Trends: Promoting a cashless society


-A +A
This article first appeared in Personal Wealth, The Edge Malaysia Weekly, on December 26, 2016 - January 1, 2017.

 

MasterCard’s digital wallet, MasterPass, has been introduced in Malaysia. Like PayPal, it stores all of the cardholder’s payment and shipping information at a secure central location, allowing the cardholder to have a more convenient online shopping experience.

Consumers can use MasterPass to make payments across devices and online channels. On e-commerce platforms, they merely need to click on the “Buy with MasterPass” button and select their preferred credit card and shipping address when they are ready to check out. There are no fees or charges to use the digital wallet.

Perry Ong, MasterCard’s country manager for Malaysia and Brunei, says MasterPass is its main initiative in embracing digital technology in finance and payments. “For example, if you want to buy something online today, you have to key in your credit card number and shipping address and go through the security details. Tomorrow, if you want to buy something else, you need to go through the same process again, which is a hassle.

“With MasterPass, you only need to register once with your bank. Then, you only need to click on ‘Buy with MasterPass’ at any e-commerce site to complete your transaction.” Ong was speaking on the sideline of the inaugural Global Entrepreneurship Community 2016.  

MasterPass is accepted by 300,000 e-commerce merchants worldwide and MasterCard is actively getting more merchants to come on board as partners. The company plans to make the digital wallet usable at physical stores in the future.

In July, MasterCard Malaysia partnered local financial technology (fintech) player Managepay Systems Bhd to launch MPay MasterCard prepaid card. It can be used to pay bills, make purchases, reload prepaid telco cards, make domestic remittances and even receive salaries. The card comes with security features such as an EMV chip and Mobile One-Time Password (MOTP) for each purchase or funds transfer.

By leveraging MasterCard’s network, cardholders can withdraw cash at automatic teller machines and benefit from exclusive discounts and privileges at selected merchant partners when paying with MPay MasterCard. To check their balance, cardholders can use the MPay Wallet mobile app, contact the call centre or request via SMS.

“We partnered MPay because we want to cater for the underserved population by equipping them with a piece of plastic that allows them to enter the financial system. It is indeed a timely approach for us as it echoes Bank Negara Malaysia’s Payment Card Reform Framework (PCRF), which was implemented last year to get consumers to use payment cards more widely,” says Ong.

Under the PCRF, the central bank aims to reach a target of 800,000 electronic fund transfers at point-of-sales terminals and RM1 billion in debit card transactions by 2020. While acknowledging that it is not possible to remove cash from the payment system, Ong says MasterCard will continue to play its part in reducing consumers’ dependence on cash.

“The PCRF projects that the country will have 31 million debit cards and 9.2 million credit cards by the end of the year, and we are definitely playing our role to facilitate this. MasterCard’s vision is a world beyond cash. Therefore, we are working on attacking every space that still operates with cash. To realise this, we are working on getting more merchants and enabling more consumers with plastic.”

 

Staying relevant in a digital world

Credit and debit cards are part of MasterCard’s efforts to adapt and stay relevant in the digitally driven world. While processing payments remains its principal business since its establishment in 1966, the company has evolved its brand identity due to the digitisation of commerce and increased connectivity of consumers.

In addition to introducing Quick Response (QR) as a payment solution in some parts of the world and Decision Intelligence, a comprehensive decision and fraud detection service powered by artificial intelligence technology, the company is extensively improving

and expanding MasterPass as the main contender in the future of digital payments.

Getting more consumers to adopt cashless transactions has always been one of MasterCard’s biggest challenges. To increase the adoption rate, it needs a compelling value proposition, says Ong.

“For example, if MasterCard wants to tie up with a cinema to get more people to adopt cashless transactions, we also need to think about how to make it compelling for the customers. What can they get in return for downloading the app and using it?

“This is where we come up with a reward system. Perhaps they will get free popcorn or discounts on tickets. This will actually get more people using the service. But that alone is not enough. Retention is also important. Therefore, we will come up with more value propositions to make them stay.”

In attracting more merchants to accept MasterCard as payment, the company has introduced sophisticated technologies so that merchants are able to accept payments either through point-of-sales terminals or mobile phones. Achieving a truly cashless society is the end objective.

