MasterCard has announced, according to the Economic Times, a new digital payment system that will allow its customers to make payments for virtually anything using virtually any electronic media, so long as they have a cellular or WiFi signal. Wired says the new service could fit in well with the way most people shop. While the Verge says, it’s still not clear if MasterCard has solved the mobile payments problem.
Up till now the problem has been, the Verge says, that customers want to be able to use their smartphones to pay for things as easily as they use credit cards. One solution has been to add Near Field Communications (NFC) which uses radio waves to allow smartphones to talk directly to cash registers. The problem with that was that all the cash registers would have to be retrofitted and sellers didn’t want to do that due to the high cost involved. Another way to solve the problem would be to add a hardware device that would allow for scanning a bar code on a product to a smartphone-but consumers have balked at that idea. In this new approach, ET says, MasterCard has come up with an approach that while not exactly elegant, does allow customers to buy things at physical stores using their phone or tablet computer. They’ve done it by setting up a cloud based site that treats sales using a hand held device in exactly the same way as a credit card.
It works like this: when a customer walks into a store, grabs something and walks to the checkout station, they also bring up the MasterCard app on their smarphone that is associated with that store-say Wal-Mart. Because MasterCard has an electronic relationship with that store, the user is able to bring it up on their phone and pay for it, much like they would were they to buy it over the Internet. The only difference is that the cashier must Ok the purchase when it pops up on their computer screen. Once that happens, the store prints out a recipe and the user walks out with the chosen item.
The system is nowhere near as convenient as simply pulling out a credit card, but for those retailers that opt into the system, it’s workable. MasterCard told ET that they believe the system will work well enough to give customers more options, while the industry waits for the development of NFC transactions to become the next standard. They note that virtually every new smartphone now comes with NFC built in, which means, using them to pay for products with radio signals will happen as soon as retailers give in and install the new kind of cash register.