MasterCard's PayPass Wallet will span online, mobile, in-store shopping

The company will let third parties resell its own service or use its API to build their own

MasterCard WorldWide announced a digital wallet on Monday that consumers will be able to use for purchases in stores, on the Web and on their mobile phones.

The global credit-card company's entry into digital wallets will tie into its PayPass point-of-sale system, with nearly 500,000 locations around the world where consumers can tap a card or phone with NFC (near-field communications) to make a purchase. But with the new offering, called PayPass Wallet Services, MasterCard will also allow third parties to create payment systems under their own brands.

MasterCard announced the system at an event on Monday evening in New Orleans, the night before the CTIA Wireless trade show begins. In a Tuesday morning keynote speech at the show, the company will also unveil a partnership with Intel to help PC makers build PayPass tap-to-pay hardware into ultrabooks.

To use PayPass Wallet, consumers will sign up and provide information for as many as 25 credit cards, including brands other than MasterCard, plus shipping information. When making an online or mobile purchase, they will be able to choose a card and a shipping destination from among the selections they've entered.

When buying on the Web or a phone, users will tap the PayPass Wallet Services logo and be prompted for a single password. Once that is entered, they will choose a card and shipping site and click to complete the transaction. Using an NFC-equipped phone at an in-store terminal, they will also get that "carousel" of selections, though they will have to choose a card from their list that could be used with the PayPass tap-to-pay system.

What sets MasterCard's offering apart from digital wallet systems announced by Visa, Google, PayPal and others is how much the company is opening up its platform to third parties, said Gartner wireless analyst Mark Hung. Banks and other partners will be able to adopt PayPass Wallet Services in two different ways: They can use MasterCard's own service under their own brand or just use the company's API (application programming interface) to build their own platform. The only sign of MasterCard in partners' offerings will be the company logo built into the PayPass Wallet logo.

Visa's V.Me system, announced last year, also spans online, mobile and in-store purchases, but Visa is holding that offering closer to its chest than MasterCard is, Hung said. That should mean consumers are offered more opportunities to sign up for PayPass Wallet, he said. And compared with PayPal, which is approaching the in-store space from online and mobile by slowly building up a network of point-of-sale devices, MasterCard has a head start in the hardest part of the equation, he said.

MasterCard won't get paid when consumers use a rebranded PayPass Wallet-based service and choose another brand of card, but offering the service does give MasterCard some advantages, said Geoff Iddison, group executive for innovative platforms at the company's E/M-Commerce division. For example, banks that use the platform could offer MasterCard customers sign-ups for PayPass Wallet before users of other cards, he said. Iddison expects the wallet to be used with MasterCard cards 80 percent of the time.

The built-in PayPass radios in ultrabooks are designed to let consumers make online purchases using physical credit cards for extra security. Intel is building support for the PayPass components into its chips for ultrabooks and has built reference designs of systems with the radios built in. Manufacturers will be able to start offering ultrabooks with PayPass built in starting in the second half of this year, said Amit Bodas, a strategic planning manager at Intel.

PayPass tapping will work in conjunction with the identity protection technology built in to all ultrabook platforms. The combination of the consumer's own card tapping their own ultrabook, in conjunction with using PayPass Wallet on an online store, will provide multiple factors of authentication, Bodas said.

Gartner's Hung thinks digital wallet adoption has been constrained by the weak economy but will show significant growth over the next few years. Yet he cautioned that traditional credit-card purchases will still far outnumber digital wallet purchases in five years.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is stephen_lawson@idg.com

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