Why MasterCard’s Rugby World Cup decision is stupid
UPDATE: David Masters, from MasterCard's Australian office, responds:
The first thing I would say is that where there is card acceptance today, it will continue through RWC. That means that if a merchandise retailer accepts all forms of cards as payment now, they will continue to accept all forms of cards as payment through the RWC. We are certainly not expecting these retailers to lessen the choice they are giving to their customers. In fact, we are trying to offer more choice.
To that end, what we are doing is investing in building a network of card acceptance locations at major New Zealand stadiums where today, the stadiums do not accept cards. The only payment option accepted at these locations today is cash. This is part of our long term commitment to Rugby World Cup 2011. We intend to leave a legacy that delivers convenience and security for New Zealand long after the tournament has come to an end. Throughout RWC these locations – that today only take cash – will accept all forms of MasterCard cards (including Credit, Debit and Prepaid cards). After RWC, they will accept all forms of cards.
So, to reinforce what I have just said, no acceptance location at the stadiums should accept fewer forms of payment than they do today. All we are doing is strengthening acceptance to allow retailers in the public areas of these stadiums to accept MasterCard cards… ALL MasterCard cards (not just Prepaid).
MasterCard recently announced that, alongside the existing option to use cash, our cardholders will now also be able to use their MasterCard cards at Eden Park and Westpac Stadiums. For those people without a MasterCard card, ANZ have announced the launch of the RWC 2011 MasterCard ANZ Prepaid card, which will carry MasterCard’s PayPass technology.
We are absolutely providing MORE choice. Not less.
Regards,
David Masters
Vice President
Strategy and Corporate Affairs
Under the terms of a Mastercard sponsorship deal, revealed this morning, Rugby World Cup fans will have to buy new MasterCard tap-and-go cards, queue at an ATM machine (not available at all rounds), or bring their own cash to games. Eftpos or Visa payment will not be an option.
While the ploy might have looked good on paper, it seems most of the great New Zealand public - at least those on Twitter - feel offended and strong-armed by the move. Click here to see comments live on Twitter (language may offend). Not everyone is outraged. @BexStevenson offered, "Anything that makes the purchase of dirty burgers and beer faster has gotta be good!" But the general feeling is hostile. Did Mastercard understimate the potential for a backlash?
Below, entrepreneur and online commentator Lance Wiggs gives his view on the company's move:
Why Mastercard’s Rugby World Cup decision is stupid
By Lance Wiggs
Mastercard is banning other credit cards from Rugby World Cup venues and insisting on only a pre-pay MasterCard or cash as acceptable forms of payments. The prepay card costs “$5-$10″, can have up to $1000 deposited into it and cannot be recharged. It uses ‘tap and go’ technology to accept payment of up to $80.
Commercial issues
Sales will be lower at RWC venues than before this move, particularly sales of expensive merchandise. No credit cards means that only people with cash or worse, with enough cash and foresight to load a pre-pay card will be able to buy. Impulse buying of a $150 rugby shirt will be essentially impossible to occur for many.
Eftpos machines are in fact available at some venues – such as the Deloitte lounge in Westpac stadium. If this move means removing those terminals then, arguably, this is restraining Visa (and MasterCard’s own) trade, as well as debit card transactions. I’m sure Mastercard has done its homework and is on solid legal ground but tell that to the punters.
Not rechargeable; high transaction fees
The cards are not rechargeable and cost money to buy and unknown costs to charge. This means consumers are paying high transaction fees. Firstly that $5-10 represents over 1% (probably more like 2-4% with average balances) to obtain a one-shot card, and secondly the inability to recharge means that residual balances will be unspent. The opportunity to launch nationally a new credit card while also spearheading the product launch of the near field technology is beautifully avoided.
Brand issues
The instant reaction to this is near universal. Mastercard is making things expensive, more complicated and asserting its market power. Eftpos, which is universal in New Zealand and has been since the early 1990s, is being put aside for a technology that seems to be a dead end street. The terminals will not be eftpos terminals but will only accept a prepay card, and worse yet they won’t even accept existing MasterCards.
We are unsure of the requirements when we buy the pre-pay cards but there are some hooks here as well. What sort of information will Mastercard require from us if we buy a pre-paid card? Will this comply with know your customer law or are these going to be a great way to launder money? (this one is difficult to win). If we do provide information, then will we be forced to provide details that create a business relationship that ends in spam and so forth? Will this be a slimey way to obtain marketing information and pitch other deals to us?
Point of difference for Visa
This morning there is no perceived difference between Visa and MasterCard but now in my mind there is. Visa works everywhere. Mastercard works everywhere but is the company that made things harder for us with stupid restrictions at the Rugby World Cup.
Dubious decision made outside NZ?
