If you are unfamiliar with Mastercard, you may be forgiven for believing it to be a ‘legacy’ business, rooted in traditions.
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But that’s actually far from the case. These days it has moved beyond credit cards and payment systems: it’s a technology company striving to bring more efficiency and transparency into the world.
Speaking to Arabian Business on the sidelines of Mastercard’s star-studded ‘Connecting Tomorrow’ event in Barcelona (featuring the likes of Pelé, Apple co-founder Steve Wozniak and Skype founder Jonas Kjellberg), Malhotra says the company has undergone a “huge transformation” over the last 10 years.
“Remember, we were an association, owned by banks, that built the infrastructure for them to be able to create a payments business. This was when credit cards first came out, and the brand became synonymous with credit cards,” he says, adding that: “It’s a natural tendency to say ‘Mastercard’ and associate it with credit cards and everything around that. And that was true, but many decades back.”
It’s moving forward to a new reality in which people associate us with technology and platforms rather than just the payments
As Malhotra tells it, Mastercard was way ahead of its peers. Bringing a technology platform – plastic payment cards – into the mainstream allowed customers to make transactions in seconds, which was revolutionary for its time.
The ubiquity of technology, such as mobile devices, means the company has had to adjust to reflect a well-connected, digitised and convenience-focused customer base which demands as seamless an experience as possible.
“Now, I don’t need you, the customer, to go to the place which has technology. We call this the difference between push versus pull. Earlier you pulled the transaction, now consumers can push the transaction,” he says.
“As you see more available platforms, you’ll see a new realisation coming through about what we do. It’s a question of us moving forward to a new reality in which people associate us with technology and platforms rather than just the payments.”
At the event in Barcelona, under the theme ‘Creating the Road Map for the Future’, Mastercard showed a number of use-cases for its new technologies, which ranged from lending platforms that digitise supply chain management to new ways of using biometrics to ensure the security of online and in-store purchases.
Also on display: technology that uses augmented reality to “place” a non-physically existent item next to a real one in a store, through one’s mobile device.
For those of us who aren’t particularly tech-savvy, such uses of technology may seem far-fetched, or far-off. But Mastercard has already begun implementing a mind-boggling array of tech to “enable” people. As an example, Malhotra points to the company’s work in parts of Africa and India, where Mastercard has implemented an “agri-app” that creates a digital marketplace for those involved in agriculture. This brings together small farmers, agents, buyers and financial service providers to do business with one another with complete transparency.
“Governments are starting to say that they have to make sure more and more people are financially included. Think of how people are able to transact in this way. And also consider that large swathes of many economies depend on the development of SMEs (small and medium-sized enterprises),” he remarks. “In the past, you’d give subsidies to help that process, but going forward, there is a clear realisation that you can only help that sector and take the economy to the next level if you drive a more efficient transaction time. If you digitise the supply chain it lowers the cost.”
You only help SMEs and the economy if you drive a more efficient transaction time
Even more importantly, Malhotra says, is increasing the transparency of economic “flow”, where people can see everything that is happening, digitally and in real-time. “You start to be able to make better decisions on things like working capital requirements and micro-credits. So it allows many more players to be in that whole value change,” he says. “That’s the big shift.”
Among the partners that have turned to Mastercard recently is Expo 2020 Dubai, which has named the company as the “official payments technology” partner of the upcoming event. That means Mastercard will be deploying technologies including augmented and virtual reality, face and fingerprint recognition and wearable and contactless payment solutions, and even voice shopping to create a “seamless” visitor experience.
The end result, according to Girish Nanda, Mastercard’s general manager for the UAE and Oman, is a cashless experience which is simple and safe, allowing the visitor to focus on and enjoy the offerings of Expo.
“Our own research shows that users are looking for new ways to pay. They’re optimistic about digital options. They want the flexibility to pay with any device,” he adds. “But equally important is the safety and security of personal information.
The Expo announcement, Malhotra beams, is a reflection of the importance Mastercard places on the Middle East and on the GCC, where a number of governments have announced plans that dovetail with the capabilities Mastercard brings to the table. “We have very solid Middle East business. Dubai is one of our five global hubs, our regional headquarters for 69 countries. I don’t need more proof than that,” he says proudly.
Malhotra says the second part of what Mastercard does in each of the region’s economies is to pay attention to any progressive government visions or positive policy-making changes to see what infrastructure it can adapt in these countries that might help the process.
