Inside Mastercard's push to bring digital wallets together

• Key insight: Mastercard has made several moves to boost its services for digital wallets. 
• What's at stake: The card network is attempting to add scale and interoperability, making different digital wallets compatible. 
• Expert quote: "The first chapter of digital wallets was adoption. The next chapter is interoperability at scale." —Mastercard's Gaurang Shah

As digital wallets become a primary way for consumers to access payments, Mastercard and Visa have made distribution a key element of their attempts to integrate with the new global wallet marketplace.

Mastercard's latest play is Mastercard Wallet Pay, which aims to improve interoperability among wallets that use contactless near field communication, QR codes and online digital payments, putting these wallets in front of more merchants and consumers in the process. 

"The next phase of digital wallet growth is not simply about adding more users, but about making wallets more useful, accepted and interoperable across everyday payment experiences," Gaurang Shah, executive vice president and head of global acceptance and merchant solutions for Mastercard, told American Banker. "The first chapter of digital wallets was adoption. The next chapter is interoperability at scale."

Making connections

Mastercard has signed up several digital wallets at launch, including Alipay+ partner wallets AlipayHK, Clip, GCash, KakaoPay, TNG eWallet, and TrueMoney, together with Axian, Cred, DaviPlata, Mercado Pago, MTN and TenPay Global.

Wallet Pay enables digital wallets to launch their own credit, debit or prepaid card program and allows merchants to accept payments from cards and wallets in person and online, covering more than 3.7 billion Mastercard credentials to connect to digital wallets.

"Many digital wallets have achieved strong local adoption, but as wallet ecosystems mature, consumers increasingly expect their preferred wallet to work seamlessly across merchants, channels and borders," Shah said. 

Mastercard's goal is to allow wallets to scale more quickly without having to build connectivity and acceptance infrastructure on their own, according to Shah. 

Mastercard's new wallet service is strategically important, reinforcing the card network's role as a deployment layer for an expanding digital wallet ecosystem, according to an analyst note from TD Cowen. 

"Even if the underlying funding source is a stored wallet balance, Wallet Pay would enable Mastercard to remain the interoperability acceptance layer," TD Cowen analysts said. "It aims to ensure that growth of digital wallets remains network-accretive vs. network-disruptive."

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Mastercard's new wallet program also follows another recent Mastercard release of a set of software tools and services designed to make it easier for banks and fintechs to add contactless payments into their iOS and Android apps.
Another Mastercard service, Mastercard One Credential, enables consumers to switch or preset payment types — routing debit for smaller purchases, credit for mid-tier expenses, and buy now/pay later or installments for larger transactions that are often supported as part of digital wallets. 

"Ultimately, we see connected digital wallet ecosystems as key to driving broader adoption," Shah said. "By bringing together leading wallet providers across Asia, Africa, the Middle East and Latin America and enabling trusted, secure and seamless payment experiences, Mastercard is helping make digital wallets more widely accepted."

Wallet planet

Visa's digital wallet products include Visa's Flexible Credential, which enables financial institutions to issue a single digital credential where consumers toggle between credit, debit, installments (such as Affirm), rewards points, or customized virtual cards.

While flexible credential features sit inside mobile banking apps, both Visa and Mastercard have also forged distribution through Apple Pay and other large digital wallets. Visa and Mastercard do not have their own digital wallets, but are tapping a large and expanding market. Juniper Research anticipates a 35% increase in global adoption between 2025 and 2030, with users rising from 4.4 billion to more than 6 billion, adding that more than three-quarters of the world's population will be using a digital wallet by the end of the decade.

"As digital wallets proliferate globally, Mastercard is offering providers a path to add merchant acceptance, cross border payments, issuing and money movement without building independent payment rails/acceptance," TD Cowen analysts said. 

The Mastercard Wallet release also suggests the card network is largely enabling wallet balances to become Mastercard-network-compatible credentials via tokenization, a major growth vector for Mastercard, TD Cowen said. 

"We expect it may enable a combo of processing fees and monetization via tokenization and wallet enablement fees, issuer processing/managed services, international money movement fees, fraud, risk and acceptance services," TD Cowen analysts said.