Payment Innovation: Past, Present + Predictions

by Susanne Hannestad 0

“We are not a credit card company, we are a technology company in the payments industry. We facilitate the movement of money and transactions between billions of consumers, with millions of merchants, in tens of thousands of banks, in 200 countries.” ~Ajay Banga, CEO, MasterCard

The banking industry has long been viewed as risk-averse and slow to change. However, a confluence of factors has recently conspired to enact a significant transformation¬ in not only how companies such as MasterCard and Visa are viewed, but how they view themselves.

The ‘Great’ Recession

The first turning point came with the financial crisis of 2008. This game-changing event caused not only significant financial losses but also loss of confidence and public trust. The continual and continuing negative press forced the hand of many banks and institutions to make major institutional changes; they needed to turn around their companies, which included attracting new customers as well as maintaining their existing customer base.

Technology, innovation + breaches

The initial shift towards innovating began with advances in alternate payment technology including PayPal, Square and Google Wallet. Viewed at first as mere upstarts in a heavily dominated industry, the major players were not fazed to make any significant changed in how they do business.

Following a series of high profile consumer data breaches, including Home Depot, Target, and Neiman Marcus, the introduction of Apple Pay that incorporates biometric security seemed to hit the market at exactly the right time.

Addressing both the emerging mobile payment industry and the need for greater security of financial transactions, Apple Pay issued a challenge of sorts to the industry to innovate or become obsolete.

It comes from the top

Any major shift in corporate culture needs strong leadership. At MasterCard, that visionary leadership came with the appointment of Ajay Banga as CEO in 2010. At this time, two years after the beginning of the financial crisis, Banga saw the opportunity to help both banks and MasterCard through innovation and technology. While still COO, Banga launched MasterCard Labs, an in-house innovation arm tasked with ‘being it’s own disruptor.” Since then, Banga has been evangelizing the virtues of technology and innovation as cornerstones of the payments industry.


With an estimated 25 million merchants worldwide, each with any number of terminals, implementation of technology advances can take time. The major hurdle for implementation is the creation of standards. Developing, testing and rolling out new standards across the globe can be a long, but very necessary, process.


With the United States set to implement the switch from magnetic stripe payment cards and terminals to chip & pin, several other countries have already begun to leapfrog to the next generation technology: contactless. This has been bolstered by the growing mobile phone payment applications including Apple Pay, Samsung Pay, Ali Pay, Android Pay and PutinPay. MasterCard is leading the contactless charge through its mandate to have all terminal contactless by 2020 in Europe.

It is an interesting paradox that two of the more conservative industries – banking and security – are now viewed as cutting edge technology innovators.

Featured Content