Payment technology firms are enticing consumers and companies by selling fast digital channels to make international payments, a trend Mastercard and
Mastercard on Thursday said
Cross-Border Services supports international transactions, and Mastercard Send is the card network's foray into real-time payments. Combined, the two Mastercard products enable users to send funds to bank accounts, prepaid debit cards, mobile wallets and cash-access locations with the money available in a few seconds.
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"There is a need for speed," said Alan Marquard, head of transfer solutions at Mastercard.
"But it's not the only thing that people are looking for. Traceability is also important. People want to know where their funds are in process."
Through the Mastercard Send collaboration,
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Mastercard Move competes with fintech products that facilitate cross-border payments, such as Ripple — which uses blockchain technology to decentralize money movement, cutting out the need for correspondent banks. Ripple initially operated the service as a rival to banks, but in recent years has partnered with banks to expand its network.
Other firms such as Tipalti and Wise are active in cross-border payments. And Visa Direct enables users to access a single connection to Visa to execute near real-time transfers, remittance, insurance claims and other transactions.
The credit card company launched Mastercard Move in March and has been trying to scale the product by adding partners. Mastercard partnered with Alipay, the Chinese digital payment app, and later signed a deal with technology firm Verituity to sell a white-label remittance and disbursement product to banks.
Other deals include a collaboration with Access Bank Group to penetrate Africa, Philippine-based RCBC to enable card-based money transfers for Filipino consumers and Paysend to offer Mastercard Move in Latin America.
"The partnerships are an accelerator," Marquard said. "
Use cases for Mastercard Move thus far have been remittances, other transfers and B2B transfers, though the card network plans to add more payment types.
"Anything that touches on money movement or money transfers," Marquard said.
Mastercard and Visa have focused on diversifying revenue streams in recent years as fintechs and regulatory moves have pressured revenue from processing transactions at the point of sale. The card networks are tapping the banks' need to adopt real-time payments and to streamline cross-border transactions.
"Both [Visa and Mastercard] leverage their respective networks' extensive set of bank endpoints and to facilitate access to cardholder accounts," said Press, adding Visa Direct and Mastercard Move are part of a trend of moving away from the Swift global payments messaging system and correspondent banking toward faster systems with more direct participants, especially for low-value payments to individuals.
"The card networks have been broadening the scope of transactions they are willing to handle with the goal of shifting traffic to their networks," Press said. "They have an inherent advantage with their extensive set of endpoints at banks and merchants and the fact that their cards are in the hands and wallets of millions of consumers worldwide."
Participating banks can offer a service with clear advantages over traditional cross-border options and at significantly reduced cost, according to Press.
But there are also challenges to the strategy. While cards have been cross-border for a long time, they haven't been used for large-value transfers due to the pricing model, and reluctance on the part of card networks to carve out exemptions for high-value payments has been a sticking point, according to Aaron McPherson, principal at AFM Consulting.
"We need to see the product in the marketplace to understand how well it ranks against what is already out there," McPherson said. "
