MasterCard Canada announced the launch of its MasterPass digital payments platform that it hopes will eventually be used for both in-store purchases and online purchases alike.

The digital wallet is being used for e-commerce transactions by four merchants at launch: Porter Airlines, WagJag, Jaunt.ca, and Grocery Gateway. MasterCard is estimating that about 800 vendors will be supporting the payments platform by the end of this year, and that 2800 vendors will be using it by the end of next year. Canada is one of four key markets MasterCard is focusing on its launch for MasterPass worldwide, with the U.S., Australia, and the U.K. also being targeted.

MasterPass is the credit card firm’s digital payments answer to services like PayPal. The cloud-based authentication method can be used by consumers to store up to 25 credit cards of any type, pre-paid credit cards, and debit cards branded by Visa or MasterCard, but not Interac debit cards. Merchants can plug in to the payment authentication system to accept credit card payments without requiring buyers to register on their own sites, and other financial institutions can white label MasterPass to offer their own digital wallets. Bank of Montreal will be offering a MasterPass-enabled BMO Wallet in the coming weeks, the first of this kind of partnership.

MasterPass was prompted by MasterCard’s own market research showing that 50 per cent of in-store spending is being influenced by digital and mobile channels, according to David Orzel, senior vice-president of market development at MasterCard. The bet is that many of those consumers will complete the transaction on those channels, given an easy enough way to do so.

“You’ve got your smartphone, you’ve got your tablet, there’s probably a laptop running somewhere and of course you have your TV screen,” he says. “Our vision is there’s a point of convergence.”

MasterPass provides an application programming interface (API) to allow third-parties to connect to its platform. Merchants can use this to integrate the payments solution into their own site, as deals site WagJag has done.

WagJag didn’t accept PayPal payments because that service is a payments processor, says Jonathan Naymark, a product specialist at TorStar Digital (the parent company of WagJag). But MasterPass simply authenticates a customer’s payment information, then passes the information back to the merchant to integrate into its payment process. It could offer a good solution for smaller merchants as well.

“For a smaller merchant that doesn’t want to navigate all those security issues, this could actually be a big help,” he says.

There are no additional fees for the consumer or the merchant when MasterPass is used, according to Jason Davies, vice-president of e-commerce at MasterCard. The aim is to simplify the online checkout process and help merchants convert more customers as a result, instead of seeing them abandon shopping carts because of the hassle of typing in credit card information or registering for an account.

MasterPass will eventually be used for in-store purchases too. A merchant could display a QR-code that contains the shopping cart information, and a customer could use their smartphone to snap a picture of it, then complete the digital transaction via MasterPass. The platform also supports NFC transactions, allowing consumers to tap smartphones to wireless terminals to pay.

The security approach to the platform is to raise the bar on registration and lower it on transactions, Davies says. Consumers can also activate a second layer of security that will have MasterPass send them a four-digit code via text message that they will then have to type in to complete a transaction within a set amount of time.

MasterPass will also soon support loyalty program identification, so consumers will automatically receive points when completing transactions at the stores they have loyalty memberships for, and have registered that program with MasterPass.

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