The Limitations of Mastercard's One Credential

→ What’s Happening?

Mastercard Launches “One Credential”?

• On February 20, Mastercard announced its new One Credential solution that gives shoppers multiple ways to pay with a single credential??

• One Credential is primarily targeting Gen Z (teens through people in their mid-twenties) who want “a simple way of accessing multiple funding options”?

• The solution provides structured credit options as well as debit in order to help Gen Z financial management and build credit, all in one place?

• Mastercard says they have several issuers lined up to issue One Credential:? Bendigo and Adelaide Bank Group, Episode Six, Galileo Financial Technologies, i2c, Lithic, Marqeta and Wio Bank?
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→ Our Thoughts?

All of Mastercard’s jargon sounds nice on their website and in their press release, but we’re going to be honest – we still don’t exactly know what One Credential is. Based on the information currently available, our best take is that One Credential is designed to be a type of mobile wallet like Apple Pay or Google Pay, where users can input all their different cards or payment methods to make tap-to-pay payments in person, pay for purchases online, or schedule automatic payments. According to the press release, one of the things that makes One Credential unique is that it allows users to strategically personalize their payments in advance, so that certain types of purchases automatically are paid for using the user’s pre-determined method. So for example, you could set the app to automatically use your debit card to pay for grocery shopping trips, but larger purchases you could designate to be automatically put on your inputted credit card. With that in mind, One Credential also seems like a hybrid PFM app, or even similar to a credit building app where users can not only monitor their spending but set boundaries around it.?

The premise of One Credential sounds good to us – personalized, strategic payments. But we feel skeptical about marketing this solution to Gen Z in particular. Strategically using One Credential to its best advantage will require quite a bit of planning. A lot of Gen Z is?currently?teenagers who haven’t been making their own payments for very long (or at all), so they most likely lack the prior experience to know how to set their preferences. How would they decide when to use debit over credit, or a specific credit card over a different one? Being strategic requires a foundational?understanding of how these methods work and the benefits (or detriments) of using one instead of another. Without an experienced purchaser directly involved (even a somewhat financially competent parent could work), would Gen Z know how to set up their preferences??

Another question we have is, since One Credential is designed by Mastercard, can users input non-Mastercard payment methods into the app? Although Mastercard is one of the largest issuers worldwide, if One Credential only works with Mastercard products, it will definitely stop people who use other payment network cards from using it. If One Credential is going to be an “all-in-on" kind of payment app, then we think it needs to allow all kinds of payments, even if they’re not issued by Mastercard. ?

So the bottom line is, although we think One Credential has several interesting facets to it, from what we know now it also has some major limitations. One Credential is currently live only in the United Arab Emirates through Wio Bank, so we’ll have to wait and see until we can access it in the U.S. to make our final judgments. ?