Mastercard: New Credentials Offer Payments Control to Gen Z and Beyond

Wasn’t long ago that navigating between accounts and payment options was largely a matter of juggling between physical, digital, prepaid and credit cards, pulling them out of wallets as needed. But the rise of digitally native consumers — especially within the younger generations that have had access to mobile devices almost from the cradle — has created a shift in payments.

As Bunita Sawhney, chief consumer product officer at Mastercard, reminded PYMNTS in a recent interview, the pandemic hastened these changes as digital wallets, tap to pay and other technologically driven options have become ubiquitous.

Now who will use them? As for populations that are most receptive to new ways to pay, Gen Z represents 25% of the world’s population, with $7 trillion in purchasing power.  They’re demanding — as are other generations — broadening range of payments and financial solutions from their primary banking relationships.

The majority of consumers, Sawhney said, “have a high desire to have tools that help them become strong and confident money managers.” Key to that goal is having visibility and transparency into, and control over, cash flows.

Against that backdrop, last week, Mastercard launched its Mastercard One Credential, through which consumers choose between debit, installments, prepaid or credit options. Mastercard’s initial approach with the credential focuses on Gen Z as the “target” that helped shape the design, because they are digitally savvy, Sawhney said, but the desire for control and payments choice is universal.

Users can set their payment preferences online or in an app, with those preferences defined along transaction limits — for example, users can specify their checking account for expenses under $100, their credit card for expenses over $100, and installments for occasional larger purchases.

Users, she said, “might want situational transactions to go towards credit — whether a revolving credit card or BNPL — because they want to be careful to smooth out how their cash flow is working over the course of the month.”

For the issuing banks, Sawhney said, there’s the advantage of offering a tool that gives customers clarity and transparency into their financial journeys and planning their financial futures with a credential that, she said, “can grow with them across their life stages.”

As she noted to PYMNTS, “this is a great way for consumers to have a healthy interaction with debit and credit products.”

SMB Opportunity

The rollout will also, down the line, include One Credential options for small businesses. A majority of small business owners are sole proprietors or gig workers, Sawhney said, and they still use their personal accounts to manage money. The credential will help them make sure they can budget and compartmentalize their spend as they run their businesses — with the thresholds here based on types or stores (as they purchase supplies or inventory, for example).

Asked about the time frames for the rollouts, she noted that Mastercard will be working with financial institutions to help them prepare to offer the credential to end users (the offering is already available in the UAE).

“The idea is to help the financial institution optimize the experience with their customer or the small business owner with the accounts that they already have,” Sawhney said. “What we bring to market in the United States may be a little different that what we do in Australia versus the U.K., based on regulatory conditions and requirements. We want to make sure that we do this at scale and in compliant fashion.”

As she told PYMNTS, the Mastercard One Credential has been designed for “an informed consumer who wants more tools in their hands to help make sure they are making smart choices that will set them up for financial success.”