Open banking – Mastercard signs new partnerships enabling more payment choice, empower consumer lending, and modernize account-based payments

Mastercard is partnering with leading 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” – according to the press release.

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.

Easing the burden of online bill payments

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.

„We are delighted to partner with Mastercard to leverage their open banking platform in the U.S. to offer secure and seamless account verification services, providing our customers with enhanced payment options and advance open banking around the world,” said Sudev Balakrishnan, chief product officer at Worldpay Merchant Solutions, FIS.

Driving responsible lending and increasing access to capital

Through a new partnership with Zip, Mastercard’s open banking technology, provided by its U.S. open banking arm Finicity, will enhance the real-time underwriting process of Zip’s lending program. Together, the companies are helping consumers more easily budget for larger purchases that can be paid over time^[1].

“Zip is valued for helping customers with managing their expenses and providing access to a financial cushion in times of unexpected expenses,” said Larry Diamond, co-founder and U.S. CEO of Zip. “Our partnership with Mastercard helps us continue to deliver a positive payment experience for our customers.”

When it comes to lending, small businesses also face obstacles getting access to capital. In the U.S., 52% of small businesses say their financing needs aren’t met. Earlier this year, Mastercard added advanced analytics to its open banking services to help lenders manage their risk profiles, while adding inclusive credit models for small business loans, including ongoing monitoring and expansion of credit lines.

“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,” said Daniel Keyes, senior analyst at Javelin Strategy & Research. “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.”

Scaling open banking across the globe

Mastercard is co-innovating with partners across the ecosystem to establish broad connectivity and data services to support customers, including access to more than 95% of deposit accounts in the U.S. and 3,000 banks across Europe. Mastercard also recently announced a partnership with European-wide investment platform Saxo Bank, which enables Saxo Bank customers to seamlessly add money to their investment accounts through an embedded platform using open banking.

“We’re accelerating our open banking connectivity across the U.S., Australia and Europe, leaning into the breadth of Mastercard’s global network, expertise in data and privacy, and trust of our brand,” said Jess Turner, executive vice president, Global Open Banking & API at Mastercard. “We’re providing more payment choice, redefining how identity is established and authenticated, and opening doors to tailored solutions that will revolutionize financial experiences.”

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_{[1] Loans through Zip Pay Anywhere and Zip Web Checkout (including any „powered by Zip” loans) are originated by WebBank, except for Zip-originated loans in Colorado, Massachusetts, Maryland and Nevada. All loans are subject to credit approval.}