They hope to have some innovations from the partnership by 2023.
The collaboration aims to enable businesses to use emerging payment technologies to turn smartphones in to cash registers, to turn wearables like watches as payment devices, and to facilitate touchless retail similar to Amazon Go stores.
“A large retailer can easily do this. A small business, how are they going to do it? That’s exactly what this will bring; 5G allows us to deliver the full experience,” Mastercard CEO Michael Miebach first told CNBC, ahead of the announcement. “For example, I choose an item in a shop, but actually they don’t have the color I like. So I’m going to have it sent home, and it is going to be paid once it arrives, all of that is coming together and we with 5G will be enabling this.”
“5G will enable the small- and-medium business to handle transactions more quickly and focus on what they are really delivering to customers,” Verizon CEO Hans Vestberg told CNBC. “You can use 5G to create more frictionless ways of transacting with your customers and focus on your business. That’s of course what we see with touchless stores and coming out from Covid, I think we see much more touchless because it’s part of our society today.”
The Mastercard-Verizon partnership looks to further digitize and disrupt global consumer spending at retailers and other merchants, which the payments giant estimates to be around $50 trillion annually. Teams from Mastercard and Verizon will be embedded at Mastercard’s New York City Tech Hub working on additional applications for the 5G alliance.
The use of Internet of Things (IoT) and Mobile Edge Computing (MEC) in retail are two of the additional applications that will be explored by teams at Mastercard’s Tech Hub. MEC allows cloud computing and other online capabilities at the limits of an internet network.
“We’re bringing the computing and storage of data closer to you as a consumer, that means that you can get hold of a service quicker, it’s going to be more secure because it’s closer to you. Some data has to be very close, some data can be very far away,” Vestberg said. “That can be in any industry, but a very good use is the financial industry, because transactions need to be very secure.”
Miebach believes small- and medium-sized businesses will be the biggest growth area for 5G contactless payments and the increased computing power has to potential to grow their businesses.
“As a small business owner, you have to compete in a more digital fashion than ever before. You might have been brick and mortar before,” Miebach said. “Let’s say you’re at restaurant, you tried out curbside pickup and now you want to run the business across both channels. That’s a better experience but at the same time, it will drive more turnover for the merchant, will drive more turnover for an issuing bank that issues a credit card as well as for us.”
“There’s also more reach into new types of payments,” he added. “In the end, the way I look at it from our businesses, we’re building a long term market for us to grow into.”