MasterCard Turns Mobile Phones Into Payment Processors

I recently read an article that stated that about 85 percent of world retail transactions are still done with paper currency. This statistic shocked me because I thought that credit and debit cards had passed up cash as the number one form of payment.

MasterCard was aware of this statistic, and viewed it as an opportunity to research why digital payments weren't the norm, and to revolutionize a new way to reach the emerging target markets. They found that the main problem with digital payments is that most people do not have proper bank accounts. However, most people do have mobile phones. In fact, even the poorest countries have 50 to 60 percent penetration rates of mobile telephony.

"This means that most adults can have access to mobile phones," said Mung Ki Woo, group executive for mobile and emerging payments at MasterCard. "Out of this discrepancy was born mobile money services."

Today, MasterCard announced the MasterCard Mobile Money Partnership Program to turn mobile phones into payment processors. This program enables consumers to purchase goods and services through their mobile phones, as well as transfer funds and pay bills.

"By adding these services, we're providing mobile money users with greater flexibility for their payment decisions," said Woo. "Now a consumer in India can go to a general store that accepts MasterCard cards and can purchase goods without the use of physical currency, something that was never available to them before."

MasterCard made a smart move in the business world by identifying a neglected potential target market and finding a way to penetrate into this market by innovating a new program. I think that they will find this program to be successful and that several other companies will follow their lead.