MasterCard unveils 'virtual wallet'

Mastercard has unveiled its bid to dominate the mobile payments market with a 'virtual wallet' allowing customers to keep personal payment details in their phone and avoid checkouts by scanning bar codes in-store to pay.

Financial services companies like the U.S. credit-card company as well as technology names Google and eBay'a PayPal are looking for ways to capitalise on the prevalence of consumers' sophisticated phones by providing programs that house credit and debit cards, coupons and store loyalty program details virtually.

Mastercard said its MasterPass service, effectively an app, would let customers pay for their goods without approaching a cashier by instead scanning a bar code and creating a digital receipt on their phone or tablet that can be shown as they exit the store.

It can also be used for easier online payments, allowing customers a "one click" way to pay without the hassle of having to input their credit or debit card details each time.

It comes almost a year after MasterCard's first foray into the mobile payments market with PayPass, which let customers pay at store tills by simply tapping their cards against a sensor.

The U.S.-based credit card company said the MasterPass system would be rolled out in Australia and Canada by the end of March. The United States will follow later in the spring, ahead of the UK in the summer.

Participating retailers include Argos, Boots and American Airlines, while banks which have signed up include Spain's BBVA and Santander, Citigroup in the United States, Italy's Intesa Sanpaolo and Sweden's Swedbank.

Ed McLaughlin, chief emerging payments officer at MasterCard, said banks would pay to use the technology, but would not give any detail on what the charges would be. Banks will also be able to use a "private label" version that can wrap their own cards into the MasterPass virtual wallets.

McLaughlin would not give details on MasterCard's usage targets for MasterPass, but said it was his company's "big play" for the next generation of payments technology.

Last month MasterCard posted fourth-quarter results that topped Wall Street estimates as more people chose card payments over cash, but it warned that global economic woes could slow revenue growth in 2013.

Both it and larger rival Visa Inc are working to spread card payments in parts of the world dominated by cash transactions. Mastercard is now focusing on tie-ups with banks in Africa and Brazil, where mobile and card payments are on the rise. It has also linked up with TIM, the second-largest mobile network operator in Brazil, to launch a mobile money program for its subscribers.

But MasterCard has its work cut. While the area of mobile payments is widely seen as the next big money-spinner, companies are so far struggling to make money from them. There is also a raft of different products coming to market.

Visa Inc will soon be rolling out its own digital wallet service, V.me, while last week PayPal launched a new European version of its mobile payments service that merchants can run on Apple Inc iPhones and Android-based smartphones.

Meanwhile tech start-up Square, headed by Twitter co-founder Jack Dorsey, has attracted thousands of small merchants in recent years by offering a free card reader that attaches to smartphones and handles payments for a flat fee.