Mastercard And Verizon Team up on 5G for Payments, But the Collaboration Will Require Patience

Wireless connectivity at faster speeds and with more reliable service could be more widely available to the payments industry in as few as two years or less. Mastercard Inc. and Verizon Communications Inc.’s Verizon Business unit announced Tuesday morning they intend to work together to make 5G connectivity available in a wide variety of applications, including contactless transactions, autonomous checkout, and bill pay.

One of the first fruits of this collaboration will be the application of 5G service to certain off-the-shelf mobile devices for card acceptance, according to a Mastercard spokesperson.

Verizon launched its 5G mobile network in the spring of 2019, and the technology is now available as well from other major telecom networks. It is said to offer faster speeds and more reliable connections than were available with prior network technologies, making it more suitable for newer, more demanding applications such as mobile payments and the Internet of Things.

“It’s inevitable that 5G will provide a lot of opportunities to expand functionality in digital commerce,” says Thad Peterson, a senior analyst at Boston-based consultancy Aite Group, in an email message. “I don’t know that [Verizon and Mastercard] are the first to make this connection, but it’s clearly early days and this is a great step for both companies to start to explore potential opportunities.”

Among the benefits the two companies expect from their collaboration are a reduction in the hardware requirements for autonomous checkout, or the ability for customers to check out and pay on their own while in the store. The companies say this application could include services such as mobile updates and voice and video ordering. Also on the docket is streamlined bill pay for Verizon customers through Mastercard’s real-time bill-payment platform, Bill Pay Exchange. This application will include fraud detection through Ethoca, a company Mastercard acquired in May 2019.

The companies plan to collaborate on these and other 5G applications in the coming months, building to a commercial rollout. “The year we’re looking at for impact is 2023,” says the Mastercard spokesperson. Experts agree it will take time to let the technology to become more commonplace in everyday applications.

Indeed, some observers advise patience. “5G has a way to go before it will have the critical mass needed to impact the payment space,” says Peterson. “There aren’t yet a lot of 5G devices out there, and the actual coverage of 5G is limited. And, given the short range of 5G transmission antennas, it’s going to take a while before areas away from major markets are able to use the technology. It seems to me that this will be an evolutionary move to greater bandwidth and functionality that takes place over the next several years.”