Mastercard’s Strategic Move to Facilitate Efficient Passwordless Payment Systems

Introduction

By 2025, Mastercard anticipates a transformation in authentication, fraud prevention, and B2B transactions as cybercrime risks surpass US$10 trillion. Mastercard has disclosed its intention to revolutionize the security of digital payments by integrating advanced authentication systems and artificial intelligence as global cybercrime threats continue to escalate. The payments giant’s vision is far-reaching, comprising a fundamental reshaping of the way consumers and businesses interact with financial services through 2025 and beyond, in addition to conventional security measures. Mastercard’s ambitious objective to eliminate physical card numbers and passwords from online transactions by 2030 is fundamental to this transformation. The transition occurs at an opportune time, as it is anticipated that cybercrime expenses will increase to US$10 trillion annually by 2025.

The company’s strategy employs a sophisticated combination of tokenization technology, biometric authentication, and its Click to Pay digital wallet system, rather than relying on traditional security measures. The potential of this approach is already evident in the company’s Decision Intelligence Pro platform.

A 20% increase in fraud protection rates across Mastercard’s network has been attained by the system through the processing of one trillion data points within milliseconds, with some implementations exceeding 300%. This technology has undergone further development in the United Kingdom, as the Consumer Fraud Risk system now detects fraudulent transactions prior to the transfer of funds from customer accounts. This initiative to improve security is concurrent with the rapid transformation of the manner in which individuals access financial services, particularly in developing markets.

Mastercard is enabling cardholders to connect their existing accounts to regional payment systems without the need for additional prepaid accounts by bridging the divide between international card payments and local digital wallets through its Pay Local service. These digital wallets have evolved into indispensable financial instruments, surpassing the realm of straightforward payments to include identity verification, loyalty programs, and healthcare services. The interoperability of these platforms is essential for financial inclusion in emerging markets, where traditional banking infrastructure may be limited, as they frequently function as primary financial accounts for unbanked populations. The business-to-business sector is currently experiencing its own revolution. Enterprise resource planning software is becoming more and more integrated with virtual cards, which generate transient numbers that are associated with credit lines.

This integration is a component of a more extensive transformation in business payments, with the embedded financing market for small enterprises expected to reach US$124 billion by 2025. The pandemic-driven transition to electronic payments has provided small businesses with access to technology that was previously unavailable. These merchants are now provided with sophisticated tools for administration, marketing, and data analysis by centralized platforms, which represents a substantial democratization of financial technology.

The payments landscape as a whole is undergoing a swift transformation. In 2028, it is anticipated that real-time payment systems will process 575 billion transactions, which will account for 27% of global electronic payments. These systems are currently operational in over 100 countries. In the interim, blockchain technology is expanding beyond cryptocurrency, facilitating innovative approaches to a wide range of industries, including trade finance and capital markets. This development has incited unprecedented collaboration between traditional financial institutions and cryptocurrency-focused firms, all of which are striving to develop more efficient payment solutions. The tokenization of assets through blockchain technology is particularly promising, as it allows for the digitization of a wide range of economic activities across the financial spectrum.

Contactless payments have become the standard in physical establishments, accounting for two-thirds of all in-person transactions on Mastercard’s network. This transition has been further simplified by the company’s Tap on Phone technology, which transforms standard mobile devices into payment terminals and eliminates the necessity for complex infrastructure. This technology is particularly advantageous to small businesses and individual entrepreneurs. Mastercard believes that innovation is contingent upon collaboration in the future. Financial technology firms are instrumental in simplifying services and guaranteeing the trust of digital transactions, as partnerships among financial institutions, technology companies, and government entities are increasingly concentrated on integrating new technologies and expanding financial access.

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Industry Comments

“By 2030, shoppers won’t need to punch in a password or one-time code to make a transaction online, thanks to the combination of tokenisation, biometric authentication and the Click to Pay digital wallet,” says Mastercard in its announcement.