Now this may finally get you to use mobile payments

Mastercard has a new way for people to pay via their Android phones. Sorry, iPhone users, you're out of luck.

Ben Fox Rubin Former senior reporter
Ben Fox Rubin was a senior reporter for CNET News in Manhattan, reporting on Amazon, e-commerce and mobile payments. He previously worked as a reporter for The Wall Street Journal and got his start at newspapers in New York, Connecticut and Massachusetts.
Ben Fox Rubin
3 min read
Enlarge Image

Mastercard is expanding its Masterpass platform into mobile payments in stores.


How many in-store purchases did you make last year using your phone? If you're like most Americans, the answer is none.

Hoping to make mobile payments just a little more accessible, Mastercard and 17 banks teamed up Thursday to let customers pay for stuff using bank apps on their phones. Citi, Bank of America, Fifth Third Bank and KeyBank are among the institutions adding mobile payments -- the ability to wave your phone or smartwatch at a payment terminal to make a purchase -- directly to their apps. Capital One, another partner, already has added this feature to its app.

The new feature will only be available to owners of Android phones that have built-in near-field communication, or NFC, chips.

The new partnership comes amid a ton of work being done to reinvent the way we pay for things by using our phones and smartwatches and other doodads. Tech companies like Apple and Google led the way into mobile payments, and the concept is now interesting enough that banks want to get more involved, which may nudge mobile payments more into mainstream use.

By adding mobile payments directly to their apps, these banks also may be able to gain more control over their customers, instead of simply handing them off to digital wallets like Apple Pay, Samsung Pay, Android Pay and PayPal.

While tens of millions of customers will have access to this new Mastercard-powered payment option, the folks left out will be Apple iPhone users. That's because Apple doesn't permit other companies to use the NFC chip in its phones, which powers Apple Pay. Unlike Apple Pay, which can be cued up from a phone's lock screen, the new Mastercard feature needs to be accessed from within a bank app.

James Anderson, Mastercard's executive vice president of digital payment products, said banks' ability to provide more information, including balances and rental car coverage, alongside mobile payments, could give these apps a leg up over services like Apple Pay. Chase is also working on its own mobile payment service, called (you guessed it) Chase Pay.

While the banks' new payments feature may become competition to tech players, Paul Moreton, Capital One's vice president of digital product management, said his company plans to continue working with Mastercard and with Apple, Google, PayPal and others to enable all kinds of digital payments.

"I don't think there's a one size fits all and I think there's a lot to be learned," he said.

For its part, PayPal said Thursday it welcomes "any developments that help people move away from the awkwardness of cash."

There's a very long way to go to make mobile payments something most people use. Apple Pay jump-started the concept, helping mobile payments sales reach $8.7 billion in the US last year, according to researcher eMarketer. While that may sound like a big number, it's still a tiny sliver of the $4.8 trillion total US retail sales in 2015. Mobile payments sales are expected to triple this year, eMarketer said.

For now, mobile payments aren't widespread enough to become a habit for most customers, partly because there still aren't that many terminals in the US that allow you to wave and pay.

"Ubiquity is very important," Moreton said.

Mastercard is powering this new payment feature using Masterpass, a service it already has available for in-app and online purchases. This new function for Masterpass will allow consumers to use the platform in-store at more than 5 million locations in 77 countries.

The rollout of the new Masterpass payment feature will start for Android owners in the US this month. Europe, the Middle East and Africa will get the feature by the end of the year, with the rollout continuing in other areas into 2017.

Watch this: Why you should pay with your phone whenever you can