Mastercard to launch passkey payments in India, tapping US$255B market

Mastercard will enable passkeys for payments in India, kicking off a global rollout. A release from the payments giant says the program will debut as a pilot with some of the country’s largest payments providers, including aggregators such as Juspay, Razorpay and PayU, online merchants such as bigbasket and leading banks such as Axis Bank.

The Payment Passkey Service will enable customers to make purchases through the application of device-based biometric authentication via face or fingerprint scan. The system tokenizes a consumer’s payment details so that no actual personal information is shared with third parties. The token itself, an encrypted alphanumeric identifier created by a hashing algorithm, is useless to fraudsters and scammers.

What this means is that, once a user has set up passkeys, all they need to do to complete a purchase is choose a digital card for payment and either perform biometric authentication or enter a PIN on their device, which is already linked to a public key that can be used to instantly validate the transaction.

“By introducing the Mastercard Payment Passkey Service in India, we’re advancing secure online checkout and our vision for a token economy,” says Jorn Lambert, chief product officer at Mastercard. “Through innovative technology that enhances security and convenience, we’re creating a more transparent commerce ecosystem for all. As we continue to lead the way in digital payments, our commitment to achieving a tokenized future is stronger than ever.”

“We are thrilled to join forces with Mastercard to introduce its Payment Passkey Service in India, a groundbreaking initiative that enhances transaction security and user experience in remote commerce, leveraging the power of biometric authentication,” said Arif Khan, chief innovation officer of Razorpay.

Fraud, scams plague UPI as transaction numbers soar

The goals in deploying passkeys for purchases are to make transactions more secure, to reduce friction, and to move payments further away from the albatross of passwords – even the latest variety of which are, according to Mastercard, increasingly vulnerable to online scams such as phishing, SIM swapping and message interception. The Reserve Bank of India’s Annual Report for 2023-2024 says the incidence of fraud cases in India has surged by nearly 300 percent in the last two years.

A BBC report from July 2024 looks at how the country’s “wildly popular” Unified Payments Interface (UPI) system has become like a fruit orchard for hungry fraudsters. It quotes government figures that show more than 95,000 cases of fraud involving UPI in the financial year ending April 2023, up from 77,000 in the previous year.

Part of what accounts for so much fraud is the sheer volume of transactions. India is now the world’s largest real-time payments market, rapidly embracing a token-based payment ecosystem to align with objectives for a safer payments system laid out by the Reserve Bank.

The country posted 129.3 billion real-time transactions in 2023. UPI recorded 14 billion in May 2024 alone. UPI itself is considering adding biometric authentication as a replacement for current PIN or password-based methods.

Which is to say, India is a no-brainer for Mastercard’s global passkey launch, given the market potential. According to Statista, the total transaction value of the nation’s digital payments market is projected to reach US$254.60 billion in 2024.

Mastercard, of course, will not stop there. The company has plans to roll out the Payment Passkey Service in other regions following shortly on the heels of the pilot. It has committed to 100 percent e-commerce tokenization in Europe by the end of the decade.

Article Topics

biometric authentication  |  biometric payments  |  biometrics  |  FIDO Alliance  |  India  |  Mastercard  |  passkeys  |  passwordless authentication  |  payment passkey  |  Unified Payments Interface - UPI