Overall this feels like a dubious decision made from outside New Zealand and accepted by local staff who don’t have the political clout to change things. It’s perceived as a dumb decision locally and will make people angry at MasterCard – angry enough to write blog posts, complain to media, write articles and avoid using the product, buying merchandise or even going to the games. It needs to be rethought.
Three suggestions on how to rethink the offer
Firstly – get eftpos into every venue, and make it super-easy for customers to buy merchandise and overpriced food and drink. That’s part of Mastercard’s overall vision – to advance commerce globally, and should be the most basic part of their offering. Brand the terminals with Mastercard logos but accept as many forms of payment as possible.
Secondly – Do offer the pre-pay cards, and do offer them with the near field capability. But make the cards free so that we will be tempted to actually use them, and make it easy for us to remove the cash at the end. If we fill in an online form, then make a particular card rechargeable, so you can instantly roll out a new credit card. This means associating the card with a particular bank, or maybe you can allow customers to choose that bank with the online form.
Thirdly – roll out the NFC (near-field communication)/eftpos terminals across New Zealand so that tourists and locals alike can experience the technology.
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Comments and questions24
This is a cock up of monumental proportions. It will serve to reduce spending at world cup venues not increase them and I for one will change my Mastercard which I have had for many years to a Visa card as will my company. This is at least 8 cards, unless this idea is reversed you will have lost me as a customer MC.
Hardly a 100% clean, green NZ approach! How many hundreds of thousands of plastic cards are going to be produced as "one time" devices and then dumped within weeks. At least existing cards have a lifetime of a year by design.
Having attended the last FIFA World Cup, the venues only accepted Visa or cash. Seems fair enough.
Where MasterCard are going wrong is not the exclusivity, but in providing a card that is not reloadable.
Also seems pretty stupid to not accept their credit cards.
A pity for them as this could have been a good story about a viable cash alternative (make it reload people!).
Any recent visitor to Eden Park will know, cash is the only payment option there. Note that there is a booth that allows you to make cash withdrawals using your eftpos card, but charges you a nice fee for doing so. At a recent Balck Caps game this booth had a massive queue on it, all day long.
If they want to do this, they need to reissue every NZ mastercard (or those that request it) for free to include the new tap and go.
I will not be adding an additional card to my wallet. I already carry a Mastercard!
MasterCard is the new American Express... or worse Diner's Card.
Perhaps the head honchos at Mastercard Inc don't realise the penetration of EFTPOS into NZ culture and society.
In any case, this is one case where it won't be priceless... I'm not going to get a debit card/prepay card and I'll be using Visa and American Express going forward as Mastercard can meet my commercial reality - I'm simply not going to use them,
@ MC-u
Like you, if this goes ahead it annoys me enough to want to cancel my MCs and switch to VISA.
This could have been such a beautiful opportunity to spearhead a new touch & go product, but the way this looks to be implemented (inability to recharge, no use of residual credit) will likely have very low uptake.
Another problem with bringing in the new card is that none of the rest of NZ retailers have the hardware to support the cards. Many are just now getting terminals up-to-date with software to handle chip-cards. Even then, chip cards seem to be implemented to protect the interests of the card company through fraud, rather than assist the consumer. As a retail customer chip cards take easily 3 times longer to process through the terminal.
As early as next year MC seems to be trying to shift fraud liability to retailers rather than take responsibility itself:
http://www.voxy.co.nz/business/mastercard-announces-five-year-plan-change-face-payments-industry-new-zealand/5/86504
Mastercard says there wont be any ongoing fees on the new preloaded card other than the $5-$10 upfront fee.
But what are the interchange fees associated with this card for merchants in stadium?
Are the interchange fees on this preloaded card so high that anyone using it will also be charged a surcharge, so the merchant can recover the cost of being forced to accept the new card?
Such surcharges exist so merchants are legally allowed to recover the costs of accepting credit cards.
These surcharges are only common place where scarcity allows - like that of an in stadium experience.
I'll bet the interchange fees being charged (that is the cost of the merchant accepting the credit card and the credit card company processing the payment) are sky high, as set by Mastercard, forcing the merchant to pass on the costs.
I envision all the money you have loaded on your card will be sucked up rather quickly and you will have no other options than cash.
Oh well, off to buy another $5 - $10 dollar card so I don't have to carry cash and risk being mugged.
MasterCockUp.
Crickey - we'll have to take cash to games. How inconvenient. (Yeah Right) Get over it people. How hard will it be to rock up to games with a couple of greenbacks in the wallet?
Eh, what do you mean it's not rechargable? can you imagine the waste this will cause? Does sustainability mean nothing to Mastercard?
