The payments industry is entering a phase where digital systems evolve from digitising cash transactions to becoming intelligent and adaptive. Mastercard is preparing its networks for this shift by strengthening security, authentication and interoperability. Sandeep Malhotra, executive vice president of core payments for Asia Pacific at Mastercard, said the next phase of innovation will depend on strong foundations in identity, interoperability and embedded security. “The payment industry has changed dramatically in the last three years, more than in the previous ten,” Malhotra said. “The focus is now on intelligent, trusted and interoperable payments supported by intelligent networks and security by default.” In an interview at the Singapore FinTech Festival, he outlined the company’s regional strategy focused on three priorities: replacing passwords and card numbers with tokenised credentials that act as secure digital substitutes for traditional card details; connecting fragmented payment systems across Asia Pacific; and enabling transactions initiated by artificial intelligence (AI) systems based on user instructions. Fraud in online payments continues to outpace in-store incidents, and inconsistent authentication often leads users to abandon transactions. Mastercard views these challenges as signals that the foundational architecture of payments must evolve. The company aims to make online shopping across Asia Pacific password-free and number-free, eliminating the need for manual card entry, by 2030. As part of this goal, they have also set a 2027 target for complete tokenisation and authentication in Singapore, Malaysia and Vietnam. Tokenisation underpins Mastercard’s infrastructure strategy At the foundation of this transformation is Mastercard’s tokenisation strategy, which embeds security at the transaction level by replacing static card data with cryptographic tokens. This removes the need for merchants to store sensitive card information, reducing exposure to breaches and improving transaction flow. “We are leading towards a token economy,” Malhotra said. “Our goal is by 2030, no more manual card entry and no more passwords.” He noted that more than 30% of Mastercard’s global transactions are already tokenised and said tokenisation had increased merchant approval rates by up to 6%, translating into close to $2 billion in additional global monthly sales. Malhotra said the pace of broader adoption depended on how each market approached authentication, with countries such as Vietnam and the Philippines operating two-factor authentication or one-time password requirements that shaped how tokenised credentials were introduced. He described these conditions as indicators of both the scale and maturity of the ecosystem. He outlined three areas where Mastercard applies tokenisation. The first involves tokenising payment credentials, enabling card numbers to be replaced by secure digital tokens. The second uses authentication based on biometrics or device recognition to verify identity and reduce reliance on one-time passwords. The third applies tokenisation to digital assets such as bank deposits and invoices, which can move across networks through on-ramp and off-ramp processes. Malhotra said that combining token credentials with biometric passkeys stored on personal devices can remove passwords and materially reduce phishing-related fraud. He added that Mastercard is working with issuers to expand the use of passkeys, with progress influenced by regulatory requirements in each market. Extending interoperability across Asia Pacific Building on its token infrastructure, Mastercard is enabling transactions between previously separate payment ecosystems in Asia Pacific. Malhotra noted that Asia accounts for 70% of global real-time payment transaction volume, highlighting the importance of improving interoperability across the region. He identified wallets such as Alipay, WeChat Pay and GCash as examples of regional systems now connected to Mastercard’s global network. He said that Mastercard has spent the past two years connecting wallet users to Mastercard acceptance by using tokenised wallet credentials. A traveller can link their Mastercard to the Alipay app and transact with QR-enabled merchants in mainland China. A GCash user in the Philippines can tap their wallet at Mastercard terminals in Singapore. These use cases rely on shared token infrastructure and do not require merchants to change point-of-sale systems. Malhotra said these interactions demonstrate how tokenisation can support payments across different ecosystems while maintaining existing acceptance infrastructure. Supporting the transition to digital assets Mastercard is testing how its network can support regulated digital assets, including tokenised bank deposits, stablecoins and tokenised financial instruments such as invoices and receivables. “We have an interoperable, open network of digital assets where assets move across public or private chains,” Malhotra said. “We can on-ramp and off-ramp them on our network.” He highlighted recent pilots that explore these capabilities. Mastercard participated in JPMorgan’s pilot of its US-dollar deposit token (JPM Coin) on the Base blockchain, exploring on-chain settlement and interoperability for institutional payments. Through its partnership with Thunes, Mastercard made it possible for a sender to transfer money while allowing the recipient to receive those funds in a stablecoin wallet if they prefer. He said these initiatives remain early stage and that broader scale depends on adoption and participation across the ecosystem. Malhotra added that activity in this area is increasing and that commercial viability will improve as more participants engage with these models. Preparing infrastructure for AI-driven transactions As AI systems begin to play a greater role in initiating and completing payments, Mastercard is developing the rules and standards needed to support agent-led commerce. Malhotra compared this shift to earlier transitions in retail, including the move from cash to digital and the rise of e-commerce. “Agentic payments are a tremendous shift,” Malhotra said. “Digital transactions are now becoming intelligent and this is a fundamental step.” These agent-led transactions involve AI systems acting on user instructions, either with the user present or operating autonomously based on predefined settings. He illustrated this with an example of a user instructing a digital assistant to purchase a red bicycle. The assistant may confirm the transaction before completing it or act automatically once a price threshold is met. Malhotra said Mastercard is developing models that support both attended and unattended transactions and is taking into account merchant readiness and regulatory expectations in each market. The company is defining protocols to govern agent behaviour, including mechanisms that verify an agent’s identity and intent and rules that enable consistent and auditable transaction flows. “We want to make sure that the trust and confidence that the consumer and the merchant have does not get broken,” he added. Mastercard positions itself as a multi-rail network Mastercard’s strategy in Asia Pacific centres on building a multi-rail payments network that supports cards, wallets, real-time transfers and digital assets across consumer and commercial domains. The strategy reflects an industry-wide shift to embed trust, programmability and security directly into the core infrastructure of payment systems. This direction parallels global efforts such as Swift’s shared ledger experiments and the mBridge project, which is testing cross-border central bank digital currencies under the direction of the central banks of China, Hong Kong, Thailand and the United Arab Emirates (UAE). While mBridge is designed for wholesale interbank transactions, Mastercard is developing infrastructure for commercial and retail use cases across private-sector networks. Deployments are being tailored to comply with local legal, operational and data requirements throughout the region. As financial institutions seek capabilities beyond processing and settlement, Mastercard is focusing on delivering orchestration, embedded identity and token-native security as core services. Institutions that integrate these functions into their infrastructure will be better placed to shape the next phase of payments in Asia Pacific.
