« We’re rapidly moving to a world beyond plastic, » says Ed McLaughlin. « In many ways, plastic is just convenient packaging. »
McLaughlin heads up emerging payments at MasterCard, and he’s tasked with thinking big on the future of transaction technology. His group has dreamed up loads of creative ways to accept payments, from hacking an Xbox Kinect to pay-by-hand motion, to implanting NFC tech in ultrabooks, to scanning irises to prevent credit card fraud. But while many may find the wild future of post-plastic payments interesting, most consumers have just one question which they desperately want answered: When, oh when, can I start to pay via smartphone?
To be clear, NFC and other contactless payment technologies do exist. Many Android phones come equipped with Google Wallet, for example, and MasterCard says more than 150,000 merchants offer its PayPass tap-to-go systems. But on the whole, the technology is far from reaching critical mass, despite articles dating back years claiming This Will Be The Year of NFC. Anecdotally, I’ve spoken with many merchants throughout New York that accept Google Wallet, but who have never had a customer take advantage of the system. When asked why they would feature the system, one merchant said, « Because Google gave it to me. »
McLaughlin acknowledges the technology’s scale is still in its infancy, but he’s unsurprisingly bullish. « There’s a Faulkner line: Things happen ‘A little at a time, then all at once,' » he says. In Canada, for example, roughly 10% of transactions are contactless, according to McLaughlin (« It was really, really important that we have terminals in all those Tim Horton’s, » he says), and MasterCard is starting to see traction in Poland and Australia too.
But when asked to give an estimate for when smartphone payments would become commonplace (in other words, would 2012 be the year of NFC or contactless tech?), McLaughlin demurred–and may have dropped a hint about Apple’s future in the industry.
« The timeline is always as rapid as it makes sense for consumers, » he says. « That’s a combination of having a critical mass of the merchants, which is what you’re seeing right now, and getting devices into the hands of consumers. I don’t know of a handset manufacturer that isn’t in process of making sure their stuff is PayPass ready. »
So that would include Apple then?
« Um, there are…like I say, [I don’t know of] any handset maker out there, » McLaughlin says. « Now, when we have discussions with our partners, and they ask us not to disclose them, we don’t. »
Apple, of course, has the magical ability to transform whole industries. No one paid for music digitally before Apple unveiled iTunes; virtually no one listened to MP3 players, or carried smartphones, or played with tablets before Apple entered the markets. (And we have good reason to believe they are angling into wireless payment territory.) I asked whether the contactless payments industry needs Apple to hit critical mass.
« Well, anytime someone with a major base moves forward, it advances what you’re doing. So of course, » McLaughlin says.
But how important is it that Apple in particular enters the game?
« I look at it the other way, » answers McLaughlin, who did not mention « Apple » even once by name. « I think as merchants provide these better interfaces for consumers–a better way of transacting–I think any consumer-focused technology provider would want to take advantage of it. »
Still, however bullish MasterCard and tech pundits are about the technology, it’s clear the industry is still a long way from replacing credit cards.
Acknowledges McLaughlin, « Until the last restaurant or bodega doesn’t take plastic, I may still have it in my pocket. »