Commercial in ’09. Visa Alerts Will Include Two-Way Messaging

Visa Inc., which on Monday announced a pilot project to deliver transaction alerts to cardholders' mobile phones and e-mail inboxes, expects to launch the service some time next year as a commercial service for its members, Visa executives say. While the pilot, which involves eight banks in the U.S. and Canada, is testing only alerts sent to cardholders, the commercial service will feature a two-way capability allowing cardholders to respond instantly, the executives say, though exactly when this capability will be introduced has not yet been determined. It will likely become available “shortly after the [commericial] rollout,” says Gerry Sweeney, head of global e-commerce and authentication at Visa. Working with PNC Bank, Royal Bank of Canada, SunTrust Bank, TD Bank Financial Group, U.S. Bank, Vancouver City Savings Credit Union (Vancity), Wachovia, and Wells Fargo as its pilot banks, Visa is offering the service to about 2,000 total bank employees. The network is linking the alerts service to its VisaNet authorization system, which it says will allow it to deliver messages at almost the moment a transaction occurs. “I get an alert before I walk away from the register or get a receipt [from an ATM],” says Pamela Zuercher, head of global product innovation for Visa. She says the service is already live with some of the banks, while others are “gearing up” to begin operation. The alerts will cover several types of transactions–ATM withdrawals, an e-commerce or phone-based payment, a cross-border transaction–and will allow users to set thresholds any transaction must exceed to trigger a message. Alerts can be sent to handsets or e-mail inboxes, or both. If a transaction looks suspicious, the user can call an 800 number to report it, a step Visa expects the two-way capability to replace. When that capability is introduced, responses from cardholders will be routed simultaneously to Visa and the issuing institution, Zuercher says. Visa hopes the pilot, which is expected to run until the end of the year, will yield data on usability. This includes making sure the triggers are easy to set and that registration for the service is as easy as possible, Zuercher says. She adds Visa will be interested in “getting more information around the economic structure of the service” in an effort to determine its value to banks and how it might be priced by Visa to its members. Pricing to consumers will be determined by the banks. Visa's pilot comes as financial institutions are starting to realize the value of cardholder alerts in fighting fraud. “Customer controls are absolutely the wave of the future,” says James Van Dyke, founder and principal at Javelin Strategy & Research, Pleasanton, Calif. Some 44% of large issuers offer mobile alerts of some kind, according to research done by Javelin. But these notifications are often less comprehensive than the ones Visa is testing, Van Dyke says. Moreover, no financial institution has yet introduced two-way alerts, he says. “Visa will change that significantly,” he notes. Van Dyke says the involvement of a bank card network is critical to the ability to deliver alerts in real time or near real time, allowing cardholders to stop fraudulent activity much sooner. Javelin research shows that while the average case of identity fraud lasts 98 days from the time the fraudulent use starts until it stops, the average case of bank card fraud lasts only 72 days, illustrating the importance of a central switch in collecting and disseminating critical information. “A capability like [the Visa alerts program] will drive that number even lower,” Van Dyke says. He adds that the new service is also likely to ease the way for broader mobile-banking services and ultimately for mobile payments. “It paves the way for the mobile wallet,” he says.