Visa: Moving into mobile payments

While the payment card industry is less than 30 years old, it took a quantum leap forward when shoppers first started paying for their purchases online with their cards. It’s a given fact that if mobile commerce is to take off, the industry needs the support of “plastic card” payment institutions.

Bruce Mansfield While the payment card industry is less than 30 years old, it took a quantum leap forward when shoppers first started paying for their purchases online with their cards. It’s a given fact that if mobile commerce is to take off, the industry needs the support of “plastic card” payment institutions. Visa International’s Bruce Mansfield is of the view that the best way to boost m-commerce is to introduce new services such as location and proximity.

What do the introduction of new technologies such as GPRS and 3G mean to Visa?
With the introduction of these high speed, high capacity wireless networks, together with the plethora of new access devices such as phones, PDA's and pocket PCs, consumers are now regularly interacting with technology in their everyday lives.

Mobile phones are an ideal platform to combine a number of consumer needs, including communications, organisers and of course payment cards. Our challenge is to combine the payment function, ie the Visa card they carry in their wallet today and use in the physical world, with the mobile phone and allow for payments to flow across the wireless network.

The introduction of 2.5G and 3G technology by carriers across the globe will make for a richer consumer payment experience, most particularly the "packet based" charging model and the "always-on" feature encourages consumers to send and receive information which in most cases requires payment to occur.

The natural synergy is therefore for the telcos to work in partnership with Visa Members across the globe to combine communications and payments. Telcos are experts in communications, banks are experts in payments and Visa's challenge is to facilitate this interaction.

As carriers move to enable both 2.5G and 3G networks, Visa will ensure that our interoperable open authentication standard for the internet, 3 D Secure, is enabled for the wireless world and m-commerce will be a key business benefit to Visa, it's Members and most importantly, Consumers and Merchants.

What can the average consumer expect in time to come?
Location based services, the ability for consumers to send and receive marketing solicitations dependent upon their needs (location, time, etc) takes us closer to the idea of one-to-one marketing. Consumers, via their handsets, can send and receive marketing offers and going forward we also see the opportunity for the actual payment transaction to occur on the handset, either across the network or via infra-red interfaces between the handset and the merchant terminal.

We are focussing on enhancing the existing physical marketing channels with interactive channels and will support both location and proximity, together with traditional m-commerce for content, product and services. M-commerce will flourish in those merchant segments that make sense, not all internet merchants will be able to sell their products or services via a handset but some will be ideal, entertainment content and ticketing are two good examples. Tell us about Visa's m-commerce payment plans.
We are working with our partners, telcos and members to m-enable their cardholders and merchants and introduce new services such as location and proximity.

The first challenge is to provide a robust authentication solution for the mobile world and this is where 3 D Secure for Mobile comes in. Introducing this will require some investment on behalf of participants. It will also require merchants to be m-enabled and finally the consumer must want to shop this way. We have to make it easy and convenient for consumers to be m-commerce fans.

Once the technology is in place, we need to focus on content and services. What follows from there is then access and interaction. That will be when things such as location and proximity will become important. And, finally, we need to ensure that theirs is a sustainable business model for participants.

Looking ahead, what changes do you see in the wireless industry?
We're seeing a convergence of wireless devices with payment systems and Ovum forecasts Asia Pacific m-commerce revenue to grow to US$47 billion in 2005.

As the world’s leading payment brand and the largest payment system worldwide, Visa will continue to leverage its success and to replicate it in the digital world. Visa will play a pivotal role in advancing new payment products and technologies to benefit its 21,000 member financial institutions and their cardholders. This includes pioneering the creation of u-commerce or universal commerce – the ability to conduct commerce anytime, anywhere and over any type of device.

U-commerce seems a relatively new term - any details?
Visa International marked the start of 2001 by announcing the first wireless transaction using a Palm handheld [device]. This is a significant step towards achieving its vision of u-commerce.

Visa is working on a number of fronts to realize the vision of u-commerce, including the continuing development of chip-based cards and payment tools, enhanced security for Web-based payments, and the acceleration of mobile commerce, proximity payment using infra-red, mobile wallet trial across existing and future 2.5G and 3G networks.

What potential do you see in Asia?
According to industry research, Asia Pacific contributes 20% of the global m-commerce revenue and there have been many forecasts on huge growth potential in the region. This is encouraged by a number of factors, such as the positive acceptance of data services (eg. DoCoMo and high SMS penetration) and the fees decrease in a number of 3G licenses, i.e. Australia and Singapore.

We expect that the mobile commerce market in Asia Pacific will develop at a quick rate over the coming years – in technology, applications, services and payment technology.

More about Top 20 Telecoms' Outlook.