A top executive with Mastercard Inc. said Monday the company, the world's No. 2 credit-card association, expected to have 4 million so-called "pay pass" cards in circulation by year's end.
Speaking at an industry conference here, Ruth Ann Marshall, Americas president for MasterCard, said that Citibank, HSBC and Key Bank had all begun offering the cards, which are equipped with a radio-frequency chip that allows customers to pay for purchases by simply waving their cards at readers posted near cash registers or gas pumps.
Marshall said the pay-pass cards were "easier to use than cash" and were one of the products MasterCard was counting on to increase revenue and profits as it faces a variety of challenges in the marketplace, including new rivals and regulatory scrutiny.
"It's just one of the ... breakthroughs in technology that we're pursuing in order to increase convenience and boost usage," Marshall said.
MasterCard, owned by more than 1,000 banks, formally revealed its plans last week to go public early next year in an initial public offering.
In addition, to raising money to bolster its balance sheet, MasterCard said it believed the IPO would help quell criticism from merchants and others, who charge that its current structure -- which foes characterize as a cartel of competing banks setting transaction fees in concert -- represents a violation of U.S. antitrust laws.
Marshall said MasterCard was also working with U.S. cellular phone providers to turn mobile phones into "a high-powered payment and sales device." The program was still in the "pre-launch stage" here in the United States, she said, but added its success overseas suggested it would appeal to "young, active consumers."
She acknowledged that the Internet and other technologies were creating "substantial ripples in the personal finance industry."
"Take PayPal, for example," she said. "Ten years ago entering the payment industry from a standing start was nearly impossible. But by providing eBay customers with a convenient way to move money PayPal quickly became a player in the payments industry and an acquisition target for eBay."
As a result, she said it was conceivable that others would eventually become players in the industry, including Google , which has signaled it may be interested in getting into payments.
Marshall said MasterCard was taking Google's threat seriously.
"Certainly any company that can develop complex search algorithms has the technological capacity to enter the payments business. And Google certainly has the capital."
She said that Google and others, however, lacked the customer history data that MasterCard and its bank owners have — and said that that data gave existing industry players a competitive advantage.
"Google, PayPal and other newcomers don't have years worth of data to draw on to structure offerings to particular market segments," Marshall said. "Banks do."
