… [The Visa] mobile services that allow financial institutions in the US to offer their account holders the ability to monitor account history and balances, transfer funds between accounts
Oh the joys of allowing Visa to push credit transactions on the debit network… if only banks would allow it. As I outlined in previous blogs below, Visa has no traction with the OCT transaction set in the US. Internationally, the opposite is true as emerging market banks have taken on to OCT (receiving funds via Visa debit network), but will not SEND. . Visa’s VMT service is thus stuck.. it can’t serve as a remittance service because sending country banks (US/EU) do not participate. Note from this week’s MA earnings call that Mastercard has partnered with Western Union to address this issue.. a much better approach for cash in.
If you ask Visa for a VMT test account, you are likely to get Bank of the West or some other small bank, with Visa’s promise “it is mandatory and all banks will comply”. It won’t happen.. there are problems with this mandate.. it is after all a debit network (see VMT blog).
What is this announcement.. really?? Visa has put a notification event service on their DPS switch where registered issuers and consumers can receive alerts.. nice of Visa to throw Monitise a bone after they completely messed up their corporate strategy by promising them to make them the “go to market” solution for mobile payments. Monitise is now the “go to” solution for issuers looking for a 3rd party service to check your balance.. or get an alert.
Also… if there were 2 banks that supported VMT I’m sure I could transfer funds with the service as well. Visa… please give us the list of banks that support it.. a demo.. we are all dying to see your progress.
Visa’s release a new iPhone app last month. One Bank has signed up (US Bank) the rest are holding back (more on this below). The application has been a 2 year effort driven by Monitise, and the UI looks very good. However, I’m afraid that Visa’s latest mobile effort is doomed to failure because of the "last mile" issue at the POS.
Visa’s iPhone app is available on Apple’s App Store (but not advertised)
The application has been a 2 year effort driven by Monitise, and the UI looks very good. However, I’m afraid that Visa’s latest mobile effort is doomed to failure because of : “last mile” issues at the POS, and issuer data ownership.
From Visa’s website (http://usa.visa.com/personal/using_visa/visa-mobile/faq.html)
**Offers: Receive merchant discounts and special offers directly on your iPhone. The offers are stored on your iPhone and can be redeemed at physical merchant retail locations, online, or by telephone …
Visit the merchant’s physical retail location and show the cashier the offer displayed on your iPhone. The merchant discounts the price in accordance with the offer and you pay for your purchase using your enrolled Visa card.
Great customer experience… click on an offer and “SHOW THE CASHIER” your coupon. My guess is that the cashier will gladly give you the discount with a cash purchase as well. There is certainly the opportunity for a social network aspect to sharing discounts (think groupon) and location aware mobile advertising.. but the banks are not on board. Why?
- Visa makes it clear they can register up to 5 Visa cards. Hence they have 1 Participating Issuer – USBank.
- Visa is beginning to use customer data for advertising. Current Visa rules do not provide for them to advertise directly to the customer.. it is the issuer that owns the relationship. Perhaps this is the driver of the marketing annoucement
Looks like I was a little premature in the original version of this post. Looks like the pilot may be a field trial for NFC as in the Micro SD form factor.
20 Aug 2010 (update Aug 23)
(update – Was just told that the BAC pilot is NOT using the Monitise application. Wow.. what on earth is going on with the Visa team? They have at least 5 different pilot models.. in a positive light this is market experimentation. I’ll take the blame for being premature, but given that I saw the new application and was told it was July I connected the dots… albeit incorrectly. Bloomberg’s story above is on target and trial is a field test of the newly certified DeviceFidelity MicroSD. Purpose is to ensure all works as planned from enrollment, activation, OTA provisioning, application usage and NFC payment ).
Visa has a number of initiatives surrounding mobile and NFC. Certainly a challenge to get multiple parties aligned to make this happen:
- Monitise, provider of a new iPhone application
- Device Fidelity, NFC tech provider which
- Bank of America (pilot agreement, marketing plans, focus demographic)
- Advertisers.. currently part of existing visa discount program
- Apple.. certification of the Moni iPhone application (submitted in June)
- First Data. Trusted Service Manager (TSM) in the NFC role…
- … I could go on
This activity represents a major investment by the entire industry team.. ( given equity stakes perhaps Keiretsu is more appropriate).
More to come … this is just a quick update
PayPal is best positioned of any major player to link the virtual and physical payment worlds (see here for detail): they have a consumer base, merchant base and a phenomenal fraud/risk team of 300+ with commensurate tech and ops. However their ability to execute is not without challenges. For example, what % of their current merchant base does POS transactions? Will there be a need for merchant terminals? If so who will pay?
18 August 2010
Great WSJ Article Today – Paypal looks to real world commerce
First Draft…. final tomorrow.
As stated in my previous blogs about Apple, Bling, and the Mercury NewCo we are in the midst of a revolution in consumer payments, driven by large non banks, with new value propositions. For example, we see established organizations like AT&T, Verizon, and Discover collaborating (Mercury NewCo) with a payment value proposition driven by mobile advertising, Card networks attempting to develop PayPal killers (see Visa PayClick) and mobile handset manufactures attempting to create models for payments separate from banks (see Nokia and Apple NFC).
The worst kept secret in mobile payments today is: there aren’t any (except for MNO unbanked solutions). Efforts like Mastercard/Obopay have failed globally because they have focused on P2P (no existing volume). Alternatively, PayPal’s efforts are focused on the POS. Enabling any “merchant” to accept any card either at POS or virtually (see previous blog on PayPal’s virtual terminal). This approach is a win for banks (card acceptance), a win for consumers (convenience/loyalty), and a win for merchants (reduced merchant fees and interchange).
PayPal is best positioned of any major player to link the virtual and physical payment worlds (see here for detail): they have a consumer base, merchant base and a phenomenal fraud/risk team of 300+ with commensurate tech and ops. However their ability to execute is not without challenges. For example, what % of their current merchant base does POS transactions? Will there be a need for merchant terminals? If so who will pay? As discussed in the article above, Bling has been mentioned as a potential approach. Issuing Bling tags to PayPal’s employees is certainly a useful way of testing the consumer issues associated with issuing (and using) a payment tag.
My guess on PayPal’s “focus”?
Given PayPal’s strengths I would see a “phone as POS” approach as the most logical. As consumers we focus on our individual accounts, but PayPal is one of the few “2 Party” payment networks (others are Discover, Amex) that also include merchant acquisition. 2 Party systems are uniquely positioned to control the costs and value proposition between the merchant and the consumer. One of the major NFC challenges is POS infrastructure: who will pay for it? The phone as POS would certainly address this Gordian Knot for small merchants. Small merchants are a group that also feels the most pain in interchange and card acceptance fees due to their lack of negotiating leverage. Oddly enough large banks seem to be supportive of PayPal’s efforts here with the view that their actions will help drive cash replacement. In other words, if PayPal’s innovation is indeed focused on NFC acquisition then they will be able to process all cards..
On the merchant side, PayPal has already completed much of the heavy lifting with its existing virtual terminal service. This service equips PayPal merchants with ability to accept any card at the POS (see Virtual Terminal blog). NFC or RFID form factors are just another abstraction for this card. On the consumer side, I would expect to see PayPal working to link PayPal accounts to multiple form factors. Expect PayPal to make an acquisition in this space.
As of today, here is my view of the teams competing in mobile payments at POS
- AT&T/Verizon/Discover/?Google/First Data
More to come tomorrow.