Fact Sheet
MasterCard Worldwide: Leading the Growth of Contactless
Payments with MasterCard® PayPass™
As an alternative to cash usage, consumers and merchants around the world are embracing
the speed, convenience and security of MasterCard® PayPass™ contactless payment
technology in environments where transaction speed is essential. Using PayPass, consumers
simply tap their payment card, or alternative PayPass device, such as a key fob or mobile
phone, on a specially equipped merchant terminal, allowing everyday transactions to be
completed quickly, securely and easily.
A growing number of merchants in several consumer categories are meeting consumer
preferences to “Tap & Go™,” as they try to keep pace with evolving payment technologies,
speed up purchases, and optimize payment processing.
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PayPass provides consumers with a fast and convenient payment option so that they no
longer need to fumble for cash and coins, swipe a card or sign a receipt.
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PayPass is ideal for merchant environments where speed is essential, such as quickservice restaurants, drug stores, gas stations, movie theaters, sporting arenas and busy,
transit environments.
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PayPass can provide merchants with an opportunity to increase customer loyalty and
speed up transactions for enhanced customer service and thereby, potentially realize
cost savings.
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PayPass can help increase issuer profitability and encourage activation of previously
dormant accounts.
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PayPass cards also include the traditional magnetic stripe, so they can be used
anywhere MasterCard cards are accepted, whether PayPass is accepted at that location
or not.
MasterCard is Leading the Industry
With MasterCard PayPass, MasterCard is leading the industry in the introduction of cashless
payments in traditional cash-heavy merchant environments where speed is essential.
Contactless payments are also gaining popularity in emerging markets, where the advanced
payment option delivers speed and convenience to the consumer and operational efficiencies
to merchants.
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As of Q2 2009, there are nearly 61 million MasterCard PayPass cards and devices in use
at over 153,000 merchants worldwide.
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According to U.S. consumer research by the Smart Card Alliance issued in September
2008, nine percent of the U.S. population has a contactless payment card.
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There are MasterCard PayPass trials and rollouts currently underway in 28 countries,
including Australia, Canada, China, France, Spain, Switzerland, Taiwan, Thailand,
Turkey, the United Arab Emirates, the UK and the United States.
MasterCard Worldwide – Page 2
Leading the Growth of Contactless Payments with MasterCard® PayPass™
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In 2004, McDonald’s became the first merchant to accept PayPass.
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Today, MasterCard PayPass is accepted at a wide variety of merchants, including
McDonald’s, 7-Eleven, CVS, Duane Reade, Rite Aid and Sheetz in the U.S. Outside the
U.S., PayPass speeds consumers through the checkout process at such locations as
McDonald's (Lebanon and Mexico), Burger King (Turkey), 7-Eleven (Australia), Starbucks
(Turkey and Malaysia), Petro-Canada (Canada), Tim Hortons (Canada) and in many
other merchant categories, including supermarkets, cinemas, gas stations, fast food and
transit.
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PayPass technology has also proven popular in sports facilities, including football and
baseball stadiums and professional golfing events.
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In 2006, MasterCard and VeriFone Holdings announced the first U.S. acceptance of
MasterCard PayPass contactless payments in taxicabs in Philadelphia, followed by
PayPass acceptance by New York City taxis in 2007. New York City cab drivers state
that they are regularly netting tips of 20% and 25% with payment card usage compared
with the average 10% to 15% tip with a cash fare.
Source: NY Sun article “Hot Tip for Cabbies: Credit Cards Boost Tips” (March 12, 2008)
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MasterCard is leading the development of new contactless payment devices beyond
cards and key fobs, including mobile phones, wristbands and wristwatches. In 2006,
MasterCard led the U.S.’s first consumer trial of NFC-enabled mobile phones for payment
in Dallas, Texas.
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MasterCard’s commitment to innovation has spurred widespread industry recognition. In
2006, MasterCard was awarded Frost & Sullivan’s “Company of the Year” award for its
global leadership in contactless payments. In November 2006, the world's first wristwatch
equipped with MasterCard PayPass technology won a prestigious OSCARDS 2006
Award, as one of most innovative banking cards in the world. MasterCard also earned
two prestigious awards from Card Technology in 2006, including the “Most Significant
Implementation” award and the “Visionary of the Year” award.
MasterCard PayPass Supports Increasing Consumer Preference for Electronic
Payments versus Cash
According to a MasterCard Global Cash Usage Survey conducted in December 2007,
consumers today are using less cash than five years ago.
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Cardholders indicated that increased usage of their PayPass device is primarily
displacing cash transactions (61%).
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A majority of survey respondents (56%) believe that one day the world will be a cashless
society where credit and debit cards will replace cash and checks for payments.
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Three quarters (75%) of respondents believe that it is no longer necessary to have a lot
of cash on hand.
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Two-thirds of respondents (66%) reported that they use cash less often than five years
ago to make purchases.
These survey results indicate that consumer preference is driving PayPass growth and usage
globally.
MasterCard Worldwide – Page 3
Leading the Growth of Contactless Payments with MasterCard® PayPass™
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About half of respondents (49%) are likely to use a contactless card if provided by their
financial institution.
