Digital Transactions Authoritative, insightful and timely information for payments professionals
Visa Inc. on Thursday said it will introduce transaction alerts and other services that will work with Google Inc.'s new Android operating system for mobile phones. The world's largest payments network also said it has developed contactless-payment and money-transfer applications for a new handset from Nokia that features near-field communication (NFC) technology. And, in what amounts to a hat-trick of mobile developments, Visa announced it will launch by the end of the year a person-to-person payment pilot with U.S. Bank and other unnamed financial institutions. The breadth of Thursday's announcements?ranging from money transfer to NFC to services like alerts and merchant offers–comes at a time when many payments executives are struggling to sort out how they should invest in mobile payments. “What Visa is saying is we're in this for the long haul,” says Robert B. Hedges, managing partner at Mercatus LLC, a Boston-based consulting firm. “They're trying to build an ecosystem, as opposed to trying to find the killer app. They're not a startup, so they don't have to promote the killer app.” Still, for some observers the latest developments leave some key questions unanswered. While Visa announced it is working with major partners such as Google and Nokia, for example, it said nothing about cooperation with wireless carriers, which specify phones and so control both device and software availability. “Working with handset vendors and ISPs are important steps in developing future mobile financial services, but the critical link to the end user is the mobile operator,” says Nick Holland, senior analyst at Boston-based researcher Aite Group LLC, in an e-mail message to Digital Transactions News. “This is to a certain extent changing with devices like the [Apple] iPhone and the new [HTC] G1 Android device, but keeping the mobile operator in the loop will be critical.” MasterCard Worldwide, meanwhile, sees an element of me-too in Visa's news. MasterCard this spring announced a handset-based money-transfer service it is launching with mobile-payments processor Obopay Inc. (Digital Transactions News, June 19). “Whenever your competitor copies you, it's validation that you're on the right track,” says Simon Pugh, group head of mobile at MasterCard. Still, observers concede Visa's announcements cover a lot of ground. The network said it will offer by year's end alerts as well as the capability to send offers from merchants and a locator service as applications that will work on Android, an operating system Google launched this week. Currently, Android is available on the G1, a phone available on T- Mobile's network that competes with Apple's iPhone and sells for $179. The phone, made by Taiwan-based HTC Corp., is slated to become available Oct. 22. The first issuer to offer the downloadable services will be JPMorgan Chase & Co., Visa said, though it added it expects more banks to sign on later. “Through this effort, U.S. consumers will, for the first time, be able to download Visa mobile service applications directly to their handsets,” says Elizabeth Buse, global head of product at Visa, in a statement. Observers say the services, while not strictly payments-based, are likely to encourage greater consumer usage and thus increased transaction volume. The locator service, for example, will be based on Google applications such as Google Maps, and will allow consumers to zero in on stores that send them offers. Similarly, Android will support Google search, a function expected to deliver handset users to merchants and to generate incremental transactions. “Adding extra services to enrich the consumer experience becomes very valuable,” says MasterCard's Pugh, though he cautions that “it's too soon to tell what impact [Android] will have on the marketplace.” To test handset-based person-to-person payments, Visa says it will launch a pilot in which a Visa cardholder can send money via his cell phone to another Visa account holder. The sender will use his mobile browser to reach a secure site where he can initiate the payment. Visa's switch will manage settlement to the recipient's Visa account; the recipient can then access the money through ATMs or by making purchases. The pilot's first phase will be limited to domestic transfers, Visa says, and will include U.S. Bank and other institutions as well as a maximum of 6,000 account holders. Some time in the first half of next year, the program will expand to international transfers. With Nokia, Visa will offer NFC-based payment as well as mobile commerce and alerts on the handset maker's new 6212 Classic phone, which sells for $315 and comes with an integrated NFC chipset. NFC allows consumers to pay for goods at the point of sale by waving or tapping their phones by or on a contactless reader. The phone is intended initially for the European and Asian markets, where NFC payment applications are more advanced than in the U.S.