“What we want to create is something like this: To start my day, I need coffee and my local kopitiam only accepts cash. We want to change that,” says Ong.

“I want to use my MasterCard to pay for coffee at the kopitiam. I want to use it to pay for office parking and I want to use it to pay for meals at the food court. On weekends, I want my gym and my sundry shop to accept MasterCard as well.

“If every single touchpoint of your life accepts credit cards as payment, it will change your behaviour as well, right? You will be more open to the idea of using less cash for transactions and gradually, this will translate into higher adoption of cashless transactions.”

MasterCard Malaysia is planning to introduce the QR payment solution here sometime next year, says Ong. “In India, the QR payment solution has seen very significant usage. That is why we intend to bring the technology and psychology here.

“With QR, merchants do not even have to invest in machines. They just need a sticker to put on their cash till. When the consumers want to pay for something, they can just scan the QR code to pay. It will be good to see Malaysians being able to just scan these codes to pay for food at, say, a mamak stall or for bus rides.”

The company also wants payments to be ubiquitous. This means MasterCard can be used to pay for online services, in-app payments and in-store payments at any merchant.

Globally, MasterCard has introduced some enhancements that can be enjoyed by all of its cardholders. This includes access to the national fraud services and digital tokenisation (the process of replacing a card’s primary account number with a unique alternate card number or “token” to allow EMV-like security for digital transactions), which it has implemented on a global scale.

“These technologies are important to ensure that we constantly enhance our security features. Even if these enhancements came out first in countries such as the US or the UK, MasterCard will gradually extend it to the rest of the world when the timing is right,” says Ong.

 

 

Smart city initiative

Last month, MasterCard inked a memorandum of understanding with Cyberview Sdn Bhd and Malaysian Global Innovation & Creativity Centre (MaGIC) to support Cyberjaya in strengthening its position as the benchmark of a smart city. Some of the initiatives outlined include integrating MasterPass to make everyday transactions for consumers faster, simpler and more secure as well as providing city authorities and urban planners with actionable data-driven insights.

MasterCard will sit on Cyberjaya’s City Innovation Council as the payment enabler. “MasterCard has already engaged with smart cities all over the world. So, from where we stand, we will bring our expertise to the table and share with them how the smart city concept can be realised,” says Perry Ong, MasterCard’s country manager for Malaysia and Brunei.

“We will also work with Cyberview to understand the objectives of the smart city and figure out how to realise them. It can be smart homes, smart traffic management or even smart parking.”

In the UK, MasterCard has worked on enhancing the city of London by partnering Transport for London (TfL). Previously, TfL only accepted payments via pre-loaded contactless smartcards called the Oyster card. While it is convenient for UK residents, it is very challenging for first-time and occasional visitors to use the system as they had to learn how to use, purchase and fund an Oyster card for their transit needs in London.

After examining a number of technologies, TfL selected MasterCard’s contactless payment technology to solve the existing problems. With this solution, visitors no longer need to acquire Oyster cards. There was also no need for the middlemen to sell and administer them. Cardholders are able to tap their MasterCard to enter the transport system and then tap again when exiting.

“Here in Malaysia, we hope that we can bring the same concept to create a truly connected smart city. We hope to introduce a system where tourists do not need to buy tickets, look for small change and collect the receipts. This is very inconvenient. We want to eliminate all this to create urban mobility,” says Ong.

“To do this, we will start by looking at Cyberjaya. For example, the main public transport is taxis. So, perhaps we will come up with a smart taxi application where anybody who hops into a taxi in Cyberjaya can pay using their mobile phones through an in-app payment.”

This has already been implemented by MasterCard in Singapore. ComfortDelGro, which has a fleet of 17,000 taxis, now accepts MasterPass. People can get a taxi, arrive at their destination and hop out without the need to whip out their wallets at all.

“This is just one example of a digital solution we are working on now. But a smart city is more than that. We are elated about the prospects of tying up with MaGIC and Cyberview to do this,” says Ong.

After Cyberjaya, the initiative can be replicated in more smart cities in the country as MasterCard is fully committed to helping the country become a cashless society.