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MasterCard announces first commercial launch of mobile payments gateway

Financial institutions Itaú Unibanco and Redecard, along with Vivo, the largest carrier in Brazil with more than 48 million customers, will be the first to use the MasterCard Mobile Payments Gateway to deliver mobile-payments services to the banks’ customers in Brazil. The service will let consumers use their phone as a mobile wallet and link their existing credit, debit or prepaid MasterCard or Maestro card accounts to their mobile phone to fund mobile-initiated payments. 

“We’ve introduced a set of mobile solutions delivered by a mobile payments gateway that we plan to launch in Brazil, and the objective is to provide a turn-key platform to allow our clients to deploy those mobile solutions in Brazil,” said Pat Killian, St. Louis-based vice president of product strategic alliances at MasterCard. “We intend to support both banked and unbanked consumers to let them use their mobile phones as payments-initiation vehicles to replace cash.

“Brazil will be the first market in which we launch commercially, which we’ve integrated with our core network today, and this is the first commercial launch,” he said. “I think it’s a demonstration that all the parties in the value system can come together and work together—I think this is a proof-point that operators and banks can works together.

“The participants are excited, because they see value to consumer, value to merchants, value to payments systems, they see that here’s a unified scheme that will help commerce develop in Brazil.”

MasterCard Worldwide advances global commerce by providing an economic link among financial institutions, businesses, cardholders and merchants worldwide.

As a franchisor, processor and advisor, MasterCard develops and markets payments services, processes approximately 21 billion transactions each year and provides analysis and consulting services to financial-institution customers and merchants.

Powered by the MasterCard Worldwide Network and through its family of brands, including MasterCard, Maestro and Cirrus, MasterCard serves consumers and businesses in more than 210 countries and territories.

The Brazilian bank Itaú Unibanco Holding, one of the 15 largest banks in the world, offers a full range of services to its local and institutional clients worldwide, including alternative investments, investment banking, asset management, brokerage and investment structure.

Redecard is responsible for the capture and transmission of transactions on credit cards of the MasterCard Diners Club International flags and debit cards of MasterCard Maestro, among others.

The company accredits and promotes commercial establishments and it also partners with banks and several segments of the retail market.

Redecard deals with the installation and management of a chain of electronic terminals throughout Brazil. The company processes 1.8 million transactions every year.

Vivo Participações provides mobile telecommunication services, cellular phone data transmission and mobile Internet services throughout Brazil. Vivo is the brand of a joint venture between Portugal Telecom and Telefónica, which started in 2002.

The company claims to have the country’s largest network and also claims to be the largest mobile telephony group in the South Hemisphere.

Smart Communications Inc. is a Philippines-based wireless services provider with 38.5 million subscribers on its GSM network as of June 2009. Smart is a wholly-owned subsidiary of the Philippine Long Distance Telephone Company (PLDT).

Milestone for mobile commerce
The Mobile Payments Gateway is a turnkey mobile-payments-processing platform that lets issuers, acquirers, merchants and carriers to provide customized mobile services in developing payments markets by tapping into the MasterCard Worldwide Network.

As a result, banked and unbanked mobile consumers gain access to a wide range of MasterCard Mobile payments services, using their mobile phone to make purchases, send and receive money between family and friends, transfer funds between accounts, pay bills, deposit funds such as payroll or social benefits, top up mobile airtime, load value to prepaid accounts, get cash from ATMs and keep track of their balances and activities with mobile alerts. 

MasterCard is working with Smart Hub Inc., a subsidiary of Philippine-based Smart Communications Inc., to leverage its mobile payments technology to develop the MasterCard Mobile Payments Gateway.

Requirements for development of a mobile payments infrastructure vary from market to market.  By integrating Smart Hub’s capabilities, MasterCard has created an open mobile-payment-processing platform through the MasterCard Payments Gateway to facilitate the launch of MasterCard Mobile payment services in developing markets. 

Consultative Group to Assist the Poor (CGAP), an independent policy and research center housed at the World Bank, and the GSMA Association report that there are more than 4 billion people worldwide who have a mobile phone, but far fewer mobile phone users have a bank account, with the number to grow from 1 to 1.7 billion by 2012.

The Mobile Payments Gateway enables these unbanked consumers to access secure mobile-payment services that were previously unavailable to them.

At the same time, participants in the mobile payments value chain can realize the potential for mobile growth outside of the markets they traditionally serve—providing opportunities for financial institutions to introduce payments and financial services to unbanked consumers and carriers to offer value-added services for mobile payments.

Following the launch in Brazil, MasterCard will introduce MasterCard Mobile payments services through the Mobile Payments Gateway in select markets worldwide, although the company would not reveal any details. 

“We want to be a broad-based consumer and merchant proposition in the market long-term, serving anyone who has a mobile phone and wants to make a payment, both banked consumes who have MasterCard today and the unbanked who don’t have a formal banking relationship,” Mr. Killian said.

“There an electronic payment gap, consumers who traditionally can’t partake in electronic payments, but still make payments, so we’re enabling that unbanked segment via our mobile payments capability,” he said. “Most importantly, we’re enabling what heretofore has been considered two different segments to interact and transact with each other based on the reality of consumers’ lifestyle.

“This mobile payments gateway can replace cash, which is less convenient and less secure, with electronic payments, which benefits everyone in the ecosystem, as well as consumers.”