November 23, 2012
- V.me is more than a mobile digital wallet. Customers will be able to use V.me to make online payments too. It lets users check out at online stores using a one-click solution that remembers card details from multiple providers (including MasterCard and American Express cards) as well as billing details and postal addresses.
- V.me is not just about mobile contactless payments. V.me will support a variety of ways to initiate payments including bar codes and QR codes, as well as NFC.
- Visa intends to distribute V.me through its member banks, much as Visa cards are distributed today. BBVA will be the first issuer in Spain.
- V.me is already in extended pilots in the UK and Spain to test the system and will launch formally in both countries soon. France will be next. V.me will start rolling out into stores in the UK next spring. Officially V.me will be available in France, Spain and the UK by next summer. (Visa Inc has already launched V.me in the US).
Although Visa talked a lot about contactless payments, what really struck me was what Visa said about the role of V.me in online payments. In effect, V.me will replace today’s Verified by Visa online authentication system, which is long overdue. Typing in a 16-digit card number and expiry date to pay online has never been a great customer experience, and Verified by Visa made it worse (and by taking customers away from the merchant’s site seemed much too much like a phishing attack). Visa hopes that V.me will finally provide an online payment mechanism that can compete with the simplicity and elegance of PayPal and Amazon’s 1-Click payments.
The second stroke of inspiration here is that by enabling customers to use V.me to pay online and on smartphones, Visa will encourage people to do the same in stores (even if the payment is initiated in a different way).
It seems to me that Visa has learnt the main lessons from contactless payment’s failure to take off quickly in the UK by focusing much more sharply on the needs of consumers and merchants. Forrester clients can see our framework for making new payment systems successful here and our view on digital wallets here. I think Visa has got a number of things right with its V.me strategy, including:
- Recognizing that most customers will only want one wallet.Visa will let customers include cards and accounts from multiple banks in their V.me wallet, and require that member banks offering the wallet let their customers do so. Visa will use a customer’s email address to provide a unique identifier to try to help ensure customers don’t end up with multiple wallets.
- Shielding the customer’s card details from the merchant. This has been one of several factors behind PayPal’s success in online payments, particularly when customers are dealing with less-well-known merchants.
- Trying to make it simple for consumers.Visa is looking for ways to lower the barriers to adoption and thinking hard about how to educate customers about the new system. You can see how the enrollment process works on Visa’s site here.
- Thinking carefully about merchants. Visa is trying harder to understand and meet the needs of merchants, particularly the larger ones that can play a decisive role in driving adoption of new payment systems. For example, Visa is thinking about how to incorporate merchant reward schemes into V.me.
- Developing a distinct brand and acceptance mark. Most successful new payment launches, from Direct Debit in the UK, to BPAY in Australia, and iDeal in the Netherlands, have had a distinct brand which makes it easier to communicate the benefits to consumers, and to signal to them where the payment is accepted.
There’s good news for both banking and merchant eBusiness executives here. For bank eBusiness executives, Visa Europe is offering a white-label digital wallet that will meet many of your customers’ requirements while being a lot less costly to implement than trying to build your own wallet. For merchant eBusiness executives Visa Europe says that it will treat V.me transactions as fully-authenticated transactions, with the same merchant liability protection and associated lower interchange fees Visa Europe cards as Verified by Visa (see more here). Probably more importantly, a better online payment mechanism should reduce abandonment and increase conversion rates.
A lot of the attention in the race to establish digital wallets has been on PayPal, on exciting newcomers like Google’s Wallet and Telefonica’s O2 Wallet, and on the dark horse, Apple’s Passbook. But the race will be long, and Visa is a formidable competitor with deep experience and many assets. With a clear strategy now in place, Visa* has to be one of the favourites to win in the long term.
Thank you to Jonathan Vaux, Sandra Alzetta and their colleagues at Visa Europe.