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Visa lays out ambitious new mobile strategy

Less than a week after CEO Joseph Saunders said Visa Inc. would be announcing its mobile payment plans, the company revealed its blueprint for what it calls the "next generation of payments solutions." And while the announcement is short on specifics, the goal is ambitious. At its core, Visa's new strategy aims to transform the way consumers everywhere pay for items in person and online, whether on their computers or mobile devices.

"We are introducing new solutions for ecommerce and mobile devices that provide the same 'Visa-quality' experience — convenience, reliability and security — people enjoy when using their Visa cards at a retail location. In doing so, we are accelerating the global shift to digital payments by harnessing our brand, products, network and 50-plus years of payments experience," Saunders said in the announcement.

Introducing the digital wallet

According to the announcement, Visa will be introducing several new payment products in the United States and Canada by this fall. The new products include a digital wallet that will hold not only Visa credit card accounts, but other payment methods as well as the personal data required to complete online transactions. The digital wallet is intended to simplify and streamline the buying process for customers making purchases on mobile devices. 

"From a consumer standpoint, e-commerce is still a challenging interaction," Jennifer Shulz, Visa's head of global innovation, said in a call. "We tolerate it with a keyboard, but it's intolerable on a mobile device."

Shulz said requirements for consumers to enter and re-enter basic data like credit card numbers and address information for every online purchase makes it clumsy, an issue that is exacerbated when the process occurs on a small mobile device.

Shulz said it was important for Visa to address the issue now as consumers are shifting their online shopping to mobile devices, and as merchants look to expand their presence to incorporate the mobile experience.

"From a retail point of view, you have a solution that now works across multiple channels," Shulz said.

She said Visa's products will solve other issues as well. By storing sensitive data for both the consumer and the retailer, Shulz said the new approach will address a host of security issues and PCI-compliance requirements for merchants.

The Visa digital wallet product will also support near field communication (NFC) technologies through Visa's PayWave service. This means that consumers will be able to use the product to make purchases in brick-and-mortar locations as NFC technologies on mobile devices are adopted.

Shulz said Visa expects that acceptance of a digital wallet won't happen quickly. She said that 2011 was a good year for mobile payments in terms of attention, but that full market adoption will take five to 10 years.

Bringing digital wallets to the rest of the world

Visa also announced that it will be focusing on expanding its new products to emerging markets as well. Many regions around the world have high penetration of mobile phones but few secure, reliable options for electronic payments, the company said. Visa said it will be working with financial institutions and wireless carriers in those markets to give consumers services that bundle basic financial transactions like payments and funds transfers with air time top-up and bill payment.

"Visa and our subsidiaries are working with financial institutions, merchants, mobile network operators and innovative technology providers to bring new ways to pay and be paid to more consumers and merchants around the globe," Saunders said in the company's announcement.

In other regions, where basic "closed-loop" mobile payment networks exist, Visa said financial solutions are still limited by geography and interoperability. The company is looking at leveraging its new products to connect these closed-loop networks.

"What Visa is proposing is providing an open network to allow utility across networks," Shulz said.

Shulz wouldn't say what markets Visa is focusing on specifically, but she did say that she expected the company to be announcing news soon.

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User Comments – Give us your opinion!
  • christopher williams
    It is good news that Visa (and Mastercard) are looking at mobile payments as part of their solution, rather than a rival format to cards. I would agree that while there is a lot of positive interaction by financial and technological entities, it is still likely to be some time before North America and Western Europe are likely to fully embrace this concept (as card payments work well and at least as easily).
    So, the area of precedence, as Jennifer mentions, is in the developing countries market, where the overall 5 billion+ phones is far in excess of the 2 billion bank accounts.
    Our non-profit group works in this area, aiming to create central clearing facilities for such payments at the domestic level, in conjunction with the UN, World Bank, ITU, IMF etc, and we welcome any organizations, big like Visa or small as mom and pop e.commerce merchants, to help create this service.
    One aspect we believe should be addressed is how the relevant government controls the payment flow, both from a money laundering and a tax collection aspect. Ideally, all electronic transactions (whether bank-to-bank, card association, local debit cards or mobile phones) should all go through the same real time fraud analysis - and all be available to have taxes (such as VAT) deducted in the course of the settlement. This structure alone can turn around financing for many developing countries, where they want to get away from aid and replace it with fully functional tax collection so they can interact successfully in the domestic and international arenas.
    Visa are already helping in Latin America in this regard; I hope this new approach on mobile payments will herald a worldwide move in that direction - and many more will join in as well!!
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