Jeremy is obviously one of those amazing people who never spends beyond his means, planning (hopefully) to pay it back at a later date. Without a visa, I for one would never be able to afford (or even purchase) a ticket to any of the games. Get real, Jer.
interesting given the launch of Snapper and the auckland transport HOp card - both being contactless payment platforms usable on the newer eftpos terminals - including taxis.
overseas many large events are cashless using these cards as both ticket and also as funds during the event.
what a missed opportunity why not have a HOP/Snapper you can use on public transport, taxis and hundreds of retailers as well as at the matches????
cant believe this mastercrud is not rechargable - that is truly stupid.
no eftpos is great though wish bars had it nothing worse than waiting for someone to take ages processing a $4 coke when you are trying to buy a round for 10 mates...
tap and go is the way of the future it just need to be done right!
You can only imagine they are using little old New Zealand as an experiment. If it works for them, expect less options for payments as others follow this initiative.
Boycott them to stop it spreading!
My concern is how is this going to be communicated to the visiting tourist, who we want to spend spend spend while they are here. The merchandise is over the $80 limit so its cash only and then they are unlikely to have over $400 cash to buy two jerseys when their team wins. Madness
The crims will be lapping this news up! Loads of lovely cashed up tourists wandering round looking for venues. Muggers, thieves and pickpockets' takings will be well up, NZs reputation well down.
It seems that this article and the responses to it are based on a fundamental misunderstanding of the situation. Here are some facts:
1) You cannot use a card of any type at any of the RWC stadiums public food and beverage outlets today. These outlets accept cash only today
2) For the RWC all MasterCard cards, not just prepaid, but the 1 million or so existing credit, debit and prepaid cards carried by New Zealanders, plus the thousands more held by the overseas visitors, will be accepted at the RWC stadiums
3) Where cards other than MasterCard are accepted in some lounge areas in the stadiums today, they will continue to be accepted during the RWC - where those lounges do continue to sell to the public (many will be hired by corporates during the tournament).
4) The merchandise outlets at the stadium will accept all cards
5) The prepaid MasterCard solutions are being made available for two main reasons: firstly as an easy way to obtain a MasterCard for those New Zealanders and overseas visitors that don't have one, and secondly, for those with or without a MasterCard who want access to PayPass, the tap and go payment solution that ensures the transactions is completed than even a cash transaction. This is proven technology and rolled out by thousands of businesses throughout the world.
5) The card accepting terminals installed by MasterCard at these stadiums will accept all cards after the RWC.
In summary, the payment options at the stadiums during the RWC are better than what they are today and what they have ever been. MasterCard's investment to install these terminals actually increases choice for RWC patrons and will leave a fantastic legacy well after the RWC to enable the acceptance of cards of all types forever more.
@MasterCard
Here is another fact: MasterCard is only a small player in New Zealand - Visa is the number one card of choice here, so anticipate low up take of your crappy unsafe card by Kiwis.
Further, what are the interchange fees on this card? Higher than usual, so you can milk Kiwi merchants for all they're worth? And, if you are charging them an arm and a leg in interchange, how are you going to prevent surcharging in stadia so they cannot recoup these fees at the expense of the consumer?
Lastly, you say the card accepting terminals installed by MasterCard at these stadiums will accept all cards after the RWC. Why not during the RWC? If it's a flick of a switch, why not turn it on and avoid all of this hassle while promoting your card with some smart marketing/advertising?
How about the tagline "Not ruining the RWC with corporate greed. Priceless."
I imagine that the author of that post is not the same person who made this foolish decision, but rather a subordinate with no pull yet has to justify how/why their company is making life harder for rugby fans.
This is an INTERNATIONAL
whoops premature "send" issues... as I was saying, This is an international event and internationally, this technology is already widely accepted, and works very well. Just because NZers are completely befuddled by any new technology and love using eftpos, doesn't mean the rest of the world has step back and work with our arcane preferences. Furthermore, this event wouldn't even be in NZ without the backing of major sponsors - I expect them to get what they want for the money they're throwing at this. Visa is doing it for the Olympics too. big deal.
So it will accept my Mastercard so I am happy.
How about reissuing existing mastercards to the new NFC cards for those that want it. I dont want to wait till 2013 when my current card expires. In fact, kiwibank didn't even put a chip on mine.
Can only happen in New Zealand! We're suckers for corporate bullshit!
What next? We'll have to start driving on the wrong side of the road as part of a F.T.A. with the U.S.?? Or give IP & trade mark, copy right ownership soon? Oh the T.P.P. should take care of that!
You waycist peeple will be doomed DOOMED I say when me and the Wairapa Maoist Party of Aoteoroa take your names and send you to the salt mines of Gore IN WINTER.
My pwoud wed army of 124 Internationalist Pwatiots will weed you out with the shonky-meter of my own invention welded fwom pure socialist technology and twactor parts!
Waycist patwiachal scum that you are KNOW THIS...WE know what is best for YOU and WE will wun the command eCONomy of the future on behalf of the looters...er...moochers...er peeple er....sheeeple.
Sheeple of the World UNite!
Penni Bright
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