With the nature of payments rapidly changing, Liz Oakes, Executive Vice President responsible for Mastercard Send in the Products & Engineering division at Mastercard, shares her thoughts on how the industry can come together to ensure everyone benefits.
Liz has more than 25 years’ experience in designing central clearing and settlement systems and bank payments systems, globally. In her role Liz drives growth of the Send business globally, broadening its multi-rail reach and innovating at pace with capabilities to meet customer needs in P2P, gig economy, rapid disbursements, rapid merchant settlements, funding to and from wallet transactions and remittances.
The nature of payments is changing rapidly. Nearly nine out of 10 consumers now expect to be able to buy what they want, when they want, and how they want – whether that’s via card, mobile wallet or in cash. This was one of the findings in our New Payments Index which surveyed thousands of businesses and consumers around the world to understand their attitudes towards payments.
This statistic isn’t surprising. During the pandemic we’ve seen a huge shift to digital, with 53% of people using banking apps more than before the pandemic began, and two-thirds said their positive experiences encouraged them to explore other forms of digital payment. In the first quarter of 2020, just as the pandemic hit, Mastercard saw a 40% increase in global contactless transactions. With 80% of these transactions under $25 in value – the type of low-value payment historically dominated by cash – we see a clear shift in consumer preferences.
The ability to make digital payments in real-time is a big part of this shift. No longer seen as a ‘nice to have’ in the payments experience – this is expected. Consumers and businesses are forcing change and in the process, we’re witnessing real democratisation in payments, where everyone has the same access and control over how they send and receive money. This doesn’t just benefit those with bank accounts. There are millions of people around the world without access to traditional financial services but now through new digital services they can use near-instant payments through a range of methods, such as pre-paid cards or mobile wallets. The advantages this can bring to boosting financial inclusion, business growth, and the digital economy are massive.
This democratisation is not without its challenges though. For many financial institutions and service providers, the benefits are clear, and the right collaborations can lead to increased revenue, speed to market and customer satisfaction, but the transition to digital services can be complex, costly and difficult. It’s therefore vital that payments technology providers rise to these challenges and work collaboratively with banks, businesses and governments to ensure everyone has access to immediate, digital payments.
Greater collaboration can give people greater control over their finances and drive powerful initiatives that have clear benefits for those most in need. An initiative called Civic Assist, developed through a partnership between technology company Oracle, Mastercard and public, private and non-profit organisations, was created to allow authorities to deploy financial aid and assistance quickly, safely and securely to those who need it. In Los Angeles during the pandemic leaders needed to disburse emergency donations quickly to people locked down at home. Through Civic Assist, the City was able to launch the Angeleno Card program within weeks, and in only three months more than $36 million had been distributed to over 100,000 people.
We’ve been able to help build similar programs across the world to quickly help those impacted by the pandemic and with funds distributed in near real-time. In Egypt for example, we worked with the government to pay out COVID-19 relief funds to citizens. By utilising Mastercard Send – technology that enables payments to multiple endpoints in near real-time – we were able to ensure people in need received funds almost instantly to a prepaid wallet so they could pay urgent bills, send money to family, or cash out the funds. Meanwhile in Russia, we worked with the federal tax authority to disburse tax refunds to self-employed people with reduced income due to the pandemic. Using Send, taxpayers were able to get tax refunds by simply providing their card number.
The challenge now is to facilitate more of these collaborations and innovations, to the benefit of all. One of the ways we hope to achieve this is through the launch of the Mastercard Send Partner Program, which counts Oracle, PayPal and Stripe amongst its initial 16 partners. We provide industry leaders and tech enablers with tools and support – such as training and insights, partner support, and sales and marketing collaboration – to embed Send into their own services. This collaboration will boost overall product expertise, improve speed to market, enhance marketing exposure so we can drive forward market solutions like those in Egypt and Russia, and provide speed, choice and security in real-time digital payments to millions of people around the world.
The democratisation of payments is giving more people than ever power and control over their own finances and new technologies are helping those who have previously been cut off from the digital economy to now participate fully. Collaboration and partnership across organisations is crucial to maintain this momentum. When we come together to solve basic needs in a time of crisis, we not only create new business opportunities and boost economies but can support those individuals who are most in need and who also stand to benefit the most in the longer term from being brought into the digital economy.