VISA - Growing e-payment
Visa’s strategy is to grow the market of e-commerce in general, not just the e-payment market as it is already the dominant form of payment on the Internet. “About 75% of the people who are on the Internet and are not shopping - they are not shopping because of security concerns,” stated Mark Burbidge, general manager, e-Visa, Asia-Pacific.
“It doesn’t matter which market you look at in Asia-Pacific, the top three reasons for why aren’t you shopping on the Internet is either ‘I don’t trust my financial details over the Net, or I have privacy concerns.’”
To address consumer fears about security and privacy, Visa kicked off its Visa Secure E-commerce Initiative (VSEI) early last year. According to Burbidge, the multi-stage program that plans to deploy both security technology and standards of practices may end up supplanting the SET (Secure Electronic Transaction) as the standard for credit card payments over the Internet.
The program has already enlisted the support of some of the largest Internet properties in the world. Major banking institutes in Korea and Singapore have also been enrolled into the program.
“We are by far the most preferred form of payment on the Web, but what we want to do is to expand that lead further hand in hand with security initiatives,” explained Burbidge.
The program employs an SSL-based encryption system, which according to Burbidge, is the most widely used encryption technology in the Asia-Pacific region. On top of the base layer of encryption, however, PKI and other authentication methods can be deployed. Fundamentally, the technology must address the three security issues of authenticating the participants, ensuring the confidentiality of information and securing the integrity of data flow over the Web.
From the end-user perspective, however, the new technology boils down to nothing more than an additional pop-up screen from the card’s issuing bank asking for identification.
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“If you look at 5-6 years back, most of the guys who were surfing the Web were technically proficient, but that’s changed dramatically over the last 2 years,” pointed Burbidge. “So we wanted to make sure from a design perspective that it will be nice and simple for people to use; and be flexible enough in terms of support for m-commerce, chip, wallet and all kinds of good stuff.”
According to Visa’s own figures, e-commerce activity in the region has been growing at a rate of 80% to 100% a year. The largest growth has been from each country’s own domestic online commerce. Korea and Japan, for instance, reported over 95% growth in terms of money spent on their domestic shopping sites. At the rate it is going, Visa expects to be doing business in the region of US$40 billion by the year 2004.
Technology, however, is only a part of a secure payment infrastructure. A bank’s core infrastructure, for instance, is only 20% made up of technology. The real security for banking transactions comes from the set of rules and standard of practices that govern those transactions. The same must be applied to the Internet.
According to Burbidge, a plan to implement those payment best practices and standards for the Internet is already in the works. The plan, still pending approval from Visa’s board in June this year, comprises two pieces of regulations: one guarding payment procedure and one looking over the procedure of accepting payment from the merchant’s end.
“If you’re using your card correctly, from a consumer’s perspective, and if you’re accepting the cards correctly, from a merchant’s perspective, you should be protected,” said Burbidge. “We didn’t have a lot of those rules in place for the virtual world before.”
From Visa’s perspective, using a credit card in the real world is a thoughtless process now.
“It should be that way too for the virtual world,” declared Burbidge.