Open Banking Adoption: Mastercard Teams Up with Fintechs to Enable More Payment Options, Streamline Consumer Lending

Mastercard (NYSE: MA) is partnering with players across the ecosystem, including Worldpay from FIS, the merchant solutions business of global financial services technology provider FIS, and Zip, a buy now, pay later firm, “to scale new open banking-powered solutions that enable more payment choice, empower consumer lending, and modernize account-based payments.”

Mastercard is bringing the promise of open banking “to more consumers and small businesses, enabling them to permission the sharing of their financial data between trusted parties.”

The promise of open banking “cannot be realized without trust.”

As more people manage their finances online, the digital landscape is “evolving to safeguard against account takeovers and synthetic identity fraud, which can lead to significant financial losses.”

In fact, consumers in the U.S. and Canada “lost $3.2 billion from fraudulently opened accounts in 2022.” To help, Mastercard is harnessing AI “to protect more than 125 billion payment transactions every year, underpinned by its data responsibility principles: you own your data, you control it, you should benefit from the use of it and we protect it.”

As consumers look for more choice in how they pay – particularly for recurring payments – they also “expect those payments to be frictionless and secure.”

To scale account-based payments, Mastercard is working “with partners like J.P. Morgan Payments on its Pay-by-bank solution, which uses Mastercard’s open banking technology to take the pain out of recurring biller and merchant payments made via ACH – from rent and utilities to government and insurance payments.”

To further scale and modernize payments, Mastercard is now partnering “with Worldpay so consumers can permission their data to be shared (not stored) seamlessly between trusted parties and securely pay bills directly from their bank account.”

Mastercard’s open banking technology “removes the friction associated with manually typing in routing and account numbers each time.”

It also automates consumer onboarding “for billers and merchants and reduces the risks and costs of storing bank account information.”

In addition, Worldpay will tap into Mastercard’s account owner verification capabilities “to support merchants in the onboarding process.”

Daniel Keyes, senior analyst at Javelin Strategy & Research, said:

“Open banking solutions can speed up the lending process so consumers and SMEs are able to get quick access to funds they need and get back to running their businesses and completing purchases. It’s particularly important that SMEs and consumers are only given funds that they’re in a position to pay back, and open banking can help make sure underwriters have access to the financial information needed so neither ends up overextended.”

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