Mastercard is introducing Fintech Express

Global payments industry giant, Mastercard is taking big steps towards embracing Fintech. During the Singapore Fintech Festival taking place from Nov-11 to Nov 13 of this year, Mastercard announced its latest innovation - Fintech Express. The program aims to onboard partners at record speed and provides immediate access to a cross-functional team of experts to support multiple work streams across Product, Partnership, Licensing and Legal as put by Mastercard. This new addition to the company was brought by the MasterCard Accelerate platform, designed to simplify the way Matercard global payments work with Fintechs around the world.

What is Fintech Express and who is it for?

Fintech Express holds a lot of potential for Fintech projects and platforms especially if they’re just trying to establish themselves on the market. By using Fintech Express, fintechs get access to a suite of digital-first products to differentiate their offerings. Mastercard will offer flexible commercial agreements for the early stages of Fintech companies to make the entry into the market more smooth. Fintech Express partners will also enjoy parallel work streams driven by dedicated Fintech experts working towards increasing speed-to-market. All these efforts are made to make the beginning stages of Fintech companies and services easier and more accessible. Mastercard seems to have a pretty good understanding of what Fintechs are after which is mostly speed, scale and performance. Fintech Express aims to deliver across all three but for now is limited to Asia pacific region - “Dynamic hotbed for ambitious startups” according to the Executive Vice President, Digital & Emerging Partnership and New Payment Flows - Rama Sridhar.

Who’s the first partner in this project?

The first company that Mastercard chose to work with is Rapyd. Rapyd is the world’s largest local payments network working to reduce the barriers to scaling cross-border commerce and is spread across more than 100 countries. The platform lets firms access over 500 local payment types including bank transfers, e-wallets, and cash. Just recently in October Rapyd raised $100m in a funding round led by Oak HC/FT. The platform plans to use the new funding to build the cloud-based platform and network. As the CEO of Rapyd, Arik Shtilman says Global commerce is at a critical inflection point as businesses face the pressure of constantly adapting to the innovations. As put by Rapys itself the company helps businesses thrive in any local market around the globe. Rapyd started out as a mobile payments company but soon after, when Rapyd tried to design an e-wallet product that would allow consumers to withdraw cash from an ATM in any country, without a bank account, it quickly became clear that there were several barrier present including but not limited to licensing, regulatory requirements plus the sheer amount of countries and entities involved in the process. Rapyd now offers a solution by removing the back-end complexities of cross-border commerce and provides local payments expertise. Global e-commerce companies, marketplaces technological firms, and financial institutions can now easily use Rapyd’s fintech-as-a-service platforms to use embed localized fintech into their applications in a simple way. Rapyd has already marked its place in the global fintech industry and with this massive collaboration, it is sure to advance even faster. This collaboration will allow Rapyd to enhance the experience of providing payment solutions to regional and global merchants as well as gig economy platforms which have become even more common, and technology providers while minimizing the development timelines and time-to-market. Rapyd is set to see the benefits of this collaboration soon enough by licensing as a MasterCard issuer within two weeks and being swiftly integrated with the MasterCard network. Along with that MasterCard will offer the counsel and advisory of its in-market fintech specialist. 

Mastercard’s history with Fintech

Mastercard Accelerate is the framework introduced by Mastercard that simplifies the experience for fintechs worldwide and promotes digital innovation. The program is fairly new and was launched on October 28th of this year. The general overview of the program is that Accelerate just gives Fintechs access to everything they need to grow quickly. Mastercard will now offer its partners it’s variety of specialized programs while also providing them with the legitimacy of working with the company as well known as MasterCard. Besides Mastercard Fintech Express, the company offers three other dimensions from MasterCard Accelerate: Mastercard Engage which connects fintechs to thousands of Mastercard technology partners, and making the collaboration more efficient; Mastercard Start Path - Invites later-stage startups to participate in a 6-month program, providing opportunities to scale and secure strategic investments. This program has been around for longer than the others and has supported over 200 companies and those companies have raised $1.5 billion in capital since 2014. And the last project running under Microsoft accelerate is MasterCard Developers- which provides APIs for everything, empowers engineers by allowing access to Mastercard payments as well as security and analytics services. But obviously, Mastercard isn't partnering up with just any Startup that uses fintech. They have to bring the most promising technologies to MasterCard as well.

Why now

Ari Sarker, Co-President at  MasterCard Asia Pacific, spoke with Bloomberg about the new launch and shared more details about the purpose of this new program while also talking about the motivation behind it. It’s obvious that Mastercard is trying to stay up to date with financial innovations while also taking into consideration the possible moves by its rival companies. As Mr. Saker put it Mastercard is targeting Fintechs with its rules, capability, platforms and licensing process adding that in most cases fintech partners would get the services way faster than traditional firms would, again highlighting the importance of speed for these companies. This new approach also highlights the shift in attitudes from traditional companies that previously have refused to provide services for Fintech companies. The co-president also talked about the timing and what pushed the company to take this step now. Evidently, it's a mix of the ever-growing number of companies offering such services and their evolving importance in the global market. But in addition to that Saker shared that there is also the factor of trying to be the first, and not falling behind if some other companies decide to offer similar serviced before Mastercard. 