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Forty-seven percent of those likely to use a contactless card cite convenience as the
greatest benefit of the technology. Aside from convenience, respondents reported that
they like the additional security, speed and ease of use of contactless payment
technology.
As of 4Q 2007, more than 70 percent of all PayPass transactions were for purchases
of $25 or less and approximately 43 percent of all PayPass transactions were for
purchases below $10, indicating that PayPass is increasingly displacing cash as the
payment method of choice among consumers for small purchases.
Source: MasterCard transaction data and case studies with participating issuing
banks
MasterCard PayPass Speeds Up Transaction Time
PayPass saves time when making purchases, improving the customer service experience at
merchant store locations.
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Only about one-fifth (21%) of consumers are willing to wait in line for more than 10
minutes to make a purchase of less than $25.
Source: MasterCard 2007 Global Cash Usage Survey
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According to a PayPass issuer case study, for consumers,
o Wait time in stores decreased 15-20%,
o Wait time at the drive-thru & QSRs decreased 40%
o Average transaction time decreased 10-40%.
Source: Chase Bank press release (07/31/2006)
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According to a 2007 MasterCard PayPass Time and Motion Study, PayPass deployment
improves retail purchase time.
o High quality PayPass deployments were:
– 52% (or 15 seconds) faster than cash payments
– 33% (or 6.86 seconds) faster than payment cards
MasterCard PayPass Can Increase Customer Loyalty for Merchants
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According to MasterCard PayPass Performance Insights, February 2008:
o PayPass can increase merchant customer loyalty and provide an incentive for
cardholders to spend at merchants where they did not previously shop.
- More cardholders began to visit PayPass-enabled merchants after becoming
PayPass-enabled. In fact, in one case study comparing year-over-year
cardholder behavior within the same three month time frame, 31% of an issuer’s
cardholders shopped at PayPass-enabled merchant locations after being
upgraded to PayPass. Prior to being PayPass-enabled, only 23% of that
portfolio’s cardholders visited PayPass-enabled merchants.
o
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PayPass caused an expansion of where cardholders chose to shop by up to
27%, meaning that after being PayPass-enabled, cardholders spent at up to 27%
more merchant categories using their card then they did before being enabled
with PayPass.
Following a 2006 pilot in which New York City’s Metropolitan Transportation Authority
(MTA) partnered with MasterCard and Citi to launch a consumer trial of PayPass
contactless payments in the New York City subway, 15 percent of credit users and 23
MasterCard Worldwide – Page 4
Leading the Growth of Contactless Payments with MasterCard® PayPass™
percent of debit users indicated that they accessed the subway via MTA pilot test stations
more frequently since the trial began.
Source: MasterCard case study “Teaming Up to Put NYC Subway Riders on the Fast
Track”
MasterCard PayPass Can Help Grow Issuer Profitability
Studies comparing cardholder spend and usage in the three months before being
PayPass-enabled with spend and usage in the same time period after becoming
PayPass-enabled have shown that PayPass tends to increase card usage and
overall spend per card, driving GDV for issuing banks. Source: MasterCard
transaction data and case studies with participating issuing banks
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Cardholders spend more with their PayPass card - After being PayPass-enabled, there
was an increase in overall spend of 27% per PayPass account. Taking the effect of
reactivation into account in the issuer case studies conducted, increases grew between
28 – 42%.
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Cardholders use their PayPass card more often o After being PayPass-enabled, there was an increased transaction frequency
per account of 27%. Taking the effect of reactivation into account in the
issuer case studies conducted, increases grew between 33 – 52%.
o
Results of a 2008 Smart Card Alliance survey cited that contactless users
are paying with their contactless cards or devices frequently, with more than
22 percent of respondents indicating that they use contactless payments
more than six times per month.
PayPass cardholders showed more significant growth in spend and transaction frequency
than other segments of an issuer’s portfolio.
• A MasterCard PayPass case study showed that 30% of the issuer’s portfolio of active
PayPass cardholders (those that “tapped” and “swiped” at PayPass-enabled merchants)
drove 71% of the change in total dollar volume after being reissued with PayPass.
PayPass is a proven tool to help reactivate previously dormant accounts in an issuer’s
portfolio and thereby help drive profitability
• In one issuer case study, for example, 15% of active “tappers” were previously inactive.
In fact, the 15% that were inactive in the prior year had the highest level of annualized
incremental spend.
Cardholders Experience High Satisfaction with PayPass
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According to the 2008 MasterCard PayPass Benchmark Study:
o PayPass has garnered high customer satisfaction levels. Among
cardholders surveyed from all issuers, about 94% of “tappers” were satisfied
with their experiences with PayPass.
o Seventy seven percent of PayPass consumers said they use PayPass as
their primary card for everyday purchases.
o According to the 2007 MasterCard PayPass Benchmark Study, 96% of
PayPass consumers will continue to tap their PayPass card “just as often” or
“more often” (31% of those surveyed will use it “more often” than before) than
they would use the card if it lacked the functionality.
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Results of a 2008 Smart Card Alliance survey indicated that 92 percent of contactless
users who responded thought contactless payments were both fast and easy.
