Internet of Things" platform.
Fit Pay's technology includes a Near Field Communication band that attaches to Web connected devices such as smartwatches. The Mastercard collaboration will add access to the network's Mastercard Digital Enablement Service, which distributes tokenization to secure contactless payments.
Mastercard is additionally debuting a bot platform that makes it easier for businesses to enable payments and other merchant communications in chat bots and to reach consumers via platforms such as Facebook Messenger. Six of the top 10 apps are messaging apps, De Valle said, and are used by more than 1.5 billion people.
"Consumers are leading a digital lifestyle, and these activities have to be seamless," Del Valle said.
Much of the networks' activity addresses 'connected payments,' either making transactions easier or protecting them.
The growth of connected commerce will change the context of payments, according to Thad Peterson, a senior analyst at Aite Group. The change will potentially make the payment less apparent to the user.
"Instead of a conscious act where the consumer needs to 'do something with their device' to make the transaction happen, things will happen in their lives that require a payment and the payment will take place in support of that activity," Peterson said. "One of the potential consequences of the intelligent enablement of the physical world will be more, faster, and smaller payments, with little conscious effort on the part of the user. The smartphone won’t be the payment enabler, it will instead be a data source."
Visa is also announcing a partnership with FIS to integrate the Visa Direct person-to-person payment service into FIS' banking and financial services technology. The collaboration can drive other use cases beyond P-to-P, such as insurance claims and health care reimbursements, considered a major benefit of the P-to-P model—P-to-P ventures such as Early Warning's clearXchange have also made health care and insurance part of their business strategy.
"This will bring faster payments to insurance claims and health care benefits," said Vish Shastry, vice president of digital solutions for Visa. "They'll be able to deliver funds to Visa debit cards in minutes."