Friday, February 25, 2005

VISA, Could It Be Everything You WANT It To Be?

I know VISA is behind the curve when it comes to the contactless payment technology, but now that they have stated they will implement, it creates a lot of questions.

I think this is how your M-Commerce starts but is also creates a conundrum of sorts for service providers.

From Visa launches contactless payments system in US .

Visa has completed development of its contactless payments system and is ready to begin deploying chip-based payment cards featuring the technology in the US.
The system, which uses radio-frequency identification (RFID) technology, allows consumers to pay for purchases by waving their card in front of a point-of-sale (pos) terminal tequipped with a contactless reader. All other aspects of the contactless payments are handled in the same way as a traditional transaction.

Visa says the system will make the purchase process faster and easier, while offering all the same security protections as traditional payments.

MasterCard's contactless PayPass and American Express's ExpressPay are already in use.

I say this is the start of M-Commerce, but not like most expect it to be. It's mobile, but it doesn't go through a service provider.

MasterCard is already working with Nokia and Motorola to incorporate the contactless payment solution in some of their mobile phones.

Will VISA announce they are working with a handset manufacturer too?

When the contactless payment credit card gets incorporated into mobile phones, how will this affect the wireless service providers? There are many mobile marketing campaigns being introduced that allow you to send a text (SMS) to a certain merchant's code and the charge then goes on your cell phone account. This is mainly being used for small purchases and any type of locations where it is difficult to use a credit card (taxis).

I think most imagined M-Commerce to be, click on an item with your phone and purchase with your service provider account. This would allow service providers to generate revenue from data traffic.

Now that the credit card companies have lowered the minimum purchase requirements , will it be easier just to wave your cellphone to make that $5 purchase than to send a text?

In order for this to work, the contactless credit card reader will have to be ubiquitous. But it represents a huge opportunity for the credit card companies.

What it could do though is jeopardize a major revenue source that the service providers were forecasting. If these readers are installed in a majority of retail establishments, and you can just wave your "credit card phone", are you even using the service providers network?

Would credit card companies have to pay service providers if they run their data through the internet or through a closed network? When the credit card is scanned, the info travels through whos network?

Would I rather wave my phone to pay for every item than cash? I get miles and a detailed summary of every transaction of everything I bought for the month.

Is there a fee for every one of these transactions, albeit small (.05, .50). If "waving" replaces cash, the transaction company that gets these fees will see some enormous volume.

Will ATM machines have to be retrofitted to accomodate the ability for contactless credit cards?

What will this do to the company(s) that make the swipe only credit card machines.

For places/situations that don't have the ability to install one of these readers, the credit card company could create their own short code (VISA=8572). Instead of waving, you could send a text and have the purchase done this way, but that would involve using the service provider.

The key to this is when credit card readers become accepted in all retail locations.
That is why I think it makes a lot of sense for a credit card company to get hooked up with a service provider.

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