Consumers expect flexibility at checkout, and Mastercard has inked deals with PayPal and Deutsche Bank to deliver more payment alternatives.
The partnership with PayPal centers around Mastercard One Credential, a platform that allows consumers to pay in multiple ways using a single credential—both online and in-store.
According to Mastercard, this functionality resonates with Gen Z users, who expect more personalized payment experiences. The collaboration with PayPal will not only allow both companies to develop new features in One Credential but also extend the platform’s reach to a broader consumer base.
Taking a Different Tack
In Europe, Mastercard is taking a different tack toward expanding payment options. Its collaboration with Deutsche Bank will leverage Mastercard’s open banking network to bolster the bank’s merchant payment solutions.
By enhancing Deutsche Bank’s request-to-pay service, Mastercard will effectively introduce real-time payments at checkout. While this model has become commonplace in countries like Brazil and India, it has struggled to gain traction in many other regions.
Real-time payments offer substantial benefits for merchants, such as low transaction costs and a more transparent reconciliation process. However, in the United States, the ubiquity of cards has hindered widespread adoption of real-time payments, as many consumers view paying by debit card as equivalent to pay-by-bank.
Another barrier to real-time payments adoption in the U.S. is that the rails—FedNow and RTP—haven’t historically supported payment requests. This limitation makes it more difficult for merchants to accept real-time payments as seamlessly as card transactions.
Gaining Momentum
Mastercard’s partnership with Deutsche Bank is designed to address this issue in Europe and boost open banking efforts in the region.
Open banking has seen increased adoption in Europe, largely due to government backing. While the model has been a key driver in reshaping the payments landscape over the past few years, it’s unclear whether Europe will follow in the footsteps of countries like Brazil and India.
“Pay-by-bank is gaining momentum in Europe through this new request-to-pay product announced by Mastercard and Deutsche Bank,” said Don Apgar, Director of Merchant Payments at Javelin Strategy & Research. “Leveraging account-to-account payments presumable means lower costs for merchants, and it will be interesting to see if consumers are attracted to using this new payment type in lieu of traditional card payments.”
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