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MasterCard Takes Contactless Payments to the Cloud

January 19, 2021

The past few months, especially since the pandemic outbreak, saw rapid development in contactless payments. The rising need to accept or adopt the contactless or cashless payment modes was mainly in response to prevent the spread of coronavirus.

Nowadays, more advanced and smarter technologies are being deployed across several mobile devices, mostly due to factors like convenience, flexibility, and speed. And this is the reason why contactless payments are gradually being moved to the cloud.

In relation to that, the card brand, MasterCard announced on January 11, 2021, that it has partnered with payments gateway NMI, financial tech company Global Payments, and IT services provider CEG (Computer Engineering Group) to launch its first pilot for the new cloud-based point of sale (POS) technology, called Cloud Tap on Phone.

Their aim is to broaden the acceptance of contactless payments for merchants, since today’s consumers prefer paying for their purchases using mobile payments on their smartphones. In addition to enhancing and expanding its point-of-sale solutions, MasterCard is also working on improving its cloud POS systems.

The card network’s goal is to make its Cloud Tap on Phone openly available across various cloud-based environments. It will empower different solution providers and ecosystem partners to build their own cloud POS offerings by integrating newer features, tools, and functionalities. The process, therefore, is also expanding the acceptance of this new cloud-based payment and POS technology.

Nili Klenoff, Senior Vice President, Global Acceptance Solutions at MasterCard, revealed that the pilot for their new cloud POS system is based on three major dynamics in the marketplace:

  1. The digital shift, which she believes won’t change soon, even if the pandemic recedes.
  2. The acceleration in the need for adopting a contactless infrastructure within the retail industry.
  3. The advantage of switching to cloud solutions, which Klenoff believes is democratizing access to digital payments solutions and apps.

MasterCard has further said that in Q3 2020, contactless payments accounted for 41% of global in-person transactions. This was a significant increase from the previous year’s 30%. It indicates that amid the pandemic situation, this new offering received much popularity and acceptance.

As a result of this launch, other payment players have innovated their digital POS solutions to make them more widely accessible.

For example, towards the end of 2020, Visa came up with its Tap to Phone solution across several global markets. Just like MasterCard’s Tap on Phone solution, Visa’s provides businesses with a mobile POS solution that one can deploy without requiring any additional hardware.

Klenoff reportedly said that the company’s new cloud solution is designed to help users develop and expand the entire payment ecosystem. This is mainly targeted at enabling businesses to enhance their customer engagement and improve their shopping experiences.

This new system from the card company can be especially beneficial for SMBs (small- and medium-sized businesses), who are affected by the pandemic outbreak. Hence, the cloud-based POS solution might also accelerate the global expansion and evolution of digital transactions.

Key Points

  • Cloud Tap on Phone is one of the card network’s next-gen innovative acceptance products. Furthermore, the software is hosted on the powerful Azure Cloud platform from Microsoft.
  • Microbusinesses and SMBs can gain access to a more cost-efficient contactless POS system without investing in any external hardware. MasterCard’s Cloud Tap on Phone can help businesses with fewer resources for purchasing additional POS hardware.
  • During the COVID-19 crisis, 34% of SMBs have adopted contactless payment solutions to optimize their checkout processes. This was a result of a study conducted by Paysafe that analyzed several SMB checkout processes used in various countries like the US, UK, Italy, Canada, Austria, Bulgaria, and Germany.
  • The Tap on Phone solution from MasterCard is also designed to expand the acceptance of contactless payments across global markets.
  • By introducing this cloud-based POS system, SMBs can also keep pace with larger enterprises that provide a number of different payment modes. It further enables MasterCard to increase their volume of payments.
  • Since the company’s new offering is spreading across numerous countries, businesses operating in markets where digital transaction infrastructures are developing, such as parts of Asia and Africa, are expected to gain access to this cloud POS system. It will further push contactless payment acceptance forward, thus accelerating MasterCard’s payment volume potential.
  • For instance, micromerchants running in India who have seen significant growth in cashless payments are more likely to take up the card network’s offering. Therefore, it will expand the overall acceptance of contactless payments in the near future.
  • Using the Tap on Phone solution, businesses, irrespective of their size, can deliver the best-in-class contactless payment expenses to their consumers via their own smartphones.
  • MasterCard’s new cloud system democratizes POS technology by converting an Android device into an acceptance device. It enables businesses to implement more contactless payment systems at checkout, while cutting down costs on external hardware terminals and other tools or features.
  • The system will help merchants to provide better curbside pay on delivery or pickup facilities for faster checkouts at the store, thus eliminating long queues. It’s a convenient, touch-free, cash alternative for consumers.
  • MasterCard’s cloud POS has become a new channel for businesses to provide more meaningful and value-added services to their consumers.
  • At present, MasterCard’s Tap on Phone software has been rolled out across 16 markets, including Asia Pacific, Europe, Latin America, North America, Africa, and the Middle East. Additionally, pilots are occurring with respective partners in Hong Kong, Costa Rica, Poland, Romania, Kazakhstan, Russia, Canada, the UK, Belarus, Turkey, and several other markets.
  • The card network’s new product development wing, MasterCard Labs, spearheaded the development of the cloud POS technology and its new cloud-based Tap on Phone product. The pilot working with CEG is following product testing sessions on the New York campus of MasterCard’s Purchase.
  • The product, Cloud POS, is a result of the company’s multi-cloud strength, meeting several businesses, financial institutions, partners, and consumers in the Cloud using innovative solutions and applications.

MasterCard has been planning this transition to contactless digital transactions for years. The rising demand for faster, safer, more convenient, and flexible methods to make payments has been a driving force behind this transition.

Today, consumers are willing to use this touch-free transaction experience permanently, even after the pandemic ends.

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