Payments giant MasterCard is the latest company to get into the person-to-person payments business, joining Facebook, PayPal, and rival Visa. The company launched MasterCard Send, a service that allows people to link their debit card accounts online or on a phone and transfer money to anyone in the U.S. using their MasterCard send account. Electronic peer-to-peer payments aim to replace paying people with cash or check.
The biggest difference with MasterCard Send and other competitors is that it is not a direct-to-consumer service. This isn't a consumer offering but rather a way for businesses to reimburse their customers, or offer rebates without having to send a check in the mail.
Berkshire Hathaway Travel Protection and FreeShipping.com are among two of the first businesses who have integrated MasterCard Send to transfer money. Shopping site FreeShipping.com, which offers members cash back on purchases they make on the site, is using MasterCard's technology to deliver cash-back payouts to users' debit card accounts. Travel insurance company Berkshire Hathaway Travel Protection will be using MasterCard Send to disburse user claims.
Using MasterCard Send, a consumer adds a debit account online, including MasterCard and non-MasterCard debit cards, and can send cash to anyone in the U.S. with a debit account (the recipient will have to enter their debit card account to deposit the money). MasterCard says transfers can take place the same-day they are sent.
MasterCard is trying to ride the wave of growth in peer-to-peer payments, which Forrester Research expects to grow to $17 billion by 2019, from $5.2 billion in 2014. But MasterCard is late to the game, and other early movers have already gained market share. Forrester notes that currently seventy-three percent of American adults who use the Internet and make P2P payments use PayPal.
But it's important to note that consumers don’t want to be subject to the fees associated with these transactions, which are not a factor when paying with cash or check.
MasterCard says that it is not charging a fee to consumers that are using service integrating MasterCard Send but these businesses could charge a fee directly to consumers if they choose.
It's not particularly surprising that MasterCard is following in the footsteps of Square and PayPal in entering into peer to peer payments. Facing the heat from payments upstarts, the company has been experimenting with new technologies such as facial recognition software, touchless transactions and more.