“The economics are different in each country, so we just change the value chain a little bit in how we operate in the markets, but the principles remain the same.”
When asked about blockchain – a technology for which Mastercard has filed a large number of patents with the US Patent and Trademark Office – Malhotra, a financial services veteran who previously held senior roles at Citicorp, American Express and ANZ Grindlays Bank, is quick to distinguish the underlying technology from cryptocurrencies, about which he says Mastercard “is not a great believer.”
I don’t think people understand how blockchain is broken down and where it can be efficient
“They’re speculative. If that’s how you want to use that technology, you might as well gamble or do some commodities trading. It doesn’t solve real-world problems like that,” he says, sounding vaguely perplexed at the public fascination with the digital currencies. “Blockchain is a solution looking for a problem. It’s not the other way around. I don’t think people really understand how blockchain is broken down and where it can be efficient. ”
While he is dismissive of cryptocurrencies, saying they would only work if they were transparent and regulated, which they aren’t, that isn’t to say that he doesn’t believe in the underlying technology. “We do believe it could have applicability in cross-border payments because it drives efficiency, openness and transparency,” he says. “It also could be useful in providing proof of provenance, like a car manufacturer who uses blockchain to make sure he has an authentic part. Our focus is on these kinds of cases.”
Malhotra is far more optimistic when talking about artificial intelligence (AI), which Mastercard is already using for a number of tasks, including automated fraud detection and KYC (Know Your Customer) applications. As an example, he points to Brighterion, a California-based AI company that Mastercard acquired in 2017.
“It uses AI to help to do AML [anti-money laundering] better and drive efficiency…we like to use AI in that sort of environment. And we’ve been very clear – we never store customer data and we are super clear on how our privacy works. Because we’re a B2B2C model, it makes us very defined on how we operate and what we use AI for,” he says. “We’ll keep using data at an aggregated level, so even if you apply more AI features, it’s done with that principle in mind. Nobody will ever know what an individual does or who they are – people become data sets of a thousand, and a certain segment operates in a certain way. It’s a different way of applying it.”
Speaking to Malhotra, it quickly becomes clear that he is what one might call a ‘futurist’. Even in casual conversation, he broaches subjects as diverse as the social and geopolitical implications of improving medical technology to whether one day the DNA from fireflies might be introduced into bark to make glow-in-the-dark trees.
When it comes to Mastercard, Malhotra is weary of saying anything too forward looking – keenly aware that the future can change quickly – though he’s clearly optimistic about the direction the company is taking, especially in the Middle East and Africa region he oversees.
“What we do see, on a broader scale, is this whole secular shift moving away from cash to much more efficient electronic forms. And I certainly see us playing a very large part in that transition. I also see us playing a huge role in ensuring that the right safety and security layers are in place when you create this digital infrastructure,” he says. “We’ll also play an increasing role partnering with governments and creating infrastructure that allows for efficiencies, whether it’s for the SME side, supply chain digitisation or financial inclusion… I see us playing a much bigger role in the Middle East and Africa.”
The recently announced partnership between Mastercard and Expo 2020 Dubai will see the company deploy its latest payment technology, including augmented and virtual reality, biometrics, facial and fingerprint recognition as well as contactless and wearable technologies.
“World expos have always offered people their first experience of technologies that will go on to change their everyday lives,” says Reem Al Hashimy, the UAE Minister of State for International Cooperation and Director General of the Dubai Expo 2020 Bureau. “In the future, people will grow to expect seamless experiences whenever they make a payment. Our partnership with Mastercard will not only make cashless payments easier for our visitors, but also allow them to try new and exciting innovations that enhance and become part of their Expo experience.”
Earlier this year Mastercard announced a partnership with mada, the kingdom’s domestic payment network, to enable online payments using Mastercard technology.
The partnership with mada allows more than 28 million mada cardholders to transact online, and in August was expanded to allow contactless payments at hundreds of thousands of NFC-enabled terminals on the kingdom.
Utilising Mastercard to facilitate online payments via the network will enable Saudi businesses to increase their e-commerce sales, said Ziad Al Yousef, director at Saudi monetary agency.
In a June conference in Amsterdam, Mastercard vice chairperson Ann Cairns said that the company has “built a blockchain that can run the whole” of its network, part of a larger effort to develop blockchain integration “at scale” and finding “real use cases.”
“You just don’t replace existing technology with blockchain because you may not create a better user experience,” she added, according to media reports.
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