January 6, 2016
MasterCard announced the acquisition of a new client for its MasterPass checkout solution. Unfortunately for PayPal and maybe MCX, the client is Walmart. The retail giant will accept MasterPass in 2016 across its domestic online properties. MasterPass by MasterCard is a digital payments platform that enhances the online and mobile checkout process.
The simple and convenient payments platform by MasterCard already provides a smooth checkout experience at thousands of online merchants, as the company states. The platform securely stores payment and shipping information, which is readily accessible when a consumer checks out using the Buy with MasterPass button and logs into her account.
Michael Cyr, group executive, U.S. Market Development at MasterCard commented in the official press release, We have enjoyed a longstanding business relationship with Walmart and are pleased to expand this into the online and mobile channels through MasterPass. With MasterPass, consumers can go online, place their order and pay with just a click. The burden of entering delivery and billing information is eliminated, further enhancing the Walmart online customer experience.
Launched in 2013, MasterPass is free and easy to set up. It is currently available in 24 countries and is accepted at 250,000 merchants globally, according to MasterCard.
While MasterPass may not directly be bad news for CurrentC, which is struggling at the terminal, it is surely bad news for other online checkout providers like PayPal, Google checkout, Amazon Payments, Visa Express Checkout, AMEX Express Checkout and private-label card checkout options, not even mentioning traditional cards.
It is interesting, however, that Walmart is integrating MasterPass almost at the same time when it is planning to launch its own mobile wallet, Walmart Pay. While the wallet will be targeted for in-store use, a partnership for online checkout with MasterPass could create barriers for online shopping use of the proprietary wallet.
However the one to be most concerned, as we mentioned, is PayPal.
Currently, Walmart offers a few checkout options, viz. credit card, gift card, PayPal and Cash. With MasterPass, MasterCard will have two checkout options secured for the network giant – traditional credit card from MasterCard and MasterPass. No other option will have that privilege on online Walmart properties.
MasterPass has its own island of online merchants accepting the payment option, just like other checkout solutions. There are more than 500 stores accepting MasterPass in their US online properties. Nonetheless, PayPal is still a major player in the field, regardless of tightening competition year over year.
At the end of 2015, PayPal announced that its checkout solution One Touch reached 10 million opt ins. Launched by PayPal at the beginning of 2015, One Touch had seen significant growth and adoption of its new checkout experience.
Enabled across 23 markets, One Touch is a tool that provides a smooth checkout experience across merchants, online and on mobile, without having to type in any payment information, usernames or passwords once customers opt in. Each month, PayPal processes millions of One Touch transactions. As PayPal claims, more than 50% of the Internet Retailer 500 and more than 1 million merchants globally have One Touch enabled.
Moreover, in the same month, PayPal announced a new deal with Macy’s Inc. and introduced its trifecta of payment options. As a result of the deal, PayPal is offered to Macy’s customers online, in store and on mobile. While there will be an omni-channel shift in the customer’s shopping environment, there is an element of synergy when it comes to the payment experience at the transaction level: customers can use a Payment Code on the PayPal app, or on the Macy’s app at checkout.
Even though PayPal holds and maintains its leading position in online checkout among other digital solutions, MasterCard is a global network giant with almost endless opportunities, which potentially can make the game harder for other online checkout solutions like PayPal`s One Touch.
Interestingly, there is another player, that claimed last year to have better conversions at checkout than PayPal. In August 2015, Visa Inc. announced that the users of its payment service, Visa Checkout, are 17 percentage points more likely to complete their online purchases than compared to the ones using PayPal Express Checkout. While we have not directly validated this claim, it certainly casts some doubt on PayPal’s prospects as it withstands direct challenges from multiple major players.
This variety of options is ensuring frictionless, secure and convenient online shopping experiences. PayPal, gift cards, prepaid cards, Google checkout and a variety of other options led to the expansion of the share of online purchases in total sales volume and facilitated new players to enter the space as companies saw the increasing usage of different options. 2014 signified more than 15% growth in Web purchases with Web sales volume reaching $305 billion. Along with the growth in e-commerce, the payment industry offers an increasing number of services to gain share in the space. While it certainly creates a better experience for online shoppers, it also has other positive implications for merchants that offer a variety of options.