MasterCard partners with startup for mobile payment system

One of the world's largest processors of credit and debit card transactions will soon partner with a small startup company to develop a mobile payment system that allows consumers to transfer money to each other digitally.

MasterCard and the small developer PaidPiper are working together to develop a payment service that will allow users to transfer money to each other automatically, according to a report from PC World. Currently, this type of transfer by mobile devices is common in countries where credit card and mobile banking options are few and far between, but bringing it to economies with significant existing credit card infrastructures is a relatively new concept. The startup says that the program will be easier to use for consumers than giving gift cards or virtual coupons to other consumers, and uses proprietary MasterCard application programming interfaces, which are now being made available to third-party developers.

PaidPiper is also developing a smartphone app that will work on Apple's iOS mobile operating system, called Ok'd, the report said. With this app, consumers will be presented the choice between "Ask" and "Give," for money transfers, meaning that those who have the app could either request or grant funds to other users. However, this could also be used as a means of incentivizing certain types of behavior, such as having participating companies credit consumers' accounts with $10, for example, for filling out an online survey through the company.

But what sets this payment system apart from others is that it issues individual account numbers for each transaction, the report said. For instance, if a mother and child are both signed up for the program, the parent would be able to give the kid a small amount of money to go shopping, with the understanding that the amount granted couldn't be exceeded, much like with a prepaid card.

NFC infrastructure wouldn't be far behind

Of course, many experts also predict that consumers will likely adopt mobile wallet technology, which allows them to use their smartphones to conduct transactions with merchants without swiping their credit cards, thanks to a technology known as near-field communications, the report said. And already, the PaidPiper system is designed to incorporate the use of NFC into its system once that technology becomes more ubiquitous in the mobile world.

On the other hand, some experts have also said adoption of NFC for purchases may be a long way off as consumers are still largely uncomfortable with the security offered by the technology. This is seen as the biggest hurdle to widespread use of mobile wallet systems, but it's believed that obstacle will be cleared as more NFC smartphones become available. Currently, very few are on the market, and the technology is still relatively new in this forum. Many had expressed similar concerns over mobile banking systems, which are now quite popular among consumers.

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