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MasterCard (s ma) and mFoundry, a mobile banking specialist, are poised to help banks launch potentially hundreds of NFC-based mobile wallets with a new partnership. The collaboration will allow banks that use mFoundry for their mobile banking apps to add support for contactless NFC MasterCard PayPass payments, turning those mobile banking apps into digital wallet payment tools.
MFoundry counts more than 500 banks, credit unions and other financial institutions as customers including two of the biggest banks, Bank of America (s bac) and PNC (s pnc). More than seven million users turn to apps and services built by mFoundry. Next year, these customers will be able to make touch-and-go payments at thousands of point-of-sale terminals with their mobile phones through the app they use regularly to check their bank statements, pay bills and transfer funds. MFoundry said it will update its mobile apps most likely in the first half of 2012 to include NFC support. It will then be up to banks to turn on the capability with MasterCard. Users will be able to connect their bank-issued debit and credit cards for NFC phone payments.
The two companies are also working on a mobile application that allows mobile phone operators to offer PayPass payments from their phones. MasterCard isn’t just striking a deal with mFoundry, it’s also becoming an investor in the start-up’s latest round. Larkspur, CA-based mFoundry is set to announce its latest round on Monday.
This collaboration is important because consumers have a trusted relationship with their banks. While Google (s goog) and the carriers through the Isis joint venture are trying to become a trusted wallet provider with their NFC-based systems, they still don’t have the kind of financial trust that consumers place in their banks. So banks could be instrumental in helping NFC along by introducing the technology to their customers through their existing banking apps.
For NFC to work, “you have to get consumers to change their behavior and we think banks are in a great position to do that,” said James Anderson, SVP of Mobile for MasterCard.
This will also bring the banks into the NFC mobile wallet market, where they have not been very prominent so far. Citibank (s c) is an early partner in Google Wallet while Isis, the carrier-led joint venture has not announced banking partners, though it hopes to have a few on-board when it launches next year. But for the most part, the banks have been largely silent. That might due to the fact that they’re not comfortable with the terms of the Google Wallet and Isis. Now, they’re in a position to leverage NFC themselves without having to work with another provider.
Drew Sievers, CEO of mFoundry said it’s not just big banks that can jump on board. The integration with MasterCard means a lot of smaller financial institutions will be able to extend support for NFC payments through their mobile banking apps. And he said this could be a catalyst for growth for mFoundry, helping it attract even more banking customers.
“By working with MasterCard, mFoundry will be able to evolve and expand its financial services platforms to reach more consumers through new and existing clients,” said Sievers.
It’s still unclear if all these banking apps will get direct access to the NFC secure element to enable payments. There seems to some wrangling going on as the carriers in Isis, AT&T (s t), Verizon (s vz) and T-Mobile, are not rushing to enable other wallets like Google Wallet to work on their NFC-enabled phones. It doesn’t appear that the Galaxy Nexus, Google’s flagship Android 4.0 phone, will support Google Wallet even though it has an NFC chip. That may come down to the fact that, unlike Sprint (s s) Verizon is not a Google Wallet partner. But Sievers believes that phones will eventually be wallet agnostic and that will allow banking apps with NFC support to flourish.
I think this could add some confusion in the short term as we hear a lot of competing voices urging users to get on board with their NFC wallet. In fact, the term mobile wallet is going to get abused early and often, I imagine. But ultimately, this could be a good thing. New technology needs advocates to help sell it to consumers and in the case of NFC, which can trigger some security concerns in consumers, having the banks walk customers through the process would be a good thing. Provided these banking apps can actually leverage existing NFC chips properly without interference, it will be another way to get NFC adopted.