Mastercard simplifies checkout with new digital credential

There is a new payment solution in town. It's the Mastercard One Credential, and makes it possible for consumers to employ multiple payment forms. Especially younger consumers.

"These days, consumers expect to be in the driver's seat," said John Lambert, chief product officer at Mastercard. "That's what sparked One Credential. It gives people an innovative way to pay that's truly personalized to them."

The One Credential is targeted primarily toward Gen Z, the generation spanning teenagers to consumers in their mid-20s. Instead of juggling between different card and payment methods, these consumers are said to be looking for an innovative digital solution at their fingertips and a simple way of accessing funding options.

That's where One Credential comes in, Mastercard explained in a press release. It's a single digitally connected credential with multiple ways to pay.

A choice of payment options

With One Credential, consumers can choose the payment option that's best for them: debit, installments, prepaid or credit cards.

"While Gen Z may be leading the way, the desire for personalization spans generations," Mastercard stated.

In its press release, Mastercard used the example of a fictional consumer in their mid-20s using One Credential to tailor and optimize their payment preferences. They might set up One Credential to pay for daily expenses (like groceries and food) from their checking account; charge expenses in excess of $100 using their credit card function' and pay for occasional large purchases using installments.

The consumer can set their preferences online or in an app, with full control over how each transaction is funded.

A stepping stone for Gen Z

Compared to those previous generations, Gen Z's payment preferences are distinct in key ways:

• Born digital natives, their payment appetite is largely digital. Mastercard said its latest research found nearly half of Gen Z consumers prefer using new and innovative methods of payment, and 65 percent want to manage everything in one place.

• They tend to spend more than they save, yet are mindful of their purchases. According to Mastercard's research personalization is key. The research indicates that for Gen Z consumers personalization is 1.31 times more important when choosing a payment method than it is for older generations.

• Gen Z consumers aspire to build wealth and actively seek out financial education online. To meet their goals, 73 percent of surveyed teens said they want more personal finance education, and the majority have sought advice from social media.

Despite Gen Z's aspirations and preferences for digital wallets, they have the lowest average credit scores of all generations, which is largely a function of thinner credit files and a reluctance to use traditional forms of borrowing, Mastercard said. Just half of Gen Z consumers use credit, the lowest credit usage among all generations.

Mastercard said its research indicates nearly 70 percent of Gen Zers are actively trying to boost their credit scores, but more than half don't know where to start. Structured credit, such as installments, doesn't just offer these consumers another choice in how to pay, it is also a path to credit worthiness.

Appealing to diverse interests

For issuing banks, One Credential provides a differentiated offering that is especially appealing to younger consumers looking for digital, personalized payment experiences, and means to planning for their financial futures.

Mastercard said plans are also in the works to roll out One Credential for small businesses, offering them more choices and control over how they pay.

Mastercard said already has key partners around the world for One Credential.

U.S. partners include Utah-based Galileo Financial Technologies, a leading technology company owned by SoFi Technologies, Marqeta, a global card-issuing platform with headquarters based in California, and Lithic, a financial technology platform based in New York.

"This cutting-edge innovation allows us to offer unrivaled simplicity and flexibility to our customers," said Derek White, Galileo CEO. "By adopting One Credential, in turn we are supporting our customers in setting new standards of convenience, optionality and security in every transaction."

Additional partners for One Credential include I2c, Inc., a provider of banking and payments technology based in Pakistan, and Wio Bank, a global banking platform based in the UAE.

Whether you want to upgrade your POS offerings, find a payment gateway partner, bone up on fintech regs or PCI requirements, find an upcoming trade show, read about faster payments, or discover the latest innovations in merchant acquiring, The Green Sheet is the resource for you. Since 1983, we've helped empower and connect payments professionals, starting with the merchant level salespeople who bring tailored payment acceptance and digital commerce tools, along with a host of other business services to merchants across the globe. The Green Sheet Inc. is also a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals.

Notice to readers: These are archived articles. Contact information, links and other details may be out of date. We regret any inconvenience.