Mastercard is unlocking opportunities in the digital economy
FinTech Magazine (FM) consulted with Ajay Bhalla (AB), President of Cyber & Intelligence, to learn what opportunities and challenges a cashless society might bring, and how Mastercard is fostering financial inclusion globally using digital technology.
FM: Please describe your role at Mastercard.
AB: I lead a team of extraordinary people who develop cutting-edge technology solutions across cyber, biometrics, artificial intelligence and identity. We play a pivotal role in enabling the safe and secure processing of the one billion transactions running through the Mastercard network each day.
FM: The COVID-19 pandemic has led to an explosion of consumer interest and adoption of contactless payments. How do you envision this trend playing out?
AB: Almost overnight, the pandemic brought about radical change in the way we work, shop, socialise and interact. With that shift, in a matter of weeks, we vaulted five years forward in digital adoption.
The world of contactless payments is no exception. At Mastercard, we’ve seen significant year-on-year growth in contactless in-person transactions: whether by card, mobile device or wearable, contactless now represents 63% of in-store transactions across Europe and 40% of those made worldwide.
Over the last few months, the pandemic has driven faster contactless adoption, largely by necessity. That trend is set to continue and contactless payment transactions are forecast to (a five-year increase of 300%).
FM: What are the opportunities and challenges of moving to a cashless society?
AB: Enabling digital payments instore allows consumers to benefit from a cleaner, touch-free interaction at checkouts and reduces the need for face-to-face retail interaction. Contactless transactions are also 10 times faster than other in-person payment methods.
This technological shift could have serious economic benefits too: the economic impact of cash payments is estimated to cost approximately 1.5% of GDP. At a time when the global economy has tipped into recession, mitigating that cost is critical.
There is one major challenge of moving to a cashless economy: how to deliver all this securely, amid new digital threats. Identifying fraudulent or suspicious transactions is a central pillar of Mastercard’s multi-layered security approach. We go above and beyond what is required to provide the most effective overall security protection. Our industry-leading artificial intelligence processes more than 75 billion transactions every year in real-time, preventing fraud from harming consumers and the wider payments ecosystem.
FM: Which other payment tech trends do you think deserve special attention?
AB: What’s often not talked about is the technology behind-the-scenes that is the foundation of the payments ecosystem: AI. At Mastercard, it’s protecting consumers, merchants, banks and all our stakeholders, helping us save $20bn in fraud in 2019 alone. When we look at tech trends that will shape the future of payments, we must look at what will most impact AI.
5G and quantum computing will be real game changers. 5G will lay the foundation for the mass connection of IoT and enable a new generation of applications and services. Quantum computing could spark the creation of an entirely new software market, allowing us to process exponentially more data than the systems we use today.
FM: How is Mastercard showing its commitment to financial inclusion?
AB: Financial inclusion remains one of the world’s great challenges, and contactless payments could play a vital role in progressing a global solution. Mastercard is committed to bringing one billion people into the digital economy by 2025, creating pathways toward increased financial security for people, communities and businesses around the world.
Ensuring digital access for everyday transactions is a key step in including those currently outside the digital economy. However, it can be expensive and complex for small and micro merchants to launch these services, forcing many to accept cash payments.
In April 2020, there were still 130 million small and micro merchants in emerging markets that did not accept electronic payments. By using tap-on-phone payments solutions, small business owners can accept payments from contactless-enabled cards, mobile wallets and even smartwatches. This unlocks the opportunity for consumers and small businesses to engage in the digital economy with greater equality.
Image: Ajay Bhalla
Nymbus enters strategic partnership with Plaid
Nymbus, a leading provider of banking technology solutions, has partnered with Plaid, a data network powering the digital financial ecosystem, to more instantly authenticate and fund customer bank accounts for financial institutions.
This new integration will allow Nymbus bank and credit union clients to securely onboard new users in a matter of seconds, which in turn translates to more active and engaged banking experiences. Plaid’s data network enables consumers to connect their financial accounts at over 11,000 institutions globally to more than 5,000 digital finance apps, including leading payments, investing, and budgeting tools.
What are the benefits of the integration?
Benefits of the Nymbus and Plaid integration for financial institution customers include:
- Improve user identity verification and reduce fraud.
- Instantly authenticate and link members’ bank accounts.
- Streamline ACH transfers between any bank or credit union in the US.
- Access and analyse comprehensive transaction data.
- Validate real-time account balances to protect against overdraft and enable account pre-funding.
“As more consumers than ever before rely on digital finances for their everyday lives, financial institutions need to meet their customers where they are while supporting safe and reliable money management experiences,” said Sarah Howell, Chief Alliance Officer at Nymbus. “Our expanding network of partners are important contributors to Nymbus’ combined portfolio of the technology, people and process available to quickly innovate with new routes to market and revenue streams.”
Continuous growth and expanding partnerships
Founded in 2015, Nymbus has continued to grow. Most recently the company has closed a new round of financing led by the Curql Fund. The US$5 million investment will be used towards Nymbus CUSO and accelerate a shared commitment to breakthrough technology for ensuring continued growth and stability for the credit union community.
Nymbus CUSO was founded in March 2021 to help break through barriers to growth, and its mission is to connect credit unions with trusted fintech offerings that both simplify technology delivery and enable new digital revenue opportunities.
Last year Plaid set a goal to move 75% of its traffic to APIs by the close of 2021, calling it “one of our top priorities as the industry moves full-steam ahead toward a fully digital financial system.”
Recently it has announced an open finance partnership with Capital One, a digital finance innovator, and the successful completion of its migration to the Capital One API. They have also completed or have in-motion data access agreements with major US financial institutions, including U.S. Bank, JPMorgan Chase, Wells Fargo, and others.