Visa Inc. and Visa Europe

Headquarters: 
United States, United Kingdom

The U.S.-based card company Visa Inc. and its separate bank-owned affiliate, Visa Europe, share a brand and intellectual property on contactless payments and NFC.

Like other payment-card schemes, they also, no doubt, share a frustration at the slow pace of adoption of contactless and mobile payment.

Visa saw its rival MasterCard Worldwide get off to a faster start in both the U.S. and in Europe for contactless cards four to five years ago, thanks to MasterCard’s more nimble approach. But Visa has closed the gap, and it has used its greater market share in Asia to develop contactless hotspots for open-loop payment in South Korea, Taiwan, Malaysia and Thailand, though MasterCard also has a presence in these markets.

Both Visa and MasterCard have been developing the U.S. contactless market, and most terminals accept both Visa payWave and MasterCard’s PayPass contactless applications, in addition to applications from American Express and Discover Financial Services.

But poor consumer awareness and the lack of broad acceptance of contactless cards at the retail point of sale have held contactless back. And neither Visa nor MasterCard has been willing to lower interchange and, therefore, merchant fees to try to expand acceptance.

Though MasterCard established a beachhead in Europe for contactless payment in Turkey in mid-2006, Visa Europe seized the initiative a year later with the launch of contactless payment in London with big British players Barclaycard. Along with Transport for London, they  collaborated on the “OnePulse” card, which combined contactless credit with transit-fare collection. Later in 2007, Visa Europe participated in an important NFC trial with Barclaycard and TfL. Barclaycard and parent Barclays, and to a lesser extent other UK banks, have since begun rolling out other contactless credit and debit cards, most with Visa payWave onboard. About 4 million Visa-branded contactless cards were on issue in the UK and 6 million throughout Europe at the end of 2009, according to Visa Europe. The card scheme said it expects that to double to 12 million by the end of 2010, mostly from continued rollouts in the UK, Turkey and Poland.

Still, as in the U.S., merchant acceptance is lagging in the UK. And unlike in the U.S, Visa Europe lowered interchange for contactless payments in the UK–albeit quietly. But that hasn’t yet spurred a tier-one retail chain to roll out contactless acceptance.

Visa later expanded to Turkey with payWave and a few other countries in Europe, but was outbid by MasterCard in France for open-loop cobranded payment cards issued by the banking arms of big hypermarket/supermarket chains Carrefour Group and Auchan Group. Both chains have aggressive contactless programs on tap, issuing cards carrying the MasterCard PayPass application and rolling out POS terminals to accept them.

Visa has tried to have a comprehensive approach to mobile payment, including introducing a couple of years ago a Visa-branded user-interface application for the expected rollout of NFC phones. It later backed off the idea, probably because banks complained the Visa brand would usurp their own brands on handset screens. In any case, the point has been moot so far because of the lack of NFC phones.

Visa Inc. participated in the “rollout” of NFC services launched in Malaysia in April 2009, but the mobile-payment and ticketing project has failed to take off for, among other reasons, the availability of only a single less-than-compelling NFC phone model in shops.

Visa has also tried to develop remote payment, transaction alerts and coupons on smartphones, as well as peer-to-peer payments and mobile money transfers. On the latter score, Visa in February 2009 earned the endorsement of mobile telco trade group GSM Association’s to offer mobile-money transfer services. Still, progress has been slow for Visa Inc. in developing mobile payments and mobile-money transfers the past couple of years, say observers.

Visa is also backing open-loop prepaid contactless stickers that U.S.-based processor First Data is attempting to rollout in retail chains in the U.S. Consumers can attach the stickers to the back of their phones or other devices and use them anywhere payWave cards are accepted. Initial sales, however, have not been brisk, said observers.

Key figures: 
Visa Inc.
POS Volume* Change Cards** Change
Asia-Pacific 636 2.7% 512 8.5%
Canada
155 -10.2% 31 0
CEMEA
78 12.3% 184
9.5%
Latin America
189 4.3% 344 4.9%
U.S.
1,621 0.5% 661 3%
Total–Visa Inc. 2,680 0.9% 1,732 5.5%
*In billions of US$  **In millions, credit and debit
Source: Visa Inc. For year ending in June 2009.
Visa Europe    
POS Volume* Change Cards** Change
Europe 856 3.7% 380.2 5.3%
*In billions of euros **In millions, credit and debit
Source: Visa Europe. For year ending Dec. 2009. 
PayWave Hotspots–Europe Contactless Cards
UK
8 million+
Turkey 1.1 million
Poland 150,000+
Figures as of June 2010
Source: Visa Europe

Visa Inc. Payments

POS Volume*

Change

Cards**

Change

Asia Pacific

636

   2.7%

    512

   8.5%

Canada

  155

-10.2%

      31

      0

CEMEA

    78

  12.3%

    184

    9.5%

LAC

  189

    4.3%

    344

    4.9%

U.S.

1,621

    0.5%

    661

    3%

Total–Visa Inc.       

2,680

    0.9%

  1,732

    5.5%

Key NFC Personnel: 
Bill Gajda, head of mobile, Visa Inc.
Erick Wong, head of mobile contactless, Visa Inc.
Sandra Alzetta Senior Vice President - Innovation, new product and channel development, Visa Europe
Mary Carol Harris, head of mobile, Visa Europe
Mark Austin, head of contactless, Visa Europe
Major NFC and Contactless competitors: 
Last Updated: 
Sep 2010
Author: 
Balaban

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