Electronics payment processors like MasterCard Inc. and Visa Inc. are trying to adapt to new technologies for making purchases. That includes the use of mobile devices, including smartphones that enable “contactless” payments just by flashing a phone at an electronic scanner.
One obstacle to adoption of the technologies is the small number of electronic terminals that retailers have installed to accept such payments.
After announcing the company’s first-quarter earnings on Tuesday, MasterCard President and CEO Ajay Banga was asked by Wells Fargo analyst Timothy Willi about his expectations for mobile payments technology. Banga said several obstacles remain before the technology can become widely used, especially in the world’s developing economies.
QUESTION: “How rapidly do you expect merchants in emerging markets will install terminals?”
ANSWER: “There are two angles to this. One angle is in the emerging markets, given the current absence of terminals that would accept something to do with a mobile phone, I’m not sure that the mobile payment ecosystem in those markets will develop the same way as it might in a somewhat more advantaged country that has better terminalization in place.
“Mind you, having said that, contact terminalization is still relatively small, even in the United States and in developed countries.
“But, you know, whether mobile payments develop … as a contact-based system, or an SMS-based money movement system, or as a true mobile commerce-enabled system, with the rapid deployment of smartphones in the world, I think some version of all three will begin to develop. What we’re trying to do is to place bets in all three, and to be partners with institutions — banks and phone companies and merchants — in all three spaces.”
But Banga said many obstacles are preventing widespread adoption:
“The cost of those terminals needs to become somewhat cheaper. The fact that if you could find intelligent ways to make that terminal more easy for a small merchant to adapt to, that would help us as well. There’s a lot of work to be done in this ecosystem yet.”
He closed by saying he expects “a lot of energy” will be devoted to these technologies. Be he was cautious about how fast it will play out: “I don’t know that it will happen in six months or one year compared to two years or three years. I don’t know the answer to that yet.”