October 27, 2008

In a move that could provide a needed boost to mobile payments in the U.S., Visa (San Francisco) will introduce a mobile financial services application designed for Mountain View, Calif.-based Google's Android mobile device platform. Unveiled in October, the partnership also involves New York-based JPMorgan Chase ($2 trillion in assets) and device manufacturer Nokia (Espoo, Finland).

The mobile payments initiative -- which Visa plans to make available in the U.S. initially for Chase Visa cardholders by the end of 2008 -- will include a variety of payments-related services designed to make m-payments more appealing to the U.S. market. The new payments suite is centered around three value-added offerings: customizable mobile alerts that will give consumers near- real-time information on their card transactions, something many in the industry believe will help beat fraud; customized merchant offers -- from discounts to loyalty programs -- available to consumers via their mobile devices; and Google's built-in location-based technology, which will enable users to quickly map nearby merchants where they can redeem Visa offers and locate ATMs that accept Visa cards.

After an introductory period, Visa plans to work with additional card-issuing financial institutions to extend the availability of the services beyond Chase customers. Visa is also developing a payment application to enable Visa account holders to make payments at retail locations or on the go over wireless networks. The focus of this aspect of the program is the next-generation Nokia 6212 handsets, which will include embedded near-field communications (NFC) chip sets.

'Better Money'

The introduction of the new services is part of a broader strategy by Visa to ramp up its payments offerings to provide customers with "better money," according to Tim Attinger, head of product innovation and development for Visa. The idea behind the initiative is to offer all of Visa's customers -- financial institutions, merchants and consumers -- more-valuable services and convenience, Attinger told attendees at a briefing announcing the deal. "The Visa network automates the delivery of the benefit," he said. "This unlocks the ability for us to use our information capabilities."

In a related move, Visa is conducting a pilot with Minneapolis-based U.S. Bank ($247 billion in assets) around mobile-based person-to-person money transfers. Visa cardholders in the U.S. will be able to send money from their Visa accounts to other Visa cardholders' accounts. Transfers will be initiated using a mobile browser to access a secure interface. The funds are directly credited to the receiver's Visa account and can be accessed via ATM or at the point of sale.

Aaron McPherson, practice director, payments and security, with Boston-based Financial Insights, says the Visa/Nokia/Google partnership is a bold move by the card giant to establish itself as a leader in the mobile commerce space. "This is potentially a very big deal," he comments. "It represents Visa taking a step forward in establishing standards for mobile transactions."

According to Tim Armstrong, Google's president for the Americas, the mapping feature in the Android offering alone will be a huge differentiator for mobile payments providers. "When you mix this with financial information that's relevant to where you are," he told the audience at the briefing, "this is going to save consumers time and energy."

McPherson points out that the Visa solution is independent of the mobile carriers. "This can be a game-changer because the Android platform is open, and that interoperability was the missing piece [to the mobile payments puzzle]," he says.

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