For example, Visa has also been active with fintechs offering to be an “ally” and investing in fintech companies across the globe. The most recent example would be Nigeria. Interswitch is Nigeria’s largest electronic payments company and has been around for a while. Visa is paying $200 million for a 20% stake in the company. According to Quartz Africa, the investment places a billion-dollar valuation on a 17-year-old intel switch. Meanwhile, Visa has also partnered with Singapore cross-border fund transfer startup Nium, to enable instant money transfers into recipients’ bank accounts through their visa debit card number. This feature can be used for person-to-person transfers as well as business-to-business transfers. But Visa has been collaborating with startups for longer than that. In July of this year, Visa announced the expansion of its popular Fast Track program to the United States in conjunction with a large growing network of partners. Fast Trak is a project aimed at speeding up the process of integrating with Visa for startups in order to use their capabilities, offers and company’s global payment network.

Why Mastercard left Libra 

During the Bloomberg interview, The co-president Saker was also asked about Libra and its recent decision to pull out of the project. Libra is a global cryptocurrency and financial infrastructure. A digital asset built by Facebook is powered by a new Facebook-created blockchain. The name comes from the basic Roman measurement of weight which is quite fitting for the purpose of it. Saker pointed out that they are partnered with multiple platforms and companies that operate using blockchain, so Mastercard is supportive of the use of blockchain and is more than eager to cooperate with these companies. What Mastercard found issue within Libra wasn’t its purpose necessarily, but rather the conflict when it came to regulations and what Mastercard was bringing to the table. MasterCard works with Proof-of-provenance, which is a protocol developed by Digix to track the movement of physical assets through the change of hands in a cryptographically secure manner. The company also works with business-to-business transactions. So pulling back from Libra was not so much about these services in particular but more so because in the end, Mastercard is a regulated entity. The company works with a number of markets with supervision by Central Bank regulators.

According to Mastercards co-president, the partnership from the beginning entailed recognizing these regulatory practices and a commitment from the company’s part to bring this aspect into the collaboration. Mastercard had to stay committed to those regulatory frameworks but apparently, Libra didn’t allow much room for that. 

Mastercard wasn’t the only one leaving Libra behind for now. Visa also decided to stay on the sidelines leaving Facebook without any support from the major global payment platforms and creating even more challenges that the cryptocurrency was already facing from the government and the court. Libra has stated that its goal is to serve as a solid foundation for financial services, including a new global currency, which could meet the daily financial needs of billions of people. But the continuous questions around Facebook’s questionable ethics makes it hard to trust the company with a global currency. Mark Zuckerberg, the CEO of Facebook was answering the questions from lawmakers about Libra for roughly 6 hours but still ended up not getting the support for the project since a lot of lawmakers found it hard to find a purpose for Facebook’s new initiative.

Future of Mastercard 

It is clear that MasterCard won’t just support anything cryptocurrency or blockchain-related even though these concepts are seemed to be more and more important to the company. By pulling out of Libra, MasterCard proved that it does not compromise when it comes to its commitment to regulations and won’t put their clients under unfavorable circumstances. Mastercard aimed to bring this very characteristic to Libra project which seems to have started the downfall process of the collaboration between the two and probably other major companies who have now left Libra behind. But back to Fintech Express, it seems like a very timely effort made by the company to accommodate the needs of contemporary customers and firms. This seems like a perfect mix, offering the strong suit of traditional companies and mixing it with the benefits and innovations of recently developed fintech firms. The projects seem to be mutually beneficial which each part bringing its own best assets to each other. MasterCard having partners with desirable innovative approaches that offer the client convenience of speed and accessibility with the expertise of a global giant like MasterCard with its resources and experience in regulations.

With the massive surge of Fintechs, some people are now questioning the future of companies like Mastercard and its likely that these firms themselves are asking the same questions. MasterCard’s move to engage these new companies and to learn from them also seems like a very good self-preservation move. It’s difficult to think about the near future and imagine that companies like MasterCard or Visa won’t matter anymore but with the course that cryptocurrency and blockchains have taken with the increased use of these technologies by a variety of entities varying from large enterprises to governments, our assumptions are slowly changing. The potential of blockchain technology and fintech, in general, is apparent. If traditional companies want to keep up and maintain their importance engaging with these companies is inevitable. Mastercard definitely took a step in the right direction by contributing to the normalization of large traditional companies collaborating with Startups and recognizing that they have something to learn and to give as well. This is just the start of the journey so it’s hard to tell if both parties will find the collaboration effective and beneficial. Largely, the success of this platform will depend on the feedback from fintech companies and whether or not it will actually elevate the speed at which they grow, but for now, the effort seems quite timely and promising.