Visa Revamps Its Online Wallet, And Gives It a New Name: Visa Checkout

Visa Inc. says its new online payment service, Visa Checkout, should help improve conversion rates for e-commerce retailers by making it easier for consumers to pay.

The service, available in the United States, Canada and Australia, enables consumers to pay online on any device, Visa says. Visa Checkout replaces the V.me online wallet Visa introduced in 2012.

Consumers enroll in Visa Checkout by supplying their names, addresses, payment card information and creating usernames and passwords.

Once enrolled, consumers enter their Visa Checkout usernames and passwords to pay. They must click the Visa Checkout button on the retailer’s payment page. A consumer can click on the Visa Checkout button and enroll in the service without leaving the retailer’s site. Visa Checkout is free for merchants, aside from their typical payment processing fees.

A pop-up window appears where the consumer can enter her Visa Checkout credentials. On the next screen she sees her enrolled credit or debit cards along with the default shipping address. Both can be changed within the pop-up window.

Consumers can use any branded payment card, Visa says. More than 180 financial institutions support Visa Checkout, including Navy Federal Credit Union, U.S. Bank, Bank of America, Chase and others, Visa says. Retailers that support it include Neiman Marcus, Pizza Hut, Petco and Ticketmaster, among others.

“People aren’t looking for another wallet,” Sam Shrauger, Visa senior vice president of digital solutions, says in a press release. “They just want a simpler way to pay online, particularly on mobile devices, and that’s exactly what we designed Visa Checkout to do.”

Visa Checkout is a change in philosophy for the giant card brand, says Rick Oglesby, senior analyst at Centennial, Colo.-based Double Diamond Group. “Visa Checkout represents a change in philosophy from V.me in that it endeavors to include the faster checkout and facilitation of merchant relationships directly into the core card offering rather than offering it as a standalone, separate product,” Oglesby says. “It’s more like merging V.me into the Visa card.”

The idea is to streamline the product to the point where the online payment function becomes just a feature of the card that issuers simply would add to new and existing cards, he says.

“When we launched V.me three years ago, we knew it would be an iterative process,” Visa says in a statement. “Commerce, both online and via mobile devices, is always growing and changing, requiring us to constantly innovate our offerings.” Visa says it incorporated lessons from V.me into Visa Checkout.

A name change alone will not convince merchants or consumers to widely adopt the online payment service. “Despite the fact that the wallet is a mainstream product online and the fact that Visa is the most mainstream electronic payment product, there will be big challenges,” Oglesby says.

Some online wallet providers have struggled. Square Inc. dropped its wallet in May, and added Square Order, an app that lets consumers make advance orders and pay for those orders at merchants. Google Inc.’s original online wallet, Google Checkout, morphed into Google Wallet. Google updated Google Wallet this week with a simpler system for storing gift cards and other functions. Mobile wallet Isis also has challenges, though it says it recently had 20,000 activations a day over a 30-day period. Isis would not say how many active users it has.

Amazon.com Inc., too has been pushing its Amazon Payments, a service that other retailers can use so their shoppers can pay using the payment card and address information stored in shoppers’ Amazon accounts.

PayPal, the payment arm of eBay Inc., is a powerhouse among online wallets. PayPal says it now has 152.2 million active user accounts as of the second quarter of 2014. Volume from e-commerce merchants totaled $40.4 billion in the quarter.

“Consumers already have well developed online payment preferences and Visa is attempting to change them,” Oglesby says. “Getting customers to click the Visa Checkout button the first time will be the biggest challenge.”

Merchants, of course, represent another critical audience to persuade to use Visa Checkout. And an important factor in their decisions to do so is if consumers use the online wallet.

“The top two reasons consumers use payment types like Amazon, PayPal and now this are it’s too complicated to remember or otherwise look up their credit card numbers, expiration dates and card verification codes,” says Paula Rosenblum, analyst at Retail Systems Research LLC. The other factor is a desire to expose credit card information to as few merchants as possible, she says.

The dilemma with a wallet provider, especially if one of the provider’s arguments for using the service is to reduce cart abandonment, is that consumers may not know a particular wallet is accepted until they reach a checkout page, she says.

“The cart abandonment would have been avoided if the merchant indicated accepted payment types right up front,” Rosenblum says. “Of course, they figure if they did that the customer might leave right up front. Instead, they basically take a gamble that the consumer will be OK with whatever payment type they offer.” This is more akin to a lack of disclosure issue by merchants rather than a cart abandonment matter, she says.

Visa also made available a Visa Checkout software development kit that enables developers to incorporate the service into apps for iOS and Android-based devices.