Industry insiders question merchant enthusiasm
for Visa Inc’s plans to launch a cross-channel digital wallet in
the US and Canada during the autumn months of 2011.
The wallet will store Visa and non-Visa
payments accounts, support near-field communication (NFC) payments
through Visa’s payWave application and it is also claimed it will
deliver a range of transaction services such as e-commerce,
m-commerce, micropayments, social networks and P2P payments in a
bid to accommodate multiple commerce scenarios.
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Visa is said to be working with a number of
payment card issuers, community banks, credit unions, acquirers,
payment processors and merchants, such as fashion retailer
Nordstrom fsb, to get its digital wallet off the ground.
Yet Richard Crone of Crone Consulting is not
convinced by Visa’s digital announcement as he argues it is still
unclear why merchants would want to invest in expensive new NFC POS
terminals.
“Visa did not address the merchants’ desires
to do tender steering to their own payment instruments neither did
it provide an ability for merchants to engage in least cost routing
though payWave,” said Crone.
“The fact that there are no merchants listed
in the announcement, other than Nordstrom fsb, would seem to
indicate there is no real merchant involvement or enthusiasm at
this time for the Visa wallet.”
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By GlobalDataWhile Visa claims its digital wallet will be
open to all payment instruments, such as MasterCard and American
Express, Crone will look on with interest to see whether Visa’s
competing networks will allow it to play a controlling role.
“As we know, the one who enrols is the one who
controls,” he said.
Key features of Visa’s digital wallet are a
click-to-buy service, whereby users can enter an email address,
alias or online ID and password, instead of a billing address,
account number and expiration date, the wallet is customisable,
allowing a consumers to set preferences for how their wallet will
work, and that the payment solution works cross-channel.
Crone argues that Visa’s ‘click-to-buy’
services demonstrates recognition that its 1+-digit account number,
expiration date, 3-digit code and billing address entry for
payments online is too much for consumers and has been a source of
disintermediation by PayPal and others.
Turning its digital attentions to emerging
payments markets, Visa plans to drive account activation in
countries such as India and Russia, where card issuance and mobile
subscriptions are high but card usage is relatively low, by working
with banks and mobile operators to link card portfolios with mobile
devices to give handsets payments functionality.
In countries within Africa and the Middle
East, where again the payments landscape is different with high
mobile device usage but a lass developed payments infrastructure,
Visa will work with mobile network operators to link new virtual
mobile prepaid Visa accounts to mobile phone numbers to enable
cash-in, cash-out, personal payments and m-payments – including
bill payments. The network also intends to connect existing
closed-loop mobile money services that currently exist to provide
m-banking and payment services to unbanked and under-banked
consumers to its open-loop network, VisaNet
“It is clear that Visa feels threatened by the
expected moves of Google, Apple and other tech companies into
payments and hopes that by opening APIs and access to VisaNet, it
will attract merchants and consumers alike into the Visa fold,”
said Crone.
