Mastercard (NYSE:MA) and Microsoft (NASDAQ:MSFT) are forming a partnership. The fintech company and the tech giant will work to increase cloud-related activity for purposes of digital commerce.

The company describes Mastercard Labs as its "global R & D arm," bringing "innovative payment solutions" at faster speeds. Thanks to the partnership, Mastercard will power this technology through Azure and Microsoft's AR, VR, and IoT technologies. It will also enable the mission to "de-risk and commercialize emerging technologies and platforms for digital commerce."

For customers, this means a digital identity that benefits from universal recognition. This should facilitate interaction with businesses, service providers, and the wider online community.

"Digital identity is a cornerstone of how people live, work and play every day," said Joy Chik, the corporate vice president of Identity at Microsoft. Chik added that she was excited to work with Mastercard to bring about this new decentralized identity.

Man using fintech on his smartphone.

Image source: Getty Images

Ken Moore, the executive vice president and head of Mastercard Labs, stressed the benefits of the partnership:

"We are thrilled to deepen our long-standing relationship with Microsoft by advancing the research, development, and scaling of new technologies and business models," said Moore.

Both companies expect this digital identity to bring other benefits, including identity verification and fraud protection. The deal also emphasizes identity inclusion. This will help the estimated 1 billion people across the world who hold no identity on digital platforms.

The partnership should also enable Mastercard's Start Path program, which assists the "best and brightest" late-stage start-ups in maximizing opportunities. This program has aided the development of more than 230 fintech businesses across the globe.

Both companies declined to disclose the financial terms of the deal.