VISA and MasterCard are after your wallet.
No, they don’t want to steal it or anything like that, but they do want to put it online. Each last week announced the launch of a digital wallet, adding another page to the burgeoning tale of contactless payment technology in the United States.
VISA’s “V.me” and MasterCard’s “PayPass Wallet Services” will enable customers to pay for purchases online by signing into their respective accounts, rather than entering billing information on a site itself. Not only will this make online shopping more secure and less time consuming, but VISA and MasterCard also plan to incorporate the technology into the mobile-phone based payment platforms that promise to be an increasingly important part of the payments landscape in the coming years.
That all sounds great, but hold on, haven’t we seen this type of product before?
Well, first of all, there’s PayPal. You also can’t help but notice certain key similarities between the new VISA and MasterCard digital wallets and the now-failed 1999 attempt by American Express’ Blue Cash program to make e-commerce more efficient and secure. Fraud just wasn’t a big enough deal – all major card networks have $0 liability guarantees.
You therefore have to wonder why VISA and MasterCard believe such technology will catch on now.
To be sure, more consumers shop online than ever before, but people still essentially have impunity from fraud. The missing link clearly seems to be smartphones. If you’re using a computer, it’s not that hard to enter payment information on a website’s checkout page, and you don’t get that much added value from a digital wallet. Depending on your phone, though, this can be quite the chore, especially on the go. It’s far easier to complete a transaction by entering a simple username and password than by whipping out your actual credit card (in a potentially crowded place) and manually entering the 16-digit number from the front, the three-digit number from the back, the expiration date, your name, and your address using baby-sized keys and a relatively small screen.
What’s more, contactless mobile payment technology already appears to be the wave of the future, as networks push merchants and issuers to gravitate toward more secure, EMV-type fraud prevention technology and away from the antiquated magnetic stripe. VISA says it will incorporate contactless technology into its V.me program, enabling consumers to tap point-of-sale terminals to make purchases or scan barcodes to garner deals. MasterCard plans to give banks and merchants the ability to incorporate PayPass Wallet Services into their own mobile payment apps.
The support of major retailers and the ability to store information about any credit card also likely play a role. You can already use V.me to make purchases through PacSun.com and Buy.com, and a number of other major online merchants are expected to join the fold in the coming months. PayPass Wallet Services boasts American Airlines and Barnes & Noble as launch partners, and numerous other retailers and banks are said to be involved, including MLB.com, Fifth Third Bank, and Citigroup. Both services allow you to store VISA, MasterCard, American Express, and Discover card information, which helps lower the barriers to consumer adoption.
Both VISA and MasterCard plan to expand their digital wallet programs in the coming months, but not many specifics are yet available. We also don’t know how these services will ultimately fare, but one thing is for sure: a lot hinges on how many retailers wind up using them (i.e. their ubiquity).