MasterCard PayPass in Transit
MasterCard Worldwide – Page 5
Leading the Growth of Contactless Payments with MasterCard® PayPass™
The transit sector has emerged as a key category for PayPass growth, experiencing
increasing adoption of contactless payments as a growing number of transportation agencies
seek to speed up the purchase of rides, optimize fare collection and keep up with consumer
demand for alternate payment choices. MasterCard is a leader in bringing MasterCard
PayPass to subway systems, buses, taxis and parking lots, with several consumer trials and
programs currently underway with transit agencies and transportation networks globally.
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MasterCard PayPass brings significant operational efficiencies to transportation
agencies. PayPass reduces the costs of accepting and processing cash and
minimizes operational expenses by enabling the aggregation of individual
transactions into a larger single payment transaction.
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Contactless payments offer commuters an alternate option for fare payment and
added speed at the point of entry, thereby enhancing the daily travel experience for
thousands of people that rely on mass transportation in busy, urban hubs.
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The robustness of MasterCard’s transit payments model enables the accommodation
of complex fare schedules and the creation of an automated fare system that is
compatible across multiple transit agencies.
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Using their MasterCard PayPass cards, travelers can speed up their check-in
process at select airports around the world.
o In February 2009, Lufthansa Airlines announced that it will replace its
traditional check-in terminals at all European airports with RFID-enabled
terminals. These terminals will enable travelers holding a Lufthansa Miles &
More credit card with a PayPass function to simply ‘tap’ their card on the
scanners to serve as identification and trigger the check-in procedure.
MasterCard has achieved several milestones in bringing contactless payments to the transit
space. In November 2008, MasterCard Worldwide and French transit operator RATP
announced that they are developing the functional and technical requirements to explore the
feasibility of using MasterCard PayPass cards to access public transport services. The goal is
to help French and foreign travellers gain faster access to public transportation by tapping
their MasterCard PayPass bank card in front of a reader.
In February 2008, Port Authority of New York and New Jersey and NJ Transit, two of the
major transportation providers in the New York/New Jersey area, announced an eight-month
trial of MasterCard PayPass at all PATH stations and select bus routes.
Mobile Initiatives for MasterCard PayPass
The mobile phone currently stands as a powerful, portable platform for the delivery of
consumer financial services, including payments. Mobile payments resonate with consumers
who are seeking quick and secure forms of payment. By linking mobile programs to PayPass,
MasterCard is bringing a new level of convenience to the consumer – extending contactless
payments to the mobile handset.
Several factors are driving the growth of the telecom market:
• Mobile phones play an integral role in consumers’ daily lives.
• Consumers are looking to use their mobile phones for services other than
telecommunications.
• Increasing network speed and enhanced handset security are making it possible to
conduct mobile payments and financial services using a mobile phone.
MasterCard Worldwide – Page 6
Leading the Growth of Contactless Payments with MasterCard® PayPass™
According to 2008 research by the Smart Card Alliance, users of contactless payments look
favorably at mobile payments.
• 43 percent of contactless users were likely to use a mobile device as a wallet,
compared to 19 percent of non-users.
• 47 percent of contactless users said they would switch mobile carriers to gain mobile
payments.
MasterCard recognizes that the adoption of contactless payments is a key bridge to mobile
payments, and has led the transformation of mobile phones into secure contactless payment
devices since the beginning of the decade, working with telecom providers and industry
organizations to ensure that standards are met as mobile phones move to the center of
commerce.
With the understanding that cooperation on the part of technology companies is critical to
building a robust mobile payments ecosystem, MasterCard is committed to facilitating
relationships that will continue to advance the growth of mobile payments. As a result,
MasterCard implemented the MasterCard Partner Program, a global online resource center
designed to foster knowledge-sharing, manage documentation distribution, track product
implementations and evaluate partnership opportunities within the mobile industry.
MasterCard is working with customers around the world to bring mobile payments services to
market quickly and easily. Most recently, MasterCard launched the Over-the-Air Provisioning
Service which allows issuers to perform over-the-air personalization of their cardholders’
mobile devices to implement PayPass capabilities.
Additionally, MasterCard is conducting several mobile payment trials with customers in the
U.S. and globally. Most recently, in the United States, U.S. Bank, MasterCard and Nokia
announced a six month mobile payments pilot program in Spokane, Washington. A select
group of U.S Bank customers in the Spokane area was given Nokia mobile phones equipped
with the MasterCard PayPass functionality, enabling them to pay for items by tapping their
phone at a variety of merchants throughout the area.
According to surveys conducted by MasterCard in 2007 following previous consumer mobile
trials, the majority of participants responded favorably to using the phone as a payment
device, citing ease-of-use, security and convenience. Additionally, the majority of
respondents said they would continue to use the phone if it was commercially available.
For more information about MasterCard PayPass, visit www.PayPass.com, and for recent
PayPass announcements, visit www.MasterCard.com.
Contacts:
Tristan Jordan
MasterCard Worldwide
914-249-5724
tristan_jordan@mastercard.com
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© 2008 